Loan Processor Blog :

What Is OFAC? What To Do When you Get An OFAC Hit

2009-06-26T11:35:00.004-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I recently ran across my first OFAC hit and thought I would share my experience in hopes it may educate others who have not experienced an OFAC hit yet in their careers.

First, let me start by explaining what “OFAC” stands for and what it means. OFAC is the abbreviation for Office of Foreign Assets Control. It is the specific branch of the United States Department of the Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. (Whew! Try saying that three times fast!) But seriously, sounds a bit scary doesn’t it? Well if you find the mission statement intimidating; try taking a look at the length of the lists available at the OFAC website! Yikes! Suddenly I am not feeling as safe as I had been before I journeyed to the website!

OFAC searches are a requirement of Section 326 of the United States Patriot Act which states that, among other things, in addition to verifying every borrower’s identity we must determine whether the customer appears on any list of suspected terrorists or terrorist organizations. In most if not all cases, your credit bureau is likely running the borrower data through OFAC listings and rendering a determination with the credit report. If your company utilizes any third party compliance or quality control related software, you may also receive OFAC checks and alerts there as well. Bottom line is the importance of paying attention to the messages. If you don’t read them on every single file, an OFAC hit can skate right under your nose and won’t become a problem until the underwriter or closer finds it. By then generally it’s late in the process and you’ll anger all parties involved requesting additional documentation from the borrower in order to hopefully determine that the OFAC hit is not the same person as your borrower.

So what should you do if you DO get an OFAC alert on the credit report or other resource that may be used in the required OFAC search process? First, never assume that the hit is golden. You always need to assume that your borrower is “innocent until proven guilty” when it comes to an OFAC hit because there can be a lot of false positives. The Treasury Department provides a helpful guide that tells you exactly how to go about evaluating the OFAC information. I followed these steps personally and was able to eventually rule out that I had a 100% accurate match.
You can access these steps in entirely at http://www.treas.gov/offices/enforcement/ofac/regulations/faccr.pdf.

1. Is the “hit” or “match” listed on the credit re port against OFAC’s SDN list or
targeted countries, or is it “hitting” for some other rea son (i.e., Control List or
PEP, CIA, Non-Cooperative Countries and Territories, Canadian Consolidated
List (OSFI), World Bank Debarred Parties, Blocked Officials File, or government
official of a designated country), or can you tell what the hit is?

• If the name is hit ting against OFAC’s SDN list or targeted countries, continue to Step 2 below.

• If it is hitting for some other reason, you should contact the “keeper” of
which ever other list the match is hitting against. For questions about:

1) The Denied Persons List and the Entities List, please contact the Bureau of Industry and Security at the U.S. Department of Commerce at
202-482-4811,

(2) The FBI’s Most Wanted List or any other FBI-issued watch list, please see the Federal Bureau of Investigation’s website at www.fbi.gov/con tact/fo/fo.htm,

(3) The Debarred Parties List, please contact the Office of Defense Trade Controls at the U.S. Department of State, 202-663-2700,

(4) The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial Crimes Enforcement Network (FinCEN) at 1-800-949-2732.

If you are unsure whom to contact, please contact the provider of the interdict software that told you there was a hit. (example-your credit provider).

2. Now that you have established that the hit is against OFAC’s SDN list or targeted countries, you must evaluate the quality of the hit. Compare the name of the individual whose credit is being checked with the name on the SDN list. Is the name on the SDN list a vessel or a company rather than an individual (or vice-versa)? Is the name on the SDN list a male’s name whereas your credit applicant is a female?

• If yes to either question, you do not have a valid match.*

• If no, please continue to Step 3 below.

3. How much of the SDN’s name is matching against the name on your credit application? Is just one of two or more names matching (i.e., just the last name or just the first name)?

• If yes, you do not have a valid match.*

• If no, please continue to Step 4 be low.

4. Compare the complete SDN entry with all of the in formation you have on the
matching name on your credit application. An SDN en try of ten will have, for example, a full name, address, nationality, passport, tax ID or cedula number, place of birth, date of birth, former names and aliases. Are you missing a lot of this information for the name on your credit application?

• If yes, go back and get more information and then com pare your complete
in formation against the SDN entry.

• If no, please continue to Step 5 below.

5. Are there a number of similarities or exact matches?

• If yes, please call the hot line at 1-800-540-6322.

• If no, you do not have a valid match.*

If you are able to exclude your borrower based on file documentation or knowledge, be sure to clearly document the file and make sure that you communicate your research to the underwriter with your loan submission and maintain the explanations and documentation in the file in case of future audit.

If you have the need to request additional documentation from your borrower in order to exclude the borrower from the OFAC hit. You may wish to provide your borrower with or direct your borrower to the following informative consumer brochure explaining more about OFAC: http://www.treas.gov/offices/enforcement/ofac/regulations/cons.pdf

If you have reason to know or believe that allowing this person to do business in
the United States would violate any of the Regulations, you should call the hotline and explain this knowledge or belief.

Lastly, I feel it’s important to communicate the potential fines and penalties for violating the regulations that require institutions to conduct and review OFAC lists for potential matches. I warn you, these are hefty which is why it’s so important that you get yourself into the habit of watching for the OFAC information on each and every loan file. The fines for violations can be substantial. Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Depending on the program, civil penalties range from $250,000 or twice the amount of each underlying transaction to $1,075,000 for each violation

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part Four: The Training Plan

2009-06-19T11:06:00.001-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

After you’ve created a written job description for the position you wish to fill and finish creating a script for interview processes along with standard questions and topics to discuss, you will want to plan ahead by creating a standard training plan. The training plan needs to include standard on-boarding procedures for the new employee along with some sort of tracking so you are able to keep track of training progress.

Some things to consider when creating a training plan and on-boarding process:

•What kinds of material might be most useful immediately to a new person in your company?
•What kinds of things would a new person need to have immediate access to in order to perform the job functions stated within the job description?
•Can you plan out an agenda for the first few days or week of the new hire’s employment and stick with the plan?
•What other persons might be able to assist with the training and oversight processes for an interim period while the new employee is learning?
•Would input and opinions from existing employees be helpful to you in creating a standard written training plan for that position?
•What can you fairly expect the new person to learn and be able to accomplish in the first few days and weeks of employment?
•Can you create a plan that phases in the overall job responsibilities keeping an end goal date as a target date for the new employee to be operating fully in the position?

I feel that it’s important to share your ideas and be willing to ask for and gather opinions from others in your office so that you are aware of how they might see such a training plan. What kinds of things were they not trained on initially that they feel would be most important or helpful to a new hire? What types of suggestions and input can the existing team offer? How can you involve others in the new hire training so that you create a trusting and comfortable atmosphere for the new person?

The major key to creating a training plan is to make sure that it is realistic out of the gate. Be realistic on what you can fairly and reasonably expect from the new person while he/she is getting acclimated to a new job with a new employer. You don’t want to overwhelm the new person with ridiculous unachievable expectations yet at the same time, you don’t want the person to be overly bored in the beginning either.

