Don’t Forget About Conventional Lending

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

This past week the top processor in our company came to me because she needed to vent. She was extremely frustrated because she received a file from an originator that was a complete disaster. She had to fix it all up, run it through automated and clean up the mess. But the most concerning part to me was what she said next. The file had been turned over to processing as an FHA but she said she ran the file conventional through Desktop Originator and it came back approve/eligible the first time through. The problem was that the originator was hell-bent on it going FHA. Why? Well why do you think? More money for the originator.

As much as I am pro-FHA, I never like to see or hear of an originator placing borrowers in an FHA loan when they can be approved conventionally. It’s not in the best interest of the borrower. FHA charges the borrower both an up-front mortgage premium that gets financed into the loan and also charges the borrower a monthly mortgage insurance premium. Those two premium requirements add to the monthly payments and make them higher than a conventional loan with MI in most cases.

When an originator starts putting his own financial greed before the financial needs and concerns of the borrower, it’s time he move on down a different career path. Nothing gets me more fired up than when people in our business forget why we’re all here in the first place. We’re here to service the borrowers. They put their trust in us to help them with their financial choices and it’s our obligation to do our homework and make sure we are choosing the very best option possible for their mortgage needs.

I’ll be honest with you. With so many program and guideline changes in the past six months, I haven’t even paid attention to conventional products myself. There have been days when I’ve thought that even wonder-woman wouldn’t have had a chance in hell of keeping up with all the lender bulletins pounding into my in-box each day. It’s been a chore just keeping up with HUD’s activity much less all of the Fannie and Freddie changes. But let’s no forget that the conventional loan options are still there because if there are options aside from FHA for the borrower, it’s worth our time to research them.

Fannie and Freddie both provide some great product training and it wouldn’t hurt many of us to check in for refresher sessions. These are also great for new originators and processors as well.

For Fannie Mae product training, refer to https://www.efanniemae.com/lc/mtgproducts/index.jsp where you’ll find a list of convenient recorded product trainings.

For Fannie Mae Underwriting-related product training which is great for processors, refer to https://www.efanniemae.com/lc/ou/websem/index.jsp where you’ll the “Basics of Underwriting Series” which includes convenient recorded sessions on analyzing income, analyzing assets and liabilities, analyzing credit and self-employed borrowers as well as sessions regarding manufactured housing and lending for minority borrowers.

You’ll find additional Fannie Mae sessions at https://www.efanniemae.com/lc/ou/websem/index.jsp#additional which includes training topics like appraising rural properties, guidelines for condos, coops and PUDs, underwriting non-U.S. citizen borrowers, and jumbo conforming mortgages.

Refer to https://www.efanniemae.com/lc/technology/du/ for desktop underwriting training and don’t forget to bookmark https://www.efanniemae.com/sf/guides/duguides/
Which is where you will find all of the DU Guides.

Lastly for Fannie Mae, be sure to bookmark http://www.allregs.com/efnma/ which is where you’ll find the Selling Guide containing all of FNMA’s guidelines.

Freddie Mac also provides a variety of convenient training options and some great reference guides and tools. Visit Freddie Mac’s Learning Center at http://www.freddiemac.com/learn/ to check out all the material.

Refer to Freddie’s Loan Prospector website at http://www.loanprospector.com/

For LP training sessions and material and be sure to bookmark http://www.allregs.com/tpl/Main.aspx which is where you’ll find Freddie’s Seller Guide.

Stay tuned next week when I will provide some great training options with the MI companies and some of my best online training discoveries and resources for conventional lending.

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.