Providing A Service

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we know, the mortgage lending industry is a service related industry. Ultimately, we as mortgage professionals profit when the service we provide exceeds that of our peers. Outstanding service determines both the quality and quantity of business that we generate. Now the question: What exactly constitutes outstanding service?

Very recently my supervisor met with our staff and insisted that the quality of service that we were providing our broker clients was less than excellent; in fact, he thought it was less than satisfactory. In his opinion, service with a smile was not enough to maintain our current business partner base as well as expand it. Of course we all think he is not only unreasonable but way off base, after all, we service our business partners very well as far as we are concerned and there lies the problem. Defining quality service is very subjective and defined completely by opinion; there is no black and white rule.

Last week I was on vacation. I spent the week with my family in Ocean City, Maryland, a nice little beach resort complete with boardwalk and the Pacific Ocean. As part of the tradition we always go to the boardwalk first so the kids can get on the rides, eat Thrashers French fries and buy junk trinkets and true to tradition, that’s where our vacation began.

During the week we spend there each year, I always purchase beach shots of all my children, the OC beach photographers walk the beach all day each day and take the pictures which usually end of in scopes or on key chains and on my desk of course. This year was no different, I fully anticipated having those pictures taken, however, when I was on the boardwalk I passed an old time photo studio and decided it would be fun to have a photo of all of them dressed up as gangsters or something.

So we decided that before we left the boardwalk that afternoon we would have that photo taken as well. Well as you can imagine, the kids are teenagers now and have a tendency to wander off and by the end of the afternoon when it was time to have the picture taken I had collected all but one of them, my son, who decided to do the Zipper one more time. The rest of the kids and I were at the photo studio and my son called from his cell phone saying that he was on his way, and would be there in just a few minutes.

The rest of the kids got dressed in the gangster get ups and when my son arrived, the photographer told me that it was too late to include him because he had another group waiting. He had not yet taken the photograph and quite frankly my youngest son was still getting his costume on. The photographer said that didn’t matter, he wasn’t waiting and regardless of if I wanted the photo or not, I still had to pay for it because he had already spent enough time getting the others ready. As I stared at him in disbelief, he took the photo and told me that the photo would be $39.99. I was mad. The service was horrible and that was just the beginning.

The next night we ended up at a restaurant, waiting for ½ hour for someone to come over and at least take a drink order from us. When the waitress walked up to the table next to us and asked if they needed anything and then walked away again without taking our order we left thinking the service was horrible. We actually ended up at the restaurant next door to the one we left, they seated us right away, we had beers in 3 minutes flat and the staff was a blast, friendly and courteous. The food was excellent and due to the great service they provided we ended up not only having a great time but very appreciative of how welcome they made us feel.

When I left the restaurant I began to think about the conference room conversation the week before with old Atilla and decided he was right. Adequate is simply not enough because my definition of adequate may not be the same as that of my brokers or borrowers.

Ok, so what is point am I trying to make? Underwriting is pretty much the end all - catch all of every mortgage operation. Without us loans do not get approved and if they don’t get approved they don’t close. If they don’t close, the company makes no money; the borrowers do not own homes and so on and so forth. It’s sometimes hard for underwriters to identify themselves with the individuals in the company that are on the front line of customer service and by this I mean the originators and processors.

After all they are the people that talk to the clients, the real estate agents and business partners so therefore should be the people responsible for making sure that the company image stays untarnished right? Wrong. Without the support of the underwriting staff, quick and expeditious turn times and availability, the front room support staff cannot provide any type of service let alone quality service. We as underwriters need to make ourselves available to our support staff and provide to them the kind of quality service that we ourselves would expect if we were apply for a mortgage or purchasing any other type of service. We need to muster all of the self control we have (YES, sometimes it takes that) to answer all of the questions quickly and accurately and get the loans turned around as fast as possible so that the guys and girls on the front lines can provide service above and beyond that of their peers and then we all win.

Now with that said, if anyone will spending time on the east coast this summer and want some outstanding steamed crabs done only like they do it on the Chesapeake Bay, try Outriggers in Fenwick Island DE, they rock!

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Assessing Financial Behavior

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor
(previously posted January 23, 2008)

Over the course of the most recent few years, underwriting guidelines have steered away from the more traditional assessment of financial risk to the product matrix. If the loan application met all the criteria as set forth in product matrix then the case was approvable for the most part. It seemed that allowing higher debt ratio’s if the loan to value was low enough off set the financial risk to the lender. Additionally, the ever-rapid appreciation in the market of the last years seemed to be diminishing the overall assessment of credit risk where the mortgage applicant was concerned.

As underwriters, it appears that we were given the opportunity to close our eyes to our fiduciary responsibility to both the mortgage applicant as well as the lending institutions that employ us as long as the loan fit the product matrix or if the case was accepted by an Automated Underwriting System. Looking back, this was probably not the most prudent way to underwrite mortgage applications.