I like to think back to the training experiences I have had over my 18 years in the business and pull some of the positive training experiences into my own plan and keep in mind those negative experiences I had where the training was less than stellar. I honestly believe that the impression you make on a new employee within their first day of work is one that stays with them and will ultimately determine if you made the right hiring choice. The more organized the on-boarding process is for new employees; the more likely they are to start with a positive perspective and to stay positive in the organization.

Be sure to refer specifically to the written job description when creating the training plan. It’s important to cover each component of the description. Create small goals within your plan and provide a tracking chart to the new person so he/she can hold you accountable for their training progress. That way you will be less likely to forget important areas of the training you promised to them. Also, be sure to schedule follow up meetings to simply check in and follow up with the new person. It’s important to make the new person feel welcome and appreciated right from the start. If you commit to occasional follow up, you can also learn of areas where the plan falls short or may need to be tweaked.

Make sure that your written training plan remains a work in progress and use the feedback you receive from your new people to help you continue to improve and perfect your plan.

A few additional items to consider if the new hire is an originator, processor or underwriter:

•If they are to be dealing with and working with particular lender guidelines, does that lender offer any training that would be beneficial to the new person? If not, can you provide some sort of overview of the important things the new person needs to know about each lender they’ll be responsible for working with?

•Can you provide the new employee with a specific list of contacts on day one so that they know exactly who to contact for questions in distinct categories?

As the old saying goes, “you never get a second chance to make a first impression.” That statement certainly holds true when training a brand new employee. Make the most of pre-planning so that the entire process is in writing and therefore runs smoothly for both you and the new hire!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part Three: Underwriter Interview Questions

2009-06-12T11:50:00.005-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

If you’ve been following along with this series, you know that last week I provided some things to consider when creating an organized interview process. I also shared my personal list of processor interview questions. This week, I would like to share my underwriter interview questions with you. If you are looking for underwriting assistance, feel free to pick and choose from my list of questions to create your own customized list of standard underwriter interview questions.

The more questions you ask, the more thorough the information you will obtain to evaluate the candidates and make the best hiring decisions for your department. Be sure to ask a line of questions that will allow you to determine if the interviewee’s background and experience will be the right fit for your needs. Never hire in a hurry based on fast decisions because those tend to be decisions you end up regretting no matter how desperate the need for help!

GENERAL QUESTIONS TO GATHER BACKGROUND & EXPERIENCE INFO

How did you hear about/what do you know about our company?

How long have you been underwriting?

What brought you to underwriting- Can you explain/summarize your career path to date?

What types of loan files have you most recently underwritten?
•Conventional?
•FHA?
•VA?
•USDA?
•State-Specific?

Would you say that the majority of your experience has been underwriting to a single lender’s guidelines or are you used to dealing with multiple lender’s guidelines?

•What lender guidelines are you most familiar underwriting to?
•Has the majority of your experience been underwriting for retail or wholesale lending environment(s)?

What range/area have you typically underwritten for to date?
•Are you used to underwriting for multiple states, sometimes far outside your home range?
•Are there a particular list of states you are most familiar with underwriting?
•How do track such state and region-specific property issues and topics?
•How would you enter a situation where you might receive a file to underwrite for a state you have never underwritten for?

Are you used to keeping track of multiple websites, logins, passwords used for daily underwriting duties?

Has your underwriting experience included daily or weekly file quotas regarding a specific number of files you have been expected to underwrite on a regular basis?
•Can you explain a bit about any quotas/volume expectations you’ve experienced to date?
•Have you felt the expectations were fair or have you run into concerns/issues?

Describe the hours of your typical work week:

Are you available to work extra hours in the evenings or on weekends if/when needed?

Do you feel you are organized when it comes to multi-tasking and balancing a high-pressure workload?

How do you prioritize your daily workload/How do you keep track of things you need to do?

Explain your current system of workflow- walk me through a file from start to finish:

How do you deal with poorly processed submissions received in underwriting?

Do you have any problem launching complaints and/or communicating in regards to poor file quality or what you feel may be training needs for particular processors?

How do you deal with conflicts as you run across them in underwriting?

What types of questions or other needs do you commonly rely on support personnel to assist you with?

What do you find are your biggest challenges in regards to underwriting?

What do you feel are your greatest strengths?

What is do you enjoy most about underwriting loan files?

What is your least favorite part of underwriting loan files?

CONVENTIONAL-SPECIFIC QUESTIONING

If applicable, when did you last underwrite a conventional file?

Do you have experience underwriting high-balance conforming loan files?

•If so, when did you last underwrite a high-balance file?
•If so, are you completely comfortable underwriting high balance loan files?

Do you have experience underwriting non-conforming/jumbo loan files?

•If so, when did you last underwrite a jumbo file?
•If so, is/was there a maximum amount you are/were authorized to underwrite?
•If so, what types of overlays applied for jumbo underwriting?
•Are you completely comfortable underwriting jumbo loan files?

Are you comfortable navigating and utilizing Fannie Mae and Freddie Mac websites and selling guides?

Do you know where to find and utilize the DU and Loan Prospector User Guides?

How well do you feel you know Fannie and Freddie AUS systems?
Have you dealt with DO/DU or LP and with mainly investor-specific custom DU/LP AUS?

How do you stay current on important Fannie/Freddie updates and changes?

How many well-processed conventional loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

FHA-SPECIFIC QUESTIONING

Are you currently authorized to underwrite FHA loans?
•If so, how long have you been underwriting FHAs?
•If so, when did you underwrite your last FHA loan?
•If so, what is your CHUMS id?
•Have you underwritten FHA purchase?
•Have you underwritten FHA newly constructed properties?
oAre you familiar with/comfortable with new construction less than 1yr requirements?
•Have you reviewed and underwritten non-HUD approved condos for spot loan approval?
oAre you familiar with/comfortable with spot loan reviews and approval decisions?
•Have you reviewed and underwritten manufactured housing for FHA?

How many well-processed FHA loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

VA-SPECIFIC QUESTIONING

Are you currently authorized to underwrite VA loans?
•If so, how long have you been underwriting VAs?
•If so, when did you underwrite your last VA loan?
•If so, what is your SARS id?
•Have you underwritten VA purchases?
•Have you underwritten VA cash out refinances?
•Have you underwritten VA IRRRL?
•Have you underwritten VA newly constructed properties?
oAre you familiar with/comfortable with new construction less than 1yr requirements?
•Have you underwritten manufactured homes for VA?

How many well-processed VA loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

COMPUTER/TECHNICAL-RELATED QUESTIONING

How would you rate your computer skills on a scale of 1 to 5 with 5 being highest?
What weaknesses do you feel you possess regarding computer skills?
•Have you ever used Outlook for email correspondence?
oAre you comfortable relying on and utilizing email for regular correspondence and communications?
•Have you ever utilized dual monitor screens?
oIf so, are you comfortable using two monitors in your daily workflow?
•Are you comfortable navigating and utilizing the internet and web on a regular basis?
•Do you know how to set up and utilize favorites?
•Do you feel you are a good “investigator” when it comes to hunting down the answers to particular questions that come up on occasion?

