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.

Quality Assurance throughout the Loan Process

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

This week’s topic came easy to me because of a variety of projects I am working on that have me diving into quality assurance and quality control-related subjects.

It’s not hard to conclude that in today’s market, lenders have tightened their lending guidelines along with their quality control measures to better protect against the risks and losses associated with mortgage fraud and loan defaults. The industry simply cannot afford oversights and mistakes at this point in time when the economy is surely suffering because of the high foreclosure rates and fraud convictions across the country.

It’s important that all parties involved in each loan transaction fully understand what quality assurance measures are, what quality control means and why these subjects are so important today. We each have a responsibility to be on the watch for fraud and questionable business practices. (When I refer to “each of us” I mean the consumer, originator, processor, underwriter, closer and the funder involved with each loan).

First, for the consumers:

• HUD’s Don’t Be a Victim of Loan Fraud website at http://www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm

• HUD’s Don’t be a Victim of Loan Fraud Fact Sheet at http://www.hud.gov/offices/hsg/sfh/buying/loanfraudfaq.pdf which is nicely formatted and perfect for color printing

• HUD’s Don’t be a Victim of Loan Fraud Brochure which is perfect for color print and distribution at http://www.hud.gov/offices/hsg/sfh/buying/loanfraudbroc.pdf

For those of us involved with originating, processing and underwriting, we can get a much clearer picture of how mortgage fraud is affecting our industry by referring to the FBI’s Mortgage Fraud web page at http://www.fbi.gov/hq/mortgage_fraud.htm. There you’ll find the various fraud schemes defined, articles explaining recent fraud convictions and arrests, facts, figures and reports. If your employment position involves any contact with the loan file, YOU need to spend some time on this website. It never ceases to blow my mind what people out there are doing and getting away with. At least until they’re caught.

There are some great tools out there that can be utilized at various stages of the loan process. I highly recommend taking advantage of them. Not because you’re required to but because your efforts just might turn up a red flag on a file that involves mortgage fraud. Something found by using one of these simple validation or verification tactics could very well lead to a future mortgage fraud conviction.

To Confirm the Existence of a Business, Such as an Employer or Place of Employment

Use 411.com, yellowbook.com, or any other reputable online directory to search for a listing by business name, business type, reverse phone number, or reverse address. These resources should be utilized for every single verbal VOE used for documentation in your loan files. Provide a printout of the web page to demonstrate you’ve verified the business exists. What to do if you don’t find the business listed or find that the phone number of address doesn’t match the information on the loan application? Immediately bring the discrepancy to the attention of your supervisor and ask for further instructions.

Another way to validate the existence of a business is to check the state licensing website for the business in question. If the business requires licensing, you can most likely find a search option at the state licensing website. You should also be able to search for corporations for most states.

I’ve also tracked down business information on occasion by simply entering the business name as a Google search and tracking down the business website.

Consult www.theworknumber.com to determine if the business reports to theworknumber. If you find the business name listed, simply request verification from the website.

You can also utilize Google Maps to determine if a business exists and precisely where it exists. This option is helpful to determine the reasonable commuting distance between the borrower’s residence and place of employment. Go to www.maps.google.com, enter the business name, business address or business type and click on “Find Businesses.” The map will populate reflecting the location on an area map.

To Validate the Reasonableness of Earnings/Income

You have options to verify average wages by area, occupation and/or industry at The Department of Labor website at http://www.bls.gov/bls/blswage.htm

Seek out employment projections and statistics by occupation or industry at http://www.bls.gov/emp/home.htm

Verify employment trends by occupation, training and earnings by going to http://www.bls.gov

To Validate and Confirm Identity

Check the SSN deceased list at http://ssdi.rootsweb.ancestry.com. Simply enter the social security number in question and click Submit. Refer to http://helpdesk.rootsweb.com/ssdi for a tutorial on the website.

Consult with your credit bureau(s) to learn about measures that can be taken and incorporated into your credit report requests. Most offer a range of additional products that can be utilized to identity possible identity theft and fraud.

To validate Occupancy

Use 411.com, yellowbook.com, or any other reputable online directory to search for a listing by borrower name, reverse phone number, or reverse address.

Obtain tax transcripts for the IRS using IRS form 4506-t. There are many vendors out there who offer their services which can help you obtain copies of the IRS files tax returns in transcript format. Those returns will identify the property address the borrower has filed under and any additional properties claimed as investment properties on schedule E.

To Validate Property Value, Neighborhood Trends

Refer to www.zillow.com where you can search for current listings and recent sales. You’ll get the most effective “hit” list by entering a zip code.

www.realtor.com will help you find estimated home values, area listings etc.

You might also check with your lenders. Many of them are now offering AVM services right at their websites!