Considering the current market, it is safe to assume that the days of the product matrix is a thing of the past. As mortgage professionals we are seeing a return to the days of traditional lending practices even if enhanced with additional tools such as Automated Underwriting Systems as well as credit scores and AVM’s. But it is important that we remember that these items are just tools and that as underwriters it is important to assess overall credit risk of the applicant to not only protect the institutions that we are employed by, but to safeguard American homebuyers ensuring that the homes they are purchasing are affordable to them.

The current credit crunch, as it has recently been defined, makes this a more daunting task for mortgage professionals. However, several programs are still available for the average American home purchaser. FNMA and FHLMC still provide programs that assist first time homebuyers as well as low to moderate home purchasers programs for which to purchase or refinance affordable housing. FHA was designed to assist the low to moderate income borrower not to mention other underserved populations. These programs in themselves serve a great number of Americans who in the most recent years were placed in subprime programs that were less than affordable and contributed to the growing number of foreclosures as well as overall market instability. But underwriting these borrowers can be a little more complicated based on manual underwriting practices and the inability of an underwriter to look at a product matrix to determine if the loan is approvable.

This is what assessing overall financial behavior is about. For the most part, it is easy to approve a loan that has been accepted by an automated underwriting system. However, it isn’t very easy approving the one that hasn’t. But this in itself does not deem the borrower unworthy of a mortgage. It is important to assess overall financial risk of the case but just as important to assess the financial behavior of the borrower. In some cases, it may appear that a particular borrower is a less then fair credit risk however further research can demonstrate that a borrower has a very acceptable credit explanation and an overall solid financial reputation. Late payments on a borrowers credit report does not in itself demonstrate an unacceptable risk. Borrowers who have demonstrated an acceptable credit reputation but have incurred significant consumer debt while saving little or no money for future unacceptable expenditures can present a larger risk the borrower who lives modestly while saving a small portion of their income, even if they have made some late payments due to extenuating circumstances.

From an underwriting standpoint, it is important that we evaluate all aspects of the borrowers’ financial behavior. Reviewing a borrowers’ bank statements for regular monthly expenditures is a good way to determine what a borrower does with their money. For instance, a borrower who has refinanced, receiving cash out 3 times in the most recent 24 months presents a more significant financial risk than a borrower who has not but has made 1 late payment on their mortgage. The borrower with multiple refinances may be living off of the equity in their home vs. managing their finances in a manner that allows them to, for the most part, pay their debts timely, based on their regular monthly income.

Feeling like a financial psychologist yet? Great, because you are. It might not be as cut and dry as it was in the past but it is more interesting. Contrary to what we as mortgage professionals are assuming about the current market, there still are a lot of worthy borrowers out there and as mortgage professionals we will continue to sound financing options for them. All we need to do is give it some thought.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

The VA Home Loan Program

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

This year has been a big year for the FHA home loan program. Not only have we seen a considerable rise of FHA mortgage originations, but we have also seen several major changes to the program itself. From increases in the statutory loan limits under stimulus, the abolition of the MCAW to the current reforms which have not yet been signed into law, FHA has come into the 21st century.

No longer alternative to sub-prime, FHA is again a major player in the mortgage industry very unlike its sister program, The VA Home Loan Mortgage Program. That’s right, the other government program.

Now as things go, a government loan is a government loan and yes VA just like FHA provides mortgage insurance for loans granted under the provisions of the VA Home Loan program, it is just simply designated for eligible veterans. Several years ago it too was a player where available mortgage programs were concerned but it is only recently that we are too seeing its revival.

With the elections ahead of us and the looming Iraq issue, we are beginning to see a rise in eligible veterans and they want to use their VA benefits. The VA Home Loan Mortgage Guarantee program is the most efficient way to do this. Providing mortgage insurance for eligible veterans while guaranteeing loans with 100% financing is nothing to sneeze at. Currently this is the 100% program available. Additionally, when you consider that there is no monthly MI on this program and flexible credit guidelines, well its actually a very beneficial mortgage program to offer.

The program works like this. Any eligible veteran may apply for a mortgage under the VA Home Loan Mortgage Guarantee program, which will provide for 100% financing, unlimited seller paid closing costs where non-recurring closing costs are concerned and allow DTI up to 41%. There are processing and underwriting difference that must be followed such as determining the balance available for family support is sufficient to meet VA guidelines but overall the program itself is pretty easy to manage. Credit guidelines also allow for more flexibility than FHA or Conventional.

As we are all aware, the average military homebuyer faces additional challenges that individuals in the civilian world do not face, particularly when they are deployed. These factors are usually taken into consideration when underwriting hence forth, no minimum credit score requirements under the program and for the most part with existing investors which are purchasing these mortgages. Programs are available for purchase, refinance, cash out refinance and EEM mortgage types so you can do pretty much the same things with them as you can the FHA mortgage types.

Now with that said, I will advise for all mortgage professionals to look to the future and hopefully the safe return of all of our military service personal which will most surely result in an increase in demand for the VA Home Loan. The current market supports the need for the program so I suggest checking into it. For those of you interested in more information, you can access VA’s website at www.va.gov.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.