How do you prefer to communicate with processors during the underwriting of their loan file? Email? Phone?

MISCELLANEOUS QUESTIONING
How comfortable are you with documentation standards and requirements regarding automated underwriting via DO/DU and LP?

•Do you refer to the DU and LP user guides on a regular basis?
•Have you ever read the guides cover to cover?

How confident are you with reviewing file documents such as bank statements?
Paystubs? Appraisals? Tax returns for self-employed income calculations? Tax returns for investment property income/losses?

How confident do you feel with reviewing and making hard decisions on appraisals?
•Are you experienced with utilizing outside systems to assist with validating collateral values? If so, what systems do you utilize and/or are you familiar with?

How confident are you in making crucial decisions while still recognizing when something is outside of your authority or comfort level?

Do you/have you relied on reports to track your underwriting pipeline? Do you have experience pulling reports regularly to determine if files have aged past expiration and this need to be cancelled, withdrawn or denied?

FRAUD/MISREPRESENTATION QUESTIONING

Have you encountered fraud/misrepresentation in any file(s) you were responsible for underwriting?
•If so, explain how you handled the situation and the outcome:

What kinds of things have you found are the most influential indicators of potential fraud/misrepresentation?

Are you familiar with the top 5 or so most commonly fraudulent states in the country- do you know which states are included in the list?

Can you explain what types of fraud training and education you’ve experienced to date?
•When was your most recently attended fraud training/education session?
•Did you find it informative/useful?
•What if anything did you learn?

Can you explain what types of things in a file might lead you to seek out further information to rule out a suspicion of potential misrep/fraud?

Has your experience to date included the use of any additional fraud detection tools or software? If so, please explain:

CHALLENGE QUESTIONS

Within the office, how do you feel that the rest of the staff view you and your role?
•If we were to talk to others who work around you, what do you think they would say about you?

What was your reason for leaving each of your past employers?

•Which did you like best and why?
•Which did you dislike most and why?

Explain what makes you different and/or more valuable than other persons I may interview?

Why should I consider hiring you to fill this role in the underwriting department?
•What might you be able to offer that we may not find in other candidates for this position?
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I recommend ending the interview with a statement such as the following which will lead you into your review of the written job description you prepared following the advice of article number one of this series:

“Thank you, I appreciate all the information you’ve given today. It will be very helpful in the decision-making process. Now let me explain to you exactly what I am looking for in this role and what YOUR responsibilities would be…”

I also suggest including some verbiage opportunities such as the following based on your conversation thus far with the candidate:

“This is an area where I suspect you may struggle, experience challenges/weaknesses that we can work on”

“This is where I feel confident you will shine”

“This is/these are the next steps in this process”

“You can expect a call or email from myself or someone else by _________.”

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Be sure to record thorough notes regarding how the candidate answered your lines of questioning and be sure to include comments on the applicant’s appearance and personality during the interview. These things will help you specifically remember the candidate in the future if you should have a stack of resumes and interviews to conduct before making the hiring decision(s).

Next week we’ll talk about formatting an orientation and training plan for the new hire(s).

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part Two: Creating Interview Questions and Script

2009-06-05T11:40:00.004-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

In part one of this series; I advised on the necessity of creating and maintaining written job descriptions for each position within your firm. By creating the actual job description in written format, you’ve given thought to the exact job responsibilities, qualification requirements, experience needs and expectations to lay the groundwork for successful interviewing and hiring. The next step is to take the information you’ve accumulated in the thought process and turn it into written interview questions.

Having a standard script in place helps you to streamline and refine the overall interview process and keep your notes and records organized consistently. Some things to consider when creating your interview script and questions:

• Will you conduct only one interview upon which to base a hiring decision?
• Will you conduct a first and second interview?
• Will you involve any other associates or personnel in either the first or second interview stages?
• Is there any sort of written “test” you might wish to administer that might be helpful in thoroughly evaluating and choosing the best candidate for the job?
• Will you require an actual job application or other paperwork such as references be completed at either the first or second interview stage?
• Will the hiring decision be made by one person alone or with the input and feedback of a number of individuals who will need to be involved?
• How much time to you have to fill the position in question?
• How will you divide out the various phases of the interview and hire process on a timeline so that the final new hire will be starting at the exact time you need the position filled?
• Exactly how long do you believe the standard interview and hire process should take? Can you interview, make a decision, extend an offer, confirm a start date and bring the new employee on board in a day? A week? Two weeks? A month?
• How many candidates do you feel you will want to review to feel comfortable that you’ve made the right decision to fill the position? How many candidates are you anticipating will apply?

All of these things need to be taken into consideration when creating and organizing a system for interviewing and hiring. The last thing you want to do is hire someone who ends up going through all of the interviewing, on-boarding, orientation and training processes only to quit immediately thereafter. What a frustrating waste of everyone’s time!

On the other hand, you also don’t want someone to start, take the time on-boarding and training only for you to have to let them go early on due to conflicts or an inability to perform in the position. It’s important you have all of your “ducks in a row” to make sure these things don’t happen. The key is being as thorough as possible with your screening and interview questions.

I like to think of each new employee as a company investment because in truth, that is exactly what each person is. BUT if the company doesn’t have specific interviewing and hiring questions and procedures in place, bad investments are no ones fault but the company’s.

Here is my personal list of processor interview questions I have been asked to share on occasion. I have found these to be a very thorough and successful list of questions that can be slightly edited to apply to a variety of work environments and positions. By using these questions, we were able to hire on one of the most valuable team members in our company. I’ve been distributing this question script ever since.

1. How long have you been processing?
2. Where/how did you learn to process?
3. Were you taught by reading manual and guidelines or did you learn from watching and learning from others?
4. Has your background in processing been with a broker, banker or both?
5. Has your experience included packaging and submitting loans to a single lender or have you been responsible for packaging and submitting to multiple lenders?
6. Have you had to package and submit loans to MI companies for either contract underwriting or mortgage insurance? If so, which MI companies are you familiar with?
7. What is your most recent experience processing
a. Conventional Conforming loans?
b. Conventional high balance conforming loans?
c. FHA?
d. VA?
e. USDA Rural Housing?

Let’s talk a bit about your work history.

1. Walk me through the flow a of particular loan file as it passed through your desk. At what stage do you receive it?
2. What are your responsibilities/what are you expected to do with it?
3. At what point does the file leave your desk and your realm of responsibility and move on to the next person?
4. Are you responsible for “editing” loan documentation or do you just have to request the documents and pass them on? (Meaning do you know how to edit paystubs, bank statements, tax returns, etc. to check for accuracy, compliance, qualifying etc?)
5. What types of loans did you process for each employer listed?
6. How many loan officers have you recently processed for?
7. What is the highest number of loan officers you’ve ever processed for?
8. What states have you processed loans for?
9. Are you licensed to originate or process in any particular state(s)?
10. Which employer did you enjoy working for most?
11. Least? Why?
12. If you could improve certain elements of your job with your most recent employer, what is it that you would want to change?
13. How do you keep current on federal compliance rules and regulations?
14. Are you aware of state-specific compliance requirements in your own state? Can you name any disclosure requirements that you are aware of?
15. If you are asked to process a loan for property in a state you are not familiar with, how do you learn about state-specific requirements and compliance needs?