It’s always a good idea to build a relationship with a top-quality vendor who can assist you with quality assurance and AVM products and processes as well. A few to consider include Interthinx, CoreLogic, and Rapid Reporting.

Take a hard look at the measures your organization is taking in regards to quality assurance and risk control measures. There’s never been a better time to add some of these simple tactics into your processing routines. Something this simple could very well stop something fraudulent and far more complicated.

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.

Important VA Resources

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

As promised from last week’s article, here is my updated list of important VA websites and resources that I like to keep close at hand in summarized format so that I have them easily accessible at all times.

All of these websites should be saved to your favorites and this list should be printed and posted to your bulletin board, added to your desktop processing binder or electronic storage system.

In addition, be sure to view VA’s prior broadcasts which are recorded for viewing long after the live sessions are held. These recordings cover a variety of subjects that are helpful to VA originating and processing. Go to http://www.homeloans.va.gov/broadcast08.htm to view by subject.

VA LENDERS, SERVICERS AND REAL ESTATE PROFESSIONALS PAGE:
http://www.homeloans.va.gov/ls.htm

VA Eligibility Rules re: how to determine if veteran is eligible for home loan program
http://www.homeloans.va.gov/eligibility.htm

VA Portal re: requesting VA case assignments and appraisals, retrieving completed VA appraisals, ordering electronic Certificate of Eligibility
https://vip.vba.va.gov/portal/VBAH/Home

Send an email the Portal Help Desk at vip@vba.va.gov

VA Forms Search Engine re: looking for a specific VA form
http://www.va.gov/vaforms/

VA Regional Loan Center Info re: current contact information for all VA regional loan centers http://www.homeloans.va.gov/rlcweb.htm for the most current listing

ATLANTA RLC- GA, NC, SC, TN
Website: http://www.vba.va.gov/ro/atlanta/rlc/index.htm

Loan Production Department:
Email: ATLLOANPROD@va.gov
Ph: 888-768-2132
General Fax: 404-929-5401
Fax for VA 26-8937: 404-929-5558

Construction & Valuation Department:
Email: 316LGYCNV@va.gov
Ph: 888-768-2132
Fax: 404-929-5392

Appraisal Cancellations:
Email: 16/correspondence@va.gov
Ph: 888-768-2132 x3

NO TRAINING PROVIDED

CLEVELAND RLC- DE, IN, MI, NJ, OH, PA
Website: http://www.vba.va.gov/ro/cleveland/index1.htm

Loan Production Department:
Email: vahomesite@va.gov
Ph: 800-729-5772
Fax: 216-522-3101

Training Page: http://www.vba.va.gov/ro/cleveland/training.htm
Cleveland RLC Lender Training Guide updated January 2008: http://www.vba.va.gov/ro/cleveland/Training_Guide_Cleveland_January_2008.pdf
VA Training Request form (for groups of 25 or more):
http://www.vba.va.gov/ro/cleveland/VA_Loan_Training.pdf

Lenders FAQ’s: http://www.vba.va.gov/ro/cleveland/FAQs_Lenders.htm

DENVER RLC – AK, CO, ID, MT, OR, UT, WA, WY
Website: http://www.vba.va.gov/ro/denver/loan/lgy.htm

Loan Production Department:
Ph: 888-349-7541 option 2
Fax: 303-914-5618

VA Home Loan Program Pamphlets: http://www.homeloans.va.gov/pamphlet.htm

First Time Homebuyer Information:
https://www.ginniemae.gov

PowerPoint Training Information:
- Occupancy
- Maximum Loan & Guaranty
- Power of Attorney
- Energy Efficient Mortgages
- Military Pay
- Ordering a Certificate of Eligibility Online
- Prior Approval Loan Procedures

HOUSTON RLC- TX, LA, AR, OK
Website: http://www.vba.va.gov/ro/houston/lgy/home.html

Loan Production Department:
Email: houstonlgy@va.gov
Ph: 888-232-2571 option 1
Fax: 713-383-1845

Release of Liability/Restore Entitlement Department:
Regina.Caldwell@va.gov
Ph: 888-232-2571 x1737

VA Houston Lender Training Guide: http://www.vba.va.gov/ro/houston/lgy/Documents/Lender%20Training%20Guide%20Jan%202008.pdf

VA Training Request Flyer:
http://www.vba.va.gov/ro/houston/lgy/Documents/Outreach.pdf

Houston RLC VA forms:
http://www.vba.va.gov/ro/houston/lgy/forms.html

MANCHESTER RLC- CT, MA, ME, NH, NY, RI, VT
Website: http://www.vba.va.gov/ro/manchester/lgymain/loans.html

