Part III (of 3): 1003 - Making Sense of the Package.

Written by:
Angelina Johnson,
NAMP Volunteer Writer

Part III (of 3):1003 - Making sense of the package.

At first glance, a poorly packaged loan missing some of the information may end up being scrutinized more. When an underwriter is not able to make heads and tails of a loan the first time he sees it, the chances of getting a clean approval lowers. We also have to remember that the loan will later be sold in the secondary market in which the file maybe underwritten again.

By experience, most of the non-performing loans encountered problems during initial underwriting. As a loan processor, it is our job to process loans as though we are underwriting it. Plug holes that may be questionned using Letter of Explanations (L.O.E.) or other means. A strong file minimizes unnecessary wasted time and maximizes profitability so package your loan right the first time. If you need to wait a few days to back things up, then do so. If unavoidable due to time constraint, then make sure to indicate an item is ' to follow'.
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About the Writer. As one of NAMP's volunteer writers, Angelina Johnson is currently a NAMP member in good standing and has applied for her CMLP certification with NAMP. Feel free to email Angelina at: angelina@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

Part II (of 3): 1003 - Deal Maker or Breaker.

Written by:
Angelina Johnson,
NAMP Volunteer Writer

Part II (of 3): 1003 - Deal Maker or Breaker.

What underwriters look for. Items that may seem 'just information' maybe crucial to an underwriter. The following are examples of such:

-age

-# of dependents

-residence history

-monthly income

-liquid assets

-current and proposed monthly payment

If a 1003 is missing one or two information, the scenario of the file loses credibility. A stated income file, for example, the underwriter looks at the borrower's age then determine if it make sense for him to be making the amount of income stated in his line of work. If it is questionable, they look further and see how much assets he has. General rule of thumb, underwriters like to see assets being 3x of income ( e.g. for a 6,000 per month income, an 18,000 liquid asset will make sense). Note: assets may include CDs and money market, stocks, bonds, 401K, etc.

# of dependents. This info is used to determine if the # of people intending to occupy the subject can be sustained by its size. In saying so, if a borrower has 3 dependents and are purchasing an owner occupied 2 bedroom 1,000sqft condo, it is conceivable to think the scenario make sense for a first time homebuyer but not someone with 2 or more properties or if the subject is in a prime neighborhood with all the available amenities and creature comforts.

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About the Writer. As one of NAMP's volunteer writers, Angelina Johnson is currently a NAMP member in good standing and has applied for her CMLP status with NAMP. Email: angelina@mortgageprocessor.org