What do you feel is your favorite thing about loan processing?
What are the biggest challenges you face in processing?
What would you say is your biggest strength? Weakness?
What would you truly like to learn to do better when it comes to processing?

How do you keep track of all of the various deadlines associated with your pipeline?
How do you determine your daily work priorities?
Do you feel you do a good job of juggling multiple tasks at one time on a consistent basis?
Have you ever learned from a costly or careless mistake?

What lenders are you familiar working with?
Are you familiar with their websites and guidelines?
Is it normal for you to seek out investor guidelines to make sure particular loans meet guideline as you process them?
Are you familiar with the Fannie Mae and Freddie Mac Selling Guides? How well do you feel you know standard FNMA/FHLMC guidelines?
Do you have experience using Desktop Originator? Underwriter? Loan Prospector?

On a scale of 1-10 with 10 being highest, how confident are you with your knowledge and skill regarding DO? DU? LP?
Do you know where to find the DU and LP guides? Have you read them? Do you refer to them occasionally or on a regular basis?
Does your processing experience include coordinating closings and fundings?
Requesting or drawing closing docs?
Have you ever had to provide files for audits? Explain those experiences and any audit results you can share.
How confident are you with reviewing paystubs to calculate income accurately?

Bank statements? Tax returns for self-employed borrowers? Business returns?
Do you have issue speaking directly with applicants/borrowers to request documentation or follow up for documentation when needed?
As an experienced processor, what do you feel is the role of the loan officer? What do you expect of them? What will you absolutely NOT tolerate from a loan officer? Can you explain or share any experiences and how you handled them?
How do you go about dealing with personality conflicts?

How confident are you in making crucial decisions and knowing when something is outside of your control re: communicating loan officer issues to management?
Within the office, how do you feel that the rest of the staff view you and your role?
Explain what makes you different and/or more valuable than other persons I may interview? What might you be able to offer that I may not find in another candidate?
Why should I consider hiring you to fill this role for my company?

Thanks for answering all of those questions for me; I appreciate you taking the time. Now let ME explain to you exactly what the expectations would be for you if you are the person who is hired to fill this role:

Do you feel that you can meet the expectations I’ve explained? Anything I mentioned that sounds challenging?

This concludes our interview for today. Thanks again for taking the time out of your day to personally demonstrate your interest in our company. Here is what happens next…

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part One: Create a Written Job Description

2009-05-29T12:20:00.003-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I often struggle to find topics of interest for each week’s article because I want to offer something valuable for everyone out there. I realize that every single topic may not apply to every single industry professional, but it’s important to me that readers find my articles helpful and informative without the “bore factor.” I always commit to do my best to cover a wide range of topics that are of interest to processors, originators, underwriters and managers as well. As you have read from me over and over again, I am a huge advocate of education. I feel that anything I can pass on from my own experiences to help others is well worth my time.

Fortunately, this week’s topic just came to me like a lightning bolt. I just happen to be working on something right now that I think many of you may find interesting and helpful. At this very moment, I am preparing for an onslaught of underwriting department interviews. Whether you have needs to interview underwriters, processors, assistants, loan officers, or other personnel, I think you’ll find my tips worth reading.

There are a number of things I feel absolutely have to be in place before you can expect any sort of organization and success with interviewing and hiring processes. The following questions correspond with the first step I work through when I find myself responsible for interviewing and rendering judgments on hiring:

1. What exactly am I/are we looking for in a candidate? What expectations must he/she be able to fulfill in the position I am interviewing to fill? What qualifications must be met? What kinds of experiences are required? Exactly what do we consider the responsibilities of the job in question? What education requirements need to be met? What challenges are present? Are there particular personal skills required to succeed in the position? Exactly how does the job relate to other persons/positions/departments within the company?

The best way to answer all of these questions in summarized format is to create a written job description. No person with interviewing and/or hiring authority should ever hire an employee without first presenting and reviewing a written job description outlining the position in question. On the other hand, no person should ever accept an offer of employment without first receiving, reviewing and acknowledging understanding of the same written job description.

Written Job Descriptions are crucial to both sides of the interviewing process for a number of reasons:

• They help to screen and eliminate potential persons who may in no way meet the minimum requirements of the job in question
• They help to establish standard expectations associated with the job in question
• They help to establish minimum education and experience requirements associated with the job in question
• They help to articulate the most important outcomes you need and expect from an employee performing the particular job
• They help to explain where each individual employee’s position fits within the structure of the department and overall company
• They help to establish the basic framework for employment evaluations and performance reviews
• They may offer legal protection in situations where termination may be necessary due to lower than expected and desired job performance

Before creating a written job description, I highly recommend using the web to search and locate sample job descriptions for review. Layouts may differ slightly, but for the most part, written job descriptions all contain the same basic information. Following are the standard components of a written job description:

COMPANY LOGO

Employment Position: Department:
Location: Reports To:

General Description/Overview of Position

Job Responsibilities

Required Qualifications

Required Experience

Education

Special Skills

It’s best to gather feedback for your written job description from those persons within the organization who have first-hand knowledge of working in the actual position itself. In this case, I plan to consult with our existing underwriting staff for their advice and feedback. I think they can provide the most productive suggestions since they are already working the exact job we intend to hire additional staff for!

Tune in next week for Step Number Two: Creating Interview Questions and Script

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Some of My Favorite Freebies

2009-05-22T15:13:00.000-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

It’s that time of year again for me to share some of the favorite “freebies” I have run across out on the web in my various research topics. I’m always on the internet, reading up on regulations, guidelines, topics of mortgage interests etc. and in that research I often run across great materials and information that so many folks don’t even know is out there and available for the takings. I love sharing these with other industry-folk because nowadays, we can all use as many free and low-cost ideas as possible in our marketing and education endeavors.

In my many years in processing, I loved sharing these things with borrowers, originators, realtors, and even used some of the materials in training lectures and presentations. I hope you may find some use in these “freebies” as well! Simply click on the bolded links below which will connect you directly to the applicable websites.

Consumer Action Website-Federal Citizen Information Center

This is a recent find I ran across when doing some research. You are entitled to request up to 10 copies of the 2008 Consumer Action Handbook for free simply by listing your name and address at the request site. They also have an order site where you can request copies of a wide variety of booklets covering a wide range of subjects. Some are free, most low priced.

Federal Reserve Consumer Information

The Feds provide a great number of handbooks, guides, pamphlets, bulletins and Fact Sheet publications that are available for individual or bulk orders. Click here to access the order options site.

