The Little Things that Make a BIG Difference

Written By: Stacey Sprain

Rushing when assembling our loan files in addition to rushing as we submit them to underwriting is quite common these days with the major decline in interest rates but it’s important we don’t overlook the little details of importance that can lead to stupid mistakes, unnecessary conditions and cost us even more valuable time in the overall loan process.

Following is a list of tips based on the most commonly reported deficiencies from underwriters and post closers in these busy times:

Deficiency -

Illegible copies

Processing/Underwriting Tip

Make sure that copies of documentation are made neatly so that the copy is likely to be legible when imaged a number of additional times throughout the loan process. Sometimes this means darkening, enlarging or recopying the documents. Be sure that all copies face one mutual direction so that the file is much easier for the next person to sort through as needed.

Deficiency -

Missing Pages

Processing/Underwriting Tip

Make sure all documents that commonly include multiple pages are copied or imaged with all pages that are referenced. If a bank statement references 1 of 8 pages, be sure your end copy includes all 8 pages.

Make sure tax returns are complete with all referenced schedules included.

Make sure all pages of appraisals, second appraisals, review appraisals, update appraisals and inspections are included in the final copy.

Deficiency -

Exclusionary Lists

Processing/Underwriting Tip

Be sure you don’t forget or overlook requirements to check appraisers and other interested parties against the lender’s exclusionary lists.

Deficiency -

Cover Letters

Processing/Underwriting Tip

Though it may sound cheesy, underwriters always appreciate a quick cover letter with incoming files. Just enough information to give a quick overview of the file, to explain the overall goal and purpose, to point out any potential areas of concerns, compensating factors etc. You’d be amazed at how much time is saved if an underwriter gets a quick overview before diving in to underwrite your file.

Deficiency -

Missing Conditions

Processing/Underwriting Tip

When submitting file conditions, make sure the conditions are organized in the order they are noted on the conditions list from the underwriter. Make sure the conditions are numbered if applicable. Never submit conditions to underwriting unless you are submitting all conditions at one time. Nothing annoys an underwriter more than piece mailing conditions which causes them to have to touch your file over and over and over again.

Deficiency -

Final Documents

Processing/Underwriting Tip

Make sure that you’re final 1008, 1003; FHA and VA addendums, AUS findings, lock confirmation and loan approval contain detail that matches consistently through the documents. Nothing is more embarrassing than having to contact your borrower after they’ve closed to have them resign documents that didn’t include the most updated information when they were signed at the closing table.

Deficiency -

MI Certs

Processing/Underwriting Tip

Make sure the Mortgage Insurance Coverage on the MI cert meets the minimum MI requirements for the product. In addition, make sure that you update your LOS with the correct MI premium rate prior to printing out the final 1003 for closing. You want the correct MI payment to be reflected.

Deficiency -

Hazard Insurance

Processing/Underwriting Tip

Always review the hazard insurance information a week or more prior to closing. Make sure that the deductible and coverage amounts are acceptable for the lender, make sure the Mortgagee Clause is correct, make sure the effective date is on or before the date of closing and make sure you utilize the renewal data to correctly determine the number of months escrow reserve that is going to be required at closing. In addition, make sure that for policies that require renewal at the time of closing, your borrower is aware of the requirement and is either prepared to bring funds for the renewal payment or roll them into the loan if allowed.

Deficiency -

Title Commitment

Processing/Underwriting Tip

Make sure the lender’s policy reflects the correct Mortgagee and loan amount prior to closing and make sure all non-standard exceptions are addressed with the title company before they become last minute problems.

Deficiency -

CPL

Processing/Underwriting Tip

Make sure you obtain an insured closing protection letter from the title company for each transaction if the lender requires it-many now do.

Deficiency -

Cash Back

Processing/Underwriting Tip

On standard non-cash out refinances, make sure your borrower isn’t receiving more than the maximum allowable amount of cash back at closing. You’ll need to work up your final figure estimates well in advance of closing in order to adjust the loan amount if needed.


About The Author

Stacey Sprain - As an NAMP® staff writer, Ms. Stacey Sprain is currently a NAMP® member in good standing, and is a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. If you would like to become a volunteer writer for us, please email us at: contact@mortgageprocessor.org.

 


Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.