Written By: Jane Harford
In my many years of underwriting, there are always interesting things that require research, further clarification, getting feedback from third party sources or getting “official” answers from the senior level credit policy folks. Today’s blog deals with some of my experiences over the years and what/how I solved situations that needed to be resolved prior to being able to approve a loan.
In my current job, I am back to working for very large lender that also services the loans that we close. There are some differences in working for a company that services those loans versus working for a smaller company that sells the loans to a larger company that purchases them, services the loans and is known as a “seller-servicer”. There is a bit more wiggle room in rendering decisions on mortgages that stay in the same loan portfolio. Because the loan stays within the same company in which it was originated, there are often “reps and warrants” that exist between the servicer and the agency that will own the loan.
In many cases, there used to be documentation relief (meaning that less stuff was required-such as numbers of paystubs, w2’s, bank statements and other evidence, maybe even a drive by appraisal or PIW-property waiver can be used). More recently, the documentation relief has gone away due to the increased requirements that from agencies and lender overlays. Now, if the original program guides say 2 yrs of w2’s are required, we are getting those two years of w2 forms.
They are carefully reviewed to ensure that they are accurate, truthful and not fraudulent. Processors or uw’s are reviewing the income, the actual tax with holdings and social security/medicare deductions to ensure that they are correct. These are the “normal” additional steps that are currently required. Each time something does not make sense within the type of program, borrower credit profile, credit score, assets, down payment reserves and property review-the entire file gets reviewed and judge against the “credit standard” again and again.
In some cases, there are times when the file must be redone, reconstructed or denied. Most of the time there are smaller changes that can be done to maintain the file in its current status. It should still maintain the full data integrity that is required by both the agency guidelines and lender overlays.
Some of the more recent things that I have “experienced” or learned about working for a larger lender again are as follows-
1) There is a desired ability to be able to meet the needs of borrowers who have more unusual situations. Not exactly portfolio lending, but the ability to get answers to questions answered in a way that allows for “unusual” loans to still close.
2) The “company’s” ability to serve its existing clientele as well as new clients in a very professional and succinct manner. Since, the ultimate goal of all mortgage companies is to close and maintain a high level of customer service, this is a huge plus.
3) The company’s loan product selection is often larger than those of smaller lenders - the larger lenders often lend in many of the 50 states. Thus, there are also state bond mortgage programs and “niche” products such as USDA Rural Development loans that are originated. The larger selection of products also gives the company an “established lender” reputation. These larger lenders then obtain the desired reputation of being able to get the job done.
Anyway, back to the unusual situations-
A) I approved a loan for a married couple that had their resident alien cards and were international refugees from a third world country. The family had been living in a neutral country for a few years after fleeing their original home. We did not have a full 24 months of employment history for either borrower. However, they did have the required trade lines, credit scores and a very large gift from a family member for a down payment. The loan closed quickly. These folks now have a safe place for their entire family to live. The children will grow up and
B) Borrower has a second home here in the United States. She is a U. S. citizen, she lives in Britain with her husband and family. She has not worked in a paid capacity for the past two plus years since spouse is a well known medical doctor in Britain. We verified the “volunteer work” that she has done in Britain for that 24 month period. We are getting a written voe on the job she just took to show that she is able to do this same type of thing in both volunteer and paid capacities. She is paying off a construction loan. Since spouse is a British citizen, he can’t go on any part of the loan or title. This is an existing customer of the company, thus the desire to approve the loan even while dealing with everything overseas.
These are just recent examples of loans I have worked on and approved. Even though we are still jumping through all of the credit hoops, property hoops-third party checks, internal fraud checks and the rest, we are still getting many good and interesting loans done. Also, there is a strong desire to work with the unusual circumstances to get loans to close. In many of these situations, these are collaborative decisions. I did not just approve the files without doing research, going up the food chain and consulting third party sources for answers to questions as well as getting Internal credit policies reviewed to ensure marketability, saleability and compliance with the agency guidelines and lender overlays.
Until next time, happy fraud free loan reviews!
About The Author
Jane Harford - As an NAMU® volunteer writers, Jane brings 30 years of mortgage business experience in FHA, VA, LAPP and is also an FHA DE Underwriter. If you would like to become a writer for NAMU® , please email us at: email@example.com.