Federal Trade Commission Consumer Protection

The Federal Trade Commission Bulk Order website is one of my absolute favorite spots to read up on consumer rights information and to obtain bulk order quantities of booklets, bulletins and brochures on a wide range of subjects that are of interest to mortgage borrowers. There are organized topics that include such subjects as Automobiles; Computers and the Internet; Credit and Loans; Education, Scholarships and Jobs; Energy and Environment; Health; Identity Theft, Privacy & Security; Investment and Business Opportunities; Shopping for Products & Services, Telemarketing and Telephone Services; and there is a complete sub-heading for businesses which includes a variety of publications that may be helpful to YOU in your own line or work!

These materials are wonderful to display in your office for your borrowers to grab at their leisure and also make great stuffers for mailing campaigns and application packages.

The FTC also hosts an entire site specifically for purpose of education about Identity Theft. There are some great materials available at this site as well which can be used for things like conferences, trainings, group meetings, etc. Their Fight Back Against Identity Theft Partnership Page offers materials specifically designed for such uses.

Federal Citizens Information Center

This is a website I only just recently discovered but it provides a wealth of information, ideas and materials for free or very low cost which are of interest to the general population in a wide variety of topics, most importantly those related to mortgages and housing. There are PDF versions of materials available to print off or you can proceed to request and order materials right there online. Go to http://www.pueblo.gsa.gov/results.tpl?id1=17&startat=1&--woSECTIONSdatarq=17&--SECTIONSword=ww to access the Financing and Sales section of the website.

Free Viewer Software Download Sites

• Adobe Reader
• Macromedia Flash Player
• Microsoft Windows Media Player-PC
• Microsoft Windows Media Player-MAC
• Paperport Viewer
• RealPlayer

HUD/FHA Freebies

There are many printing distributors out there who charge to provide copies of HUD forms and materials, booklets, posters and brochures. Did you know that you can order many if not all of these materials for free using HUD’s Online Distribution System? Using the online ordering system, you are able to request the required Equal Housing Opportunity Posters, HUD Settlement Cost Booklets, required HUD/FHA forms and other various materials.

Other Freebies from HUD:

• HUD Homebuyer Webcasts
• Equal Housing Opportunity Graphic Logos for Printing and Use

OnGuard Online

This site provides some really fun games, tools, videos and resources that can be used to educate people about privacy and security online. In addition, you may wish to order publications in bulk from the Order Publications website.

VA/Veterans Affairs

VA provides a set of free online videos for Veterans which include coverage on such topics as Alternatives to Foreclosure, Buying a Home, Selling a Home, Refinancing, and Energy Efficient Mortgages.

You’ll find a list of free online VA Home Loan Pamphlets available at http://www.homeloans.va.gov/pamphlet.htm

Be sure to take advantage of all of the great education and training materials that are out there to help you and your customers. They will appreciate you taking the extra time and making the additional efforts to help educate them on these topics of interest to them. Doing so will also make you stand out from your competition!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

HUD Announces Acceptance of Advances on the $8000 First-Time Homebuyer Tax Credit – BUT then retracts within 24 hours

2009-05-15T14:13:00.004-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I realize HUD’s Mortgage Letter 2009-15 generated a lot of excitement and buzz for the industry upon it’s posting on May 12th but no one was more pleased to see HUD retract it just as quickly on May 13th than I. Please note that when I voice my pleasure for the retraction, it certainly doesn’t include any nod for HUD’s methods. I find it completely and utterly cowardly that they post something, include it in a speech to generate all the excitement that they did only to quietly retract it all with no notification, no explanation to accompany the decision and sweep in under the rug. I don’t know what on earth went down with this whole thing but I can tell you I am not finding ANYTHING anywhere on the net and I consider myself to be a pretty darn good bloodhound when it comes to digging until I find what I’m determined to find.

I’ll be honest, I was livid when I saw the Mortgagee Letter explaining that HUD had taken position to accept the $8000 tax credit advance as a source of downpayment because in my opinion, we would not be doing our borrowers any favors by leading them into these questionable offers. I realize I have realtors and loan officers everywhere all riled up with my opinionated statement but let’s stop and think about this for a moment with a clear head and with most importantly, common sense. Given that the current state of the housing industry was created by handing mortgages to borrowers who either didn’t qualify or have downpayment funds available in the first place, why on earth would the feds of all people want to encourage that potential homeowners go out and borrow funds on an asset that isn’t even theirs yet? The idea is simply preposterous! I am still completely flabbergasted that they would have approved this idea!

At the same time, I feel for those first time homebuyers who, for a brief moment in the past 24 hours, may have gotten their hopes up that this would be the option they’d been waiting for only to have their dream crushed almost as immediately as a glimmer of hope appeared. But in all honesty, I feel like it’s our job to PROTECT potential first time homebuyers from these kinds of things and it’s a responsibility I personally do not take lightly. Young homebuyers don’t always think of “the big picture” as so many of us have learned to do over the many years we’ve spent in the business. It’s our job to do the research and to make sure that what we’re getting them into doesn’t have the potential to cause them harm. I don’t feel confident at this time that any one of us can make that promise on an advance of the $8000 tax credit given that the unemployment rates are rising, federal debt is rising, consumer confidence is down, and that based on recently issued figures, Fannie and Freddie may be on the brink of complete failure. There’s an old saying we industry vets pass around among us and if I’ve heard it once I’ll say it again- “If it sounds too good to be true, it probably is! “

When I first heard about these places concocting these $8000 credit advance schemes my brain immediately flooded with questions; many of which are still there-unanswered. I have already heard and read of some horror stories out there where borrowers were flat out taken advantage of. They borrowed the monies, bought the home, lost their job and are now stuck holding an outstanding loan that was secured on an asset they now may not even be entitled to because they can’t even make the mortgage payments on the home they bought with the advance on their anticipated tax credit in the first place. These are the kinds of things that we all need to think about before recommending these advance loans to potential homebuyers.

With the state of the current housing market and the instability of the employment sector, let’s be serious. Is this really a good idea for anybody involved? Sure-It’s great for the schemers who are making boatloads of interest and penalty charges on these advances. But did anyone really stop to consider the likelihood of potential loan default? Are these advances really and darn different than seller funded downpayment assistance which has now been outlawed? When the statistics supposedly show that borrowers are three times more likely to default when they don’t contribute any of their own funds toward their downpayment, is this really a good idea to promote out there? Do we really think it will stimulate the economy? What if it completely backfires? Then what? That’s a backlash the housing industry simply CANNOT AFFORD right now.

What made me most angry upon reading the Mortgagee Letter was that in one top newspaper’s headlines, there was a small paragraph about HUD deciding to allow the advance tax credit loans while just a paragraph below I read the following:

Freddie Mac Reports Loss, Needs More Capital From U.S.
Wall Street Journal (05/13/09) P. A9; Hagerty, James R.
As the costs of mortgage defaults continue to mount, Freddie Mac posted a first-quarter loss of $9.85 billion and announced that it will need another $6.1 billion of capital from the Treasury. A week earlier, Fannie Mae recorded a quarterly loss of $23.17 billion and said it would require $19 billion to stay afloat. Federal regulators seized control of the two government-sponsored enterprises last fall. The Treasury has since agreed to provide up to $200 billion of capital each to the GSEs by buying preferred shares paying 10 percent dividends.

