Rough Day?

April 27th, 2012


Rough day? I had an experience recently I’d like to share. It will help people understand why underwriters are so rigid in requiring what Fannie Mae mandates. And why they require it to be submitted prior to closing, with no excuses. This is important because there are times where an underwriter requires some documentation that sometimes cannot be provided immediately by the client. And the client inevitably asks why can’t I send it in after closing.

A client will say, “I need to go to closing Monday. But I will send in your document requests Tuesday when I get the document from my safe deposit box when I have time to get to the bank.”

I will gladly pay you Tuesday for a hamburger today, said Wimpy to Popeye. Sure you will.

After 26 years in this business I have never seen an underwriter yield on a document requirement, and allow it to be submitted after settlement. There was one document request on a loan of mine that closed recently. It was an updated bank statement that we needed. The client said he would not have it until a few days after settlement. The underwriter said we would have to delay settlement and wait for the statement to arrive. The client yelled, complained, screamed, cajoled, threatened, and yelled some more. The underwriter is human, so she yielded. She said it was a fairly innocuous document that should contain no surprises. So she said she would allow us to go to settlement and provide the document right after closing.

Three days after closing I called the client to remind him to send in the needed bank statement so we could sell the loan to Fannie Mae and meet their requirements. He said, “What is my incentive to do so?” In other words, he had his loan, he was done providing us with anything. And I could go jump off a bridge. Unreal.

So now you know why underwriters and banks do not yield. They’ll require ALL documents to be turned in BEFORE settlement. We ultimately got what we needed from the client who would not cooperate. But it took two weeks, lots of pleading, and a $200 gift certificate to a local restaurant for the client. Without that document the loan would have been unsaleable to Fannie Mae. That would result in a large loss to the company. Does it really take bribery to get people to do what they promised? This is one small sample of lots of stories to help explain why underwriting is so rigid. Up next…occupancy fraud. Why underwriters question if you are really going to move into a property as your primary residence.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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