Loan Production Department:
Email: NH_LP@vba.va.gov
Ph: 800-827-6311 option 7
Fax: 603-222-5862

Appraisal & Valuation Department:
Email: nh_appr@vba.va.gov
Ph: 800-827-6311 option 6

Manchester RLC Lender Training Guide October 2006: http://www.vba.va.gov/ro/manchester/lgymain/lp/2006%20Training%20Guide%20Web%20Version.doc

Manchester RLC Realtor Training Guide October 2006:
http://www.vba.va.gov/ro/manchester/lgymain/lp/2006%20realtor%20guide.doc

Lender Live Training Opportunities:
http://www.vba.va.gov/ro/manchester/lgymain/lp/loanprocessing.htm

2008 Training Registration form:
http://www.vba.va.gov/ro/manchester/lgymain/lp/registration%20form.doc
Email Training Suggestions and Requests to: NH_LP@vba.va.gov

Local Release & Bulletins:
http://www.vba.va.gov/ro/manchester/lgymain/localreleases.htm

PHOENIX RLC- AZ, CA, NM, NV
Website: http://www.vba.va.gov/ro/phoenixlgy/
Subscribe to Phoenix RLC mailing list:
http://mailman.listserve.com/listmanager/listinfo/phoenixrlc

Loan Production Department:
Email: LPGC.VBAPHO@va.gov
Ph: 888-869-0194
Fax: 602-627-3221

Construction & Valuation Department:
Email: CVGC.VBAPHO@va.gov
Ph: 888-869-0194
Fax: 602-627-3222

Phoenix RLC Training Page: http://www.vba.va.gov/ro/phoenixlgy/VA%20Training.htm

Phoenix RLC Bulletins:
http://www.vba.va.gov/ro/phoenixlgy/RLC%20Bulletins.htm

Phoenix RLC “What’s New?”
http://www.vba.va.gov/ro/phoenixlgy/VA%20Whats%20New.htm

ROANOKE RLC- District of Columbia, KY, MD, VA, WV
Website: http://www.vba.va.gov/ro/roanoke/rlc

Loan Production Department:
Email: Roanoke.lp@vba.va.gov
Ph: 800-933-5499

ST. PAUL RLC- IL, IA, KS, MN, MO, NE, ND, SD, WI
Website: http://www.vba.va.gov/ro/central/stpau/pages/homeloans.html

Loan Production Department:
Email: RLC335@vba.va.gov
Ph: 800-827-0611 x66051
Fax for VA 26-8937 Verifications: 612-970-5635

Construction & Valuation Department:
Email: vaappraisal.stpaul@vba.va.gov
Ph: 800-827-0611 x-66050
Fax: 612-970-5499

St. Paul Contact Page: http://www.vba.va.gov/ro/central/stpau/Lenders/roster2.html

St. Paul Lenders Training Guide November 2007: http://www.vba.va.gov/ro/central/stpau/PDFs/November%2007%20Complete%20Guide.pdf
Email Request for VA Training: RLCTT@va.gov

St. Paul RLC Memos & Bulletins: http://www.vba.va.gov/ro/central/stpau/Pages/Memos07.html

Link to “What’s New” Page:
http://www.vba.va.gov/ro/central/stpau/Lenders/whatsnew.html

ST. PETERSBURG RLC- AL, FL, MS, Puerto Rico, US Virgin Islands Website: http://www.vba.va.gov/ro/south/spete/rlc/index.htm

Subscribe to quarterly RLC newsletter: http://www.vba.va.gov/ro/south/spete/rlc/index.htm

Loan Production Department:
Email: FL/HOMELOAN@vba.va.gov
Ph: 888-611-5916
Fax: 727-319-7763

Appraisals & Valuation Department:
Email: fl/homeloan@vba.va.gov
Ph: 888-611-5916
Fax: 727-319-7762

St. Pete 2007 Construction & Valuation Training Guide:
http://www.vba.va.gov/ro/south/spete/rlc/training/2007_C-V_training_Guide.pdf
Email Training Requests to: LENDERTRAINING@VBA.VA.GOV

VA FAQs re: Home Loan Program (by category) http://www.homeloans.va.gov/lgyfaq.htm

VA Training Website: http://www.homeloans.va.gov/broadcast.htm

VA Lenders Handbook: http://www.warms.vba.va.gov/pam26_7.html

DU Guide for VA Loans: https://www.efanniemae.com/sf/guides/duguides/pdf/vaduug.pdf

VA Special Adapted Housing: http://www.homeloans.va.gov/sah.htm

VA Condo/PUD/Builder search re: approved condominium and PUD projects, approved builders

http://condopudbuilder.vba.va.gov/2.2/frames.html

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.