A while back Lenn Harley posted a fantastic post on an opportunity she had to meet with an underwriter face-to-face. It was a great article and Lenn's insight and thought provoking questions prompted me to contact her to see if she would allow me to write about a specific portion of her blog post. First, I would like thank Lenn for her kindness and generosity in talking with me at great length. Her wealth and depth of real estate knowledge is considerable and her willingness to share is immense.
I was particularly taken with her series of comments about the relationship between the underwriter and various entities involved in the process of getting a loan through the thing called "underwriting". The following is Lenn's list:
"WHAT SHALL I ASK? The meeting had no itinerary, so I decided to simply prepare a list of questions covering the relationship between the
- underwriter and the loan officer
- underwriter and the investors
- underwriter and the loan types offered
- underwriter and MI companies
- underwriter and LTV, income/debt ratios
- underwriter and AMCs
- underwriter and appraisal problems/reviews
- underwriter and title companies
- underwriter and funding resources
- underwriter and contract dates/contingencies "
Pulling on my experience in wholesale lending and the graciousness of the talented underwriters I have had the pleasure of working with throughout the years, I wanted to dissect the various relationship components as a way of "pulling back the curtain" in the finance process. In order to address them thoroughly I am going to segment these posts into various "Parts"
Part 1: The Underwriter and the Loan Officer
I recently wrote a blog post "Nanny nanny boo boo....The Underwriter does not like you!" that addresses this issue specifically, Briefly, the "relationship" between the underwriter is based upon the quality of workmanship evident in the loan package. Underwriting is strenuous and stressful...their job is on the line with every signature and they are also under a lot of pressure to "close" loans. Think of the proverbial "Catch 22"....the lender needs funded loans to stay in business, but doesn't want to have any loans default. The firm the loan officer works for (as well as the loan officer) is "underwritten" with each loan submission:
Let's start with the loan package itself. Is it complete...all documents and all pages submitted in the correct order? Are the copies legible? Has the loan officer/processor followed the lender's submission standards and stacking order? Has the loan officer read the guidelines to confirm the file meets the minimum standards for the specific mortgage product? Has the file been delivered in a timely manner to ensure it can progress through the system in an orderly and timely manner? Is the loan officer only sending crisis and/or rush files?
The loan package exemplifies the loan officer's knowledge, as well as the respect for the underwriter's time and obligations. More often than not, a file is suspended or declined based entirely on the actions (or lack of action) of the loan officer/processor.
**Let me digress a moment to state that more than a few loan officers have been ‘thrown under the bus" by lousy processing. And, many a good loan officer has left a company because the lack of quality processing cost them business and additional stress. Most good and talented loan officers choose or stay with a company because of the processing, not the rate sheet!
Now, consider the loan officer and the firm that he/she works for: This area is almost 100% professional reputation and experience. How long have they been submitting loans/files to the underwriter? How many files have been submitted in the past month, quarter, year? How many of the files that were submitted were: Approved? Declined? Suspended? A good loan officer at a poor brokerage (and vice versa) can be tainted by the actions of the other. Has the broker ever had a "first payment default" on ANY file they have submitted in the past? (NOTE: This is the "kiss of death" for any investor or lender.......the broker would likely be put on notice for a buy back of the loan).
Ask your loan officer about their relationship with the underwriter. Do they know them? (by name, reputation, experience)? Do they respect underwriters in general? Beware the "all underwriter's are tough, bad, etc....you are ultimately working with someone who like to play the "blame game".
The "SECRET": Your loan officer has little prayer of getting an exception or a rush if they are not "known" to the underwriter. More than once, my underwriter's (both retail and wholesale) have bailed my tail out of the fire on a file. They are, and have always been, my "Best Friend's" in lending.
Deborah Garvin
loanmonarch@yahoo.com
(619) 787-8212
"contact me when you need knowledge, experience and ethics in the financing process."
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