Find Favor With Your Underwriters & Loan Officers.
Written by: John HoxseyCertified Master Loan Processor (CMLP)
The road to establishing a great rapport with your loan officers can be tricky – but the underwriting process does not need to be.
The key to quick turn times and minimal conditions is scrubbing the file properly and turning in a full and complete file (Full and complete for underwriting means all documents pertinent to the loan as well as a complete 1003 minus the title work - I call this the basics). I take the time up front to pre-underwrite the file before I turn it in to underwriting.
This is a difficult concept for many brokers to wrap their heads around. The typical loan officer wants to rush the file through processing, push the underwriter, waive as many stips as they can, and go straight to closing. They do not realize that turning in an incomplete file and expecting an underwriter to condition for what is missing will actually slow things down and have a net result of many unnecessary conditions.
Rushing the file in such a way will actually prolong the turn time. Most loan officers simply do not understand the process. This is a common misunderstanding. It is our job to encourage teamwork and a smooth flowing operation. Our responsibility as processors is to turn in a complete file for underwriting, as such; it is the loan officer’s responsibility to turn in a complete file for processing.
Let’s compare two scenarios and their probable timelines. The first scenario will be a file that has been piece-mailed and rushed. The second will be the same file properly scrubbed and pre-underwritten.
Scenario One:
The loan officer turns in a file with LP findings that ask for one pay-stub and a verbal VOE. The 1003 is missing some employment information and the LO expects you to find the missing employment information. The LO claims the borrower is difficult to deal with and deems it would be much easier if you tracked down the information. After carefully examining the file it becomes obvious that there are serious gaping holes in the information that has been gathered. There are missing disclosures, docs are out of date with compliance, some of the borrowers income is part time. Additionally, the borrower needs to use bonus income from their primary job to qualify but the LP findings assumed the borrower made all of their income through one job with a salary. The asset statement the borrower submitted does not show their name or account number as it is a screen print from their online account. There are two 1003’s in the file, each one is signed and each one has different rates and loan amounts. The processing submission form is not filled out so you do not know what is correct and how the file should be submitted. Not to mention the appraisal is not in yet. Is any of this sounding familiar yet? This file is mass hysteria, dogs and cats are living together, the world is in chaos!!!
After much time and research you find out the terms, and notify the LO that you would like to wait until the file is properly completed before you submit. Your loan officer becomes angry and you feel forced into a position of submitting an incomplete file.
The following is what ensues. The file is submitted. Underwriting turn time is 48 hours but it is now the third day and you still have no answer. The underwriter has seen your file but has put it back at the bottom of the pile in disgust and decides to deal with clean full files that have a shot at closing and impacting their bonus.
After making many phone calls you finally receive conditions on the fourth morning. It’s a laundry list. In fact, you have not seen a list this long since your mother sent you shopping for thanksgiving dinner the year all of your extended family came to visit.
Why do you have such a long list of conditions? Since the file was turned in incomplete the underwriter has no way to fill in the blanks and is now concerned that you, the LO, or the borrower may be trying to hide things. In their mind all things must now come into the light in order for them to feel comfortable doing the loan.
Now you have to go back to the loan officer and ask for “the list”. The loan officer does not understand why the underwriter is asking for so many things on such a simple file and is convinced that somehow this is all your fault. It takes the LO a few days to gather the conditions. It has now been over two weeks but you finally have a complete file. The LO for some unknown reason has communicated with the borrower that the loan will be closing tomorrow and expects you to make it happen since he is handing you everything the underwriter asked for (Never mind the fact that it is end of the month and the underwriter’s turn time is 24-48 hours. Also, per the lenders operations guidelines, it is another 24-48 hours to schedule once you have the clear to close)
In the LO’s mind they have fulfilled their obligation and they assume that the underwriter will be handed the conditions on a silver platter with trumpets blaring. It should take all of 5 minutes, in their opinion, for the file to hit your desk and be handed off to an underwriter, who will then expedite the full closing package to the title company thus closing the file. Once again this is a common misunderstanding and it is usually because the LO was never taught how the back end of the loan process actually works. Taking some time to explain the back-end process can go a long way in solidifying the LO / processor relationship.
Since it is processing’s responsibility to make sure the findings match the conditions, you decide to give the file a good once-over to make sure everything is correct. The appraisal has just come in and the property is listed as a PUD. There is now $95 per month in HOA dues that were missed on the initial submission. Also, the income is significantly less now that we have the full picture. With the updated information the loan is no longer getting an approval through the Freddie Mac automated system. You decide to run it through DU. Fortunately it comes back approved. Unfortunately the lender the LO chose only does Freddie loans and they are not giving you an exception. The underwriter denies the loan and you have to submit to another lender.