My first thought was to sit back and read it one more time. Yep, that’s what it says all right. Even with the huge ongoing refinance boom we are in, both Fannie and Freddie appear to be in major trouble. So tell me again WHY it’s a good idea we let first time homebuyers borrower money for their downpayment by securing a loan against an asset they haven’t even earned yet? No matter which side of the fence you sit on over this whole thing, I think we can all agree that it will be interesting to see how this whole situation plays out….

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

The Importance of Credit and the Role it Plays in Mortgage Qualifying- Part V: The Fair Credit Reporting Act (FCRA)

2009-05-11T19:17:00.003-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Many consumers, who also become potential homebuyers and homebuyers, are not aware of their federal rights under the Fair Credit Reporting Act. I feel it’s important to pass along this information to our borrowers because these rights are very important when it comes to maintaining acceptable credit histories, warning off unnecessary telemarketing phone calls and staying aware of who is inquiring into a person’s credit profile.

We as mortgage lenders are obligated to obtain each borrower’s permission to inquire into their credit and we must disclose to each borrower the results of our inquiry within five business days of receiving a borrower’s credit report with a disclosure that provides the borrower with their fico scores, the range of fico scores that are possible under each major bureau and the actual messages that contribute to each fico score reporting.

Below is a summary of the Fair Credit Reporting Act (FCRA) courtesy of the Federal Trade Commission:

• You must be told if information in your file has been used against you. Anyone who uses a credit report or another type of consumer report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.

• You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file disclosure”). You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if:

• a person has taken adverse action against you because of information in your credit report;

• you are the victim of identify theft and place a fraud alert in your file;

• your file contains inaccurate information as a result of fraud;

• you are on public assistance;

• you are unemployed but expect to apply for employment within 60 days.

In addition, effective September 2005 all consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.ftc.gov/credit for additional information.

• You have the right to ask for a credit score. Credit scores are numerical summaries of your credit-worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.

• You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.ftc.gov/credit for an explanation of dispute procedures.

• Consumer reporting agencies must correct or delete inaccurate, incomplete, or
unverifiable information. Inaccurate, incomplete or unverifiable information must be
removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate.

• Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

• Access to your file is limited. A consumer reporting agency may provide information about you only to people with a valid need -- usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access.

• You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.ftc.gov/credit.

• You may limit “prescreened” offers of credit and insurance you get based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt-out with the nationwide credit bureaus at 1-888-5-OPTOUT (1-888-567-8688).

• You may seek damages from violators. If a consumer reporting agency, or, in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.

• Identity theft victims and active duty military personnel have additional rights. For more information, visit www.ftc.gov/credit.

Next week we will take a look at identity theft and how we can help to educate our borrowers to keep their personal information safe.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Finally - Updated HUD Handbooks with CURRENT Guidelines!

2009-05-01T14:19:00.004-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Though I had planned to discuss FACTA this week, HUD recently issued a very important Mortgagee Letter with some long awaited news for all of us so let’s take a break from my series on credit and talk about Mortgagee Letter 2009-14! We’ll pick up right where I left off on the credit series next week.

Earlier in the month, HUD issued ML 2009-14 which announced the newly updated online versions of several HUD Handbooks, including HUD Handbook 4155.1 which is the most important handbook containing FHA credit guidelines. You’ll find the new handbooks at http://www.fhaoutreach.gov/FHAHandbook/prod/index.asp which is a new portal page created by HUD. There are two handbook links available. The first link is for the newly updated 4155.1 Mortgage Credit Analysis for Mortgage Insurance handbook. The second is called the 4155.2 which is actually a consolidated version of three formerly separate handbooks- The 4000.2 Mortgagees Handbook Application through Insurance, the 4000.4 Single Family Direct Endorsement Program and the 4165.1 Endorsement for Insurance for Home Mortgages (Single Family).

The new handbooks will actually be required to be used and the old outdated handbooks will be archived 30 days from the date of the Mortgagee Letter which will be on or around May 9, 2009. To assist users with the transition to the newly formatted online handbooks, HUD created a Q&A sheet which explains how to utilize the search feature and goes on to explain further the best news of all- When Mortgagee Letters are issued going forward, the content will be updated in the handbook in order to keep the content of the new handbooks up to date at all times! Hooray for HUD!

FINALLY they listened to all of the industry complaints and took action to make things easier for all of us. I don’t know about you but I surely appreciate this. It will make things so much easier for originators to access current information, it will make it easier to train processors, to get the right information to borrowers, realtors, … the underwriters don’t have to go digging for Mortgagee Letters when they run across a situation where “I know I read something about this somewhere but have to find what Mortgagee Letter it was in…” This is the best news we’ve gotten in our industry in a long time! I feel like dancing in the streets!

I’ve also noticed that HUD has recently rolled out some web seminars at their Single Family Training and Events website. BUT- one thing to keep in mind about these- HUD’s webinars will give very basic and standard information about FHA guidelines. You will still get the most benefit from more personalized and specifically structured sessions such as those offered by FHAOnline University which offers sessions on specifically targeted Subjects such as the 203k Rehab Program, HECM Reverse Mortgages, FHA Underwriting, FHA/VA Processing, FHA Direct Endorsement Underwriting and FHA/VA Closing for Closers.

I am also very impressed by HUD’s continued efforts to build the www.fha.gov site. They are constantly adding new information that can be accessed and used to educate potential homebuyers, existing homeowners, realtors, and other industry members. FHA is on You Tube, Face book, Twitter; they’re all over the place! I greatly appreciate the efforts being made by HUD to “get out there” and to promote the education of the average consumers across the country. They are definitely working hard to move us all into the future and to promote education and training in the housing industry. I can’t think of anything more important in our country these days. Let’s give a round of applause for the Department of Housing and Urban Development! Way to go HUD!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

The Importance of Credit and the Role it Plays in Mortgage Qualifying - Part IV: Credit Repair

2009-04-26T19:01:00.003-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

If you’ve ever taken steps to repair your own credit or assisted a borrower with repairing his/her credit report for mortgage-related purposes, you know how simple the process is and you also know, if you’ve taken advantage it properly, that there is NO COST associated with it. That’s right folks, it’s free! I’ve used this process on a number of occasions to instruct people on how to repair their own credit and it has worked like a charm every time.

The Federal Trade Commission offers a lot of free information on credit in the form of bulletins, brochures, booklets, and handouts. The materials are available absolutely free and can be ordered in bulk quantities. I’ve used the materials on many occasions to distribute at company meetings, with loan application packages, for presentations, and have even passed them to friends and family to educate them on credit and how to accomplish credit repair. I like to keep a supply on hand just for those purposes. As I’ve mentioned before, I am an advocate for consumer education so I feel that anything I can do to help “spread the word” is well worth the efforts.