The good news is that you now have a full package. You submit the loan, receive a few simple stips concerning the mortgagee clause, and turn the file around within a few days to close the loan.
Scenario Two:
The loan officer turns in a file with LP findings that ask for one pay-stub and a verbal VOE. The 1003 is missing some employment information and the LO expects you to play detective and find the missing employment information. You stick to your guns and give the LO the list of needed items and communicate that this loan will not be submitted until you receive said items. Since the LO now realizes the loan will not move forward until you receive a full file, the items appear on your desk in record time. You take everything into account and rerun the findings - It does not get an LP approval, but does qualify through DU. You submit to your favorite Fannie lender.
The lender loves working with you. You have developed a reputation of handing in clean, organized, and complete files. This particular underwriter recognizes your submission, puts your file on top of the stack in anticipation of an easy loan to underwrite. You receive a same day approval with a thank you note attached for the clean and well processed file. The loan closes two days later and you receive your HUD a day in advance. The loan officer loves you and can’t believe how quickly you closed the loan.
Scenario one was a long, drawn out, and frustrating event that took over three weeks and everyone was ready to kill one another at the end. The loan officer did not receive a referral and the borrower told all of their friends what an incompetent company they had just dealt with.
Scenario two took about a week, was easy, and your reputation went up a few points in everyone’s book.
As a contract processor I can pick and choose the clients I work with. Not every processor has that luxury. The processor / loan officer relationship has to be a good fit both ways. But like any relationship it may take some time to develop. The LO has to be able to trust that I will work diligently and do everything in my power to close their loans quickly and efficiently. I also have to be confident that the LO’s will do their part up front and turn in a file that is ready for processing. Keeping things in perspective like this enables me to operate a well oiled machine. I rarely see incomplete files anymore and when I do I choose not to tarnish my reputation by turning them in.
Doing your homework up front, pre-underwriting the file, and holding all parties accountable to the system can and will decrease your turn-times, takes less energy, and enables you to handle much higher volumes.
Remember - Your reputation is your business.
Happy Processing!!!
About the Writer. As one of NAMP's volunteer writers, John Hoxsey is currently a NAMP member in good standing and is a NAMP Certified Master Loan Processor (CMLP). Feel free to email John at: john@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.
The road to establishing a great rapport with your loan officers can be tricky – but the underwriting process does not need to be.
The key to quick turn times and minimal conditions is scrubbing the file properly and turning in a full and complete file (Full and complete for underwriting means all documents pertinent to the loan as well as a complete 1003 minus the title work - I call this the basics). I take the time up front to pre-underwrite the file before I turn it in to underwriting.
This is a difficult concept for many brokers to wrap their heads around. The typical loan officer wants to rush the file through processing, push the underwriter, waive as many stips as they can, and go straight to closing. They do not realize that turning in an incomplete file and expecting an underwriter to condition for what is missing will actually slow things down and have a net result of many unnecessary conditions.
Rushing the file in such a way will actually prolong the turn time. Most loan officers simply do not understand the process. This is a common misunderstanding. It is our job to encourage teamwork and a smooth flowing operation. Our responsibility as processors is to turn in a complete file for underwriting, as such; it is the loan officer’s responsibility to turn in a complete file for processing.
Let’s compare two scenarios and their probable timelines. The first scenario will be a file that has been piece-mailed and rushed. The second will be the same file properly scrubbed and pre-underwritten.
Scenario One:
The loan officer turns in a file with LP findings that ask for one pay-stub and a verbal VOE. The 1003 is missing some employment information and the LO expects you to find the missing employment information. The LO claims the borrower is difficult to deal with and deems it would be much easier if you tracked down the information. After carefully examining the file it becomes obvious that there are serious gaping holes in the information that has been gathered. There are missing disclosures, docs are out of date with compliance, some of the borrowers income is part time. Additionally, the borrower needs to use bonus income from their primary job to qualify but the LP findings assumed the borrower made all of their income through one job with a salary. The asset statement the borrower submitted does not show their name or account number as it is a screen print from their online account. There are two 1003’s in the file, each one is signed and each one has different rates and loan amounts. The processing submission form is not filled out so you do not know what is correct and how the file should be submitted. Not to mention the appraisal is not in yet. Is any of this sounding familiar yet? This file is mass hysteria, dogs and cats are living together, the world is in chaos!!!
After much time and research you find out the terms, and notify the LO that you would like to wait until the file is properly completed before you submit. Your loan officer becomes angry and you feel forced into a position of submitting an incomplete file.
The following is what ensues. The file is submitted. Underwriting turn time is 48 hours but it is now the third day and you still have no answer. The underwriter has seen your file but has put it back at the bottom of the pile in disgust and decides to deal with clean full files that have a shot at closing and impacting their bonus.
After making many phone calls you finally receive conditions on the fourth morning. It’s a laundry list. In fact, you have not seen a list this long since your mother sent you shopping for thanksgiving dinner the year all of your extended family came to visit.
Why do you have such a long list of conditions? Since the file was turned in incomplete the underwriter has no way to fill in the blanks and is now concerned that you, the LO, or the borrower may be trying to hide things. In their mind all things must now come into the light in order for them to feel comfortable doing the loan.
Now you have to go back to the loan officer and ask for “the list”. The loan officer does not understand why the underwriter is asking for so many things on such a simple file and is convinced that somehow this is all your fault. It takes the LO a few days to gather the conditions. It has now been over two weeks but you finally have a complete file. The LO for some unknown reason has communicated with the borrower that the loan will be closing tomorrow and expects you to make it happen since he is handing you everything the underwriter asked for (Never mind the fact that it is end of the month and the underwriter’s turn time is 24-48 hours. Also, per the lenders operations guidelines, it is another 24-48 hours to schedule once you have the clear to close)
In the LO’s mind they have fulfilled their obligation and they assume that the underwriter will be handed the conditions on a silver platter with trumpets blaring. It should take all of 5 minutes, in their opinion, for the file to hit your desk and be handed off to an underwriter, who will then expedite the full closing package to the title company thus closing the file. Once again this is a common misunderstanding and it is usually because the LO was never taught how the back end of the loan process actually works. Taking some time to explain the back-end process can go a long way in solidifying the LO / processor relationship.
Since it is processing’s responsibility to make sure the findings match the conditions, you decide to give the file a good once-over to make sure everything is correct. The appraisal has just come in and the property is listed as a PUD. There is now $95 per month in HOA dues that were missed on the initial submission. Also, the income is significantly less now that we have the full picture. With the updated information the loan is no longer getting an approval through the Freddie Mac automated system. You decide to run it through DU. Fortunately it comes back approved. Unfortunately the lender the LO chose only does Freddie loans and they are not giving you an exception. The underwriter denies the loan and you have to submit to another lender.
The good news is that you now have a full package. You submit the loan, receive a few simple stips concerning the mortgagee clause, and turn the file around within a few days to close the loan.
Scenario Two:
The loan officer turns in a file with LP findings that ask for one pay-stub and a verbal VOE. The 1003 is missing some employment information and the LO expects you to play detective and find the missing employment information. You stick to your guns and give the LO the list of needed items and communicate that this loan will not be submitted until you receive said items. Since the LO now realizes the loan will not move forward until you receive a full file, the items appear on your desk in record time. You take everything into account and rerun the findings - It does not get an LP approval, but does qualify through DU. You submit to your favorite Fannie lender.
The lender loves working with you. You have developed a reputation of handing in clean, organized, and complete files. This particular underwriter recognizes your submission, puts your file on top of the stack in anticipation of an easy loan to underwrite. You receive a same day approval with a thank you note attached for the clean and well processed file. The loan closes two days later and you receive your HUD a day in advance. The loan officer loves you and can’t believe how quickly you closed the loan.
Scenario one was a long, drawn out, and frustrating event that took over three weeks and everyone was ready to kill one another at the end. The loan officer did not receive a referral and the borrower told all of their friends what an incompetent company they had just dealt with.
Scenario two took about a week, was easy, and your reputation went up a few points in everyone’s book.
As a contract processor I can pick and choose the clients I work with. Not every processor has that luxury. The processor / loan officer relationship has to be a good fit both ways. But like any relationship it may take some time to develop. The LO has to be able to trust that I will work diligently and do everything in my power to close their loans quickly and efficiently. I also have to be confident that the LO’s will do their part up front and turn in a file that is ready for processing. Keeping things in perspective like this enables me to operate a well oiled machine. I rarely see incomplete files anymore and when I do I choose not to tarnish my reputation by turning them in.
Doing your homework up front, pre-underwriting the file, and holding all parties accountable to the system can and will decrease your turn-times, takes less energy, and enables you to handle much higher volumes.
Remember - Your reputation is your business.
Happy Processing!!!
About the Writer. As one of NAMP's volunteer writers, John Hoxsey is currently a NAMP member in good standing and is a NAMP Certified Master Loan Processor (CMLP). Feel free to email John at: john@mortgageprocessor.org. Or, if you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.
posted by Editor in Chief at 10:50 AM
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