You’ll find online credit-related education materials at the following FTC consumer websites:

- Your Rights- Credit Reporting: http://www.ftc.gov/bcp/menus/consumer/credit/rights.shtm

- Credit Cards and Consumer Loans: http://www.ftc.gov/bcp/menus/consumer/credit/loans.shtm

- Credit Reports and Scoring: http://www.ftc.gov/bcp/menus/consumer/credit/reports.shtm

- In Debt? http://www.ftc.gov/bcp/menus/consumer/credit/debt.shtm

- Mortgages/Real Estate: http://www.ftc.gov/bcp/menus/consumer/credit/mortgage.shtm

- Privacy: http://www.ftc.gov/bcp/menus/consumer/credit/privacy.shtm

Set these websites as favorites on your PC and visit them regularly to read up on credit-related issues so you will always have current information to pass on to your friends, family and borrowers.

I get asked occasionally how I know about all of this “credit-related stuff.” Quite simply, I learned simply by reading through the materials I’ve referred to above! Years back I got frustrated with so many derogatory credit reports coming across my desk and became determined to figure out how I could help borrowers clean things up on a permanent basis so that I didn’t have to deal with the same derogatory, outdated and duplicated credit accounts every single time one of them decided to refinance. I went web-searching for answers and I stumbled on to the Federal Trade Commission Consumer website. I started reading the exact same brochures you’ll find at the links I’ve laid out above and I used the information to help borrowers learn how to get their credit fixed.

So exactly how does a person go about repairing their credit? The first step is by obtaining the free annual credit report that every consumer is entitled to by law. I covered that process in my last article. Simply direct the borrowers to www.annualcreditreport.com where he/she can request his/her free credit report from each of the three main repositories- TransUnion, Equifax and Experian.

Upon receiving each report, the borrower will need review all of the data that is listed including the personal information – Make sure name is spelled correctly, that date of birth is correct, that the social security number is valid, and most importantly, the borrower needs to review the information reported with each credit tradeline to make sure that the account number, open date, monthly payment amount and outstanding balance is correct. The borrower also needs to make sure that each account with a balance is rated current and not out of date. Often, older derogatory accounts like collections, charge offs, tax liens and judgments may reflect old outstanding balances that are not up to date or accurate. It is those older derogatory accounts that most often will need the repair so that the consumer can present an up to date credit profile.

Another thing to watch for is to make sure there are no duplicate outdated derogatory accounts. Often a collection account may transfer between several collection agencies and reflect old and outdated balances with each of them instead of just reflecting the account that most recently acquired the account.

Once the borrower has edited the report data and determined the information that needs to be corrected and updated, he/she can submit an electronic request for account investigation right online through the repository provider of the credit report. Those instructions are included right within the report when it is received after requesting from www.annualcreditreport.com. You can also refer people to the following websites where they can submit credit dispute requests regarding their personal reports after they first obtain a copy of their personal credit report from each repository:

- TransUnion- Credit Disputes: http://www.transunion.com/corporate/personal/creditDisputes.page

- EquiFax- Online Disputes: http://www.equifax.com/answers/correct-credit-report-errors/en_cp

- Experian Credit Report Disputes: http://www.experian.com/disputes/

Each of the repositories also allows consumers to request account investigations/disputes by phone and by mail. The borrower’s personal credit report received through www.annualcreditreport.com will include a phone number and address specifically for those purposes.

The most common reasons I find for outdated and inaccurate credit report data are often related to bankruptcy and divorce. Often after someone files bankruptcy and has the bankruptcy discharge a number of liabilities, they do not follow the proper steps to get their accounts all updated on their report. The same thing often happens with divorces. When liability responsibilities are reassigned in divorce settlements, often the borrower forgets the importance of notifying the credit repositories to advise that he/she has divorced and is no longer liable for particular account payments and balances. In such cases, it’s important that the consumer provide supporting documentation with their request for dispute. The same if often true of collection account payments. If a collection appears as unpaid yet the borrower is adamant that the balance has been paid off, he/she simply needs to provide a copy of a cancelled check, money order receipt or alternate form of evidence for payment made.

For each dispute request, the repository has 30 days in which to investigate the account and render communication as to status. In most cases, the investigations are complete within 30 days, the account information is permanently updated and the borrower’s credit will be automatically “cleaned up.” Once that happens, it means that each time you may pull his/her credit for mortgage-related purposes, you should start to see fico scores improve and will no longer see the same old outdated and duplicated garbage on his/her report.

One thing of great importance to remind everyone about- The credit bureau that you use locally to pull credit only updates the consumer’s accounts temporarily for mortgage-related purposes. The updates they make upon your request are not permanent. The only way that consumer accounts can be updated permanently is through the major repositories- TransUnion, Equifax and Experian. So each time you find yourself calling, faxing, or electronically requesting tradeline updates for your borrower when processing their loan application, remember this series of articles about consumer credit. You can take the tips and information I have listed to help educate your borrower on how to accomplish these updates permanently with no cost to him/her.

Tune in next week when I’ll discuss FCRA- the Fair Credit Reporting Act

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

The Importance of Credit and the Role it Plays in Mortgage Qualifying- Part III

2009-04-20T10:23:00.005-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

There are several ways for a consumer to maintain a positive credit profile and a favorable fico score which may include but are not limited to the following:

- Paying bills on time when they are due each month
- Not applying for new credit except for when absolutely necessary and when there is some likelihood that the consumer can actually be approved for the credit being applied for
- Paying off credit card balances monthly or taking care not to “max out” credit cards to their maximum allowed limits
- Taking care to make sure that outstanding co-pays and balances are paid timely for things like medical bills, outstanding rents owed, child support, state and federal tax balances due, traffic tickets, utility bills, etc. so that such accounts do not end up going to collection or judgment
- Monitoring his/her credit profile in order to be sure that none of the following have occurred:

o Accounts opened without consumer consent
o Accounts used without consumer consent
o Derogatory information reported in error
o Aged tradelines not reported current
o Identity Theft/Fraudulent activity suspected

Based on that list of items, one big question usually comes up from the consumer- “How on earth do I monitor my own credit profile?”

That answer is a simple one but very few people are aware that the option exists. If you watch TV or listen to the radio on a regular basis, you are probably quite familiar with the little tune that sticks on the brain when it’s heard and it goes something like this- “Free Credit Report.com, … F-R-E-E that spells free, credit report.com baby…”

Well folks, as catchy as that tune is THAT ISN’T the option I’m referring to. According to the Fair Credit Reporting Act (FCRA), every one of us is entitled by law to a free copy of our credit file once annually from each of the three major repositories- TransUnion, Equifax and Experian. The ONLY place you can take advantage of the consumer right afforded you by the federal act is www.annualcreditreport.com. There are many imposters whose claims lead you to believe they are the place to get these things but the only one true location is www.annualcreditreport.com. On a side note, I would encourage you to read up on your rights according to the Fair Credit Reporting Act by accessing the FTC Summary at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre35.pdf.

There are actually three ways you can request your free annual credit report from annualcreditreport.com:

1. Simply access www.annualcreditreport.com online. At the home page, simply choose your state from the dropdown box and click on “Request Report.” The screens will walk you through the process which is quick and easy and in just a few minutes, you’ll have all three credit repository profiles with your credit sitting right in front of you for review.

2. If you do not have access to the internet, you can request your report by calling 1-877-322-8228 or

3. You can complete and mail in your request upon completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

When ordering online, you will be prompted with offers related to credit services- do not accept these offers. They are really not necessary, at least not until you’ve familiarized yourself more with your personal profile, how it all works and what it all means. Expenses for credit-related deals and products are not required in order for you to maintain good credit, fix errors in reporting or monitor your credit annually. All of those things can be accomplished without charge and without subscribing to our paying for added services.

Once you receive your free credit report profile from each of the three repositories, you should review closely and check for accuracy. Information such as your residence history, open accounts, derogatory reporting, public records, open accounts, closed accounts, outstanding balances, minimum monthly payment amounts, outdated ratings and inquiries. If you find errors or questionable activity, there are additional steps you will need to take in order to get the information updated and corrected.

Tune in next week and we will examine those options more closely. The first step toward helping borrowers with credit repair is for you to learn how to repair your own! Follow the steps referenced herein and get an idea of how this works!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

The Importance of Credit and the Role it Plays in Mortgage Qualifying - Part 2

2009-04-11T17:55:00.002-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

It’s amazing to me how few people really understand the importance of and the actual value of their credit report. Most really have no idea what credit really is and how important it is in one’s life. We see so many credit reports cross our desk with patterns of late payments, low fico scores, charge offs, collections, judgments and tax liens and it’s always frustrated me because in many cases, I don’t feel that it’s necessarily the individual’s fault.

I feel the fault lies more with our government and education outlets for not making the information more readily available with standard education and community programs. I mean how many people in the general population would know that all of these great websites, booklets and brochures are provided by the Federal Trade Commission at the FTC website where I find them? And for those persons who may not have a computer sitting in their home, how on earth would they ever be able to access this information?

I personally think homebuyer education and credit counseling should be a requirement for every single first time homebuyer who applies for a mortgage. Imagine the impact that simple requirement could have on the general population and how much different it could make with consumer credit education!

Over the years I think I’ve seen just about every pattern of credit that could exist. I’ve also heard just about every excuse for it too. I’ve seen people with over $200,000 in credit card debt accumulated, I’ve seen an individual who owed a whopping $180000 in outstanding child support that was in collection, I’ve seen one individual who had never paid a bill on time in his life but who just had to run out and purchase a $90000 automobile a month before he came to apply for a home loan… But I’ve also seen derogatory credit caused by circumstances far beyond a person’s control.

It’s those folks I tend to want to help recover the most. But regardless of reasons, whenever given an opportunity, I try to pass on my own knowledge of credit laws, rights and responsibilities so that one more person walks out into society with credit education and understanding.

An individual’s credit profile consists of personal data retrieved from public records and financial institutions who report customer account data to the major credit repositories on a monthly or quarterly basis. A credit report isn’t really even created until someone requests an actual “report” in association with application for employment or most often in association with some sort of application for credit.

An individual credit report is like a fingerprint. It’s a way to get a small snapshot of a person’s overall lifestyle by viewing where he lives now and has lived in the past, where he works and has worked in the past, how old he is, and what his overall pattern of financial responsibility looks like by reviewing public records and repayment histories on reported debts and obligations. By viewing the person’s history of financial responsibility in regards to repayment patterns on existing and prior obligations, we can assume the likelihood as to whether or not we might expect the person to be responsible with the repayment obligation connected with a home loan.

The credit report itself includes the following information: Borrower full name, social security number, birth date, current address, reported residence history, reported employment history, public records history of judgments, liens and bankruptcy, as well a the history of credit for each loan, credit card, and mortgage account that the individual has obtained and paid for the past seven to ten years. A report may also contain fraud alert messages that the consumer is able to request be placed on their credit report in cases of stolen identities. The report may also include specific explanation messages the consumer may have requested be included in their file. Also, there may be Safescan, Hawk Alert messages and other messages related to the records evaluation of the combination of borrower name, birth date and social security number. The report will also include contact information for each of the creditor’s that report and list tradelines to the report.

Each time an individual applies for any type of credit that requires evaluation of his credit report, an inquiry is generated and identified on his credit profile. When someone has multiple credit inquiries within a short time period, it may suggest financial difficulties or misuse of credit. Such situations can contribute to lowering one’s credit score and are taken into consideration when one applies for credit with each financial institution. Having a good credit profile and credit score provides a person lower interest rates on revolving lines of credit, auto loans are other personal loans - even mortgage loans in some cases.

So how does a person build a good credit report? According to the FTC, these are the best ways for a young person or an individual who has never utilized credit to build a credit report from the ground up:

- Apply for a credit card through a local store. Local stores are more likely to extend credit to people without an established credit history.

- Apply for a secured credit card. By borrowing against your own money, creditors find this to be far less risky.

- Ask someone with a good credit history to co-sign on a loan or a credit card application. By co-signing, the person is agreeing to pay back the loan if you don’t.

Next week I’ll explain the criteria that make up a “good” credit report and will point out ways to help improve credit as well as how to repair incorrect data and remove inaccurate data.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

The Importance of Credit and the Role it Plays in Mortgage Qualifying- Part I

2009-04-03T11:25:00.005-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

As we’ve all come to know in the mortgage business, credit plays one of the most important roles in borrower qualifying. The most important and crucial component of a mortgage application has become the credit history and fico scores associated with each borrower’s credit profile. If a borrower’s credit history reflects periods of late payments, collections, judgments, charge-offs and low fico scores, our ability to approve them for home purchase is greatly reduced.

Therefore, it becomes even more important that WE are educated about credit and the important role it plays for our borrowers. Our knowledge can be passed on to help potential borrowers become solid customers and future homeowners. In the following weeks, I will pass on the knowledge I have acquired over the years in hopes it will help educate YOU so you can educate your potential borrowers. Credit education is valuable for everyone and everyone can benefit from it.

Let’s take a look at the three major players in the role of credit reporting. There are three major credit repositories throughout the world that employers, banks, lenders, financial institutions, and credit card companies report their consumer data to- TransUnion, Equifax and Experian. It is the date these three repositories receive that creates every individual person’s credit profile and credit report. Based on the data received, each of the repositories then renders an individual fico score. We’ll get to more information on fico scores later. First, let’s take a closer look at these major repositories.

TransUnion

TransUnion, headquarted in Chicago, was founded in 1968 and maintains credit histories on approximately 500 million consumers throughout 25 countries on 5 continents.

Equifax

Equifax employs approximately 7000 people in 15 countries. You may be surprised to learn of its largest business unit which we access regularly in our daily mortgage processing routines. TALX Corporation is behind the Work Number of Everyone which provides us with electronic employment and income verifications for many major businesses throughout the United States.

Experian

Experian supports clients in more than 65 countries and employs more than 15,500 employees in 38 countries. The corporate headquarters are in Dublin, Ireland with operations headquarters in California and the United Kingdom and it maintains credit information for approximately 215 million consumers in the United States alone.

Next week we’ll take a look at the standard components of an individual credit report and review who reports the information that makes up each individual’s credit report.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)