The Perils of Piece-Mailing

Written By: Frankie Lacy

Are you ever tempted to place a loan back into the underwriting queue before all conditions are in? Do you believe that submitting a “deal breaker” condition for underwriting review without all the other conditions will speed up the approval process? If so, this article is for you!

Piece-mailing is a long standing practice we have struggled against. The temptation to piece-mail grows as we attempt to expedite reviews to meet sales contract expiration dates and monthly quotas. However, submitting one condition at a time has many drawbacks that outweigh any perceived benefit.

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The first problem with piece-mailing is its inefficiency. It causes unnecessary delays in the loan review process that can create a backlog in the pipeline. These backlogs generate a need for rush requests as we race to beat the clock at month end. Rush reviews cause the quality of the review to erode, leaving processors and underwriters vulnerable to error.

In addition, the more times loans are reviewed, the more likely it is a key piece will be missed. This is because true risk management cannot be compartmentalized to once section of the file. The file in its entirety, with each component supporting the next, is what determines the viability of a loan. When an underwriter is reviewing one piece at a time, they may miss layers of risk that, alone, are not insupportable. However, when all the layers are combined, they may constitute an unacceptable level of risk.

To compare each condition as it is piece-mailed with the rest of the loan documentation is almost a re-underwrite. Logistically, this is an unrealistic goal. The processor or underwriter is just concentrating on clearing each individual condition. For example, a loan officer might send in proof the earnest money deposit check has cleared the bank account. Or they might send in proof a repair made to the subject property was paid in full prior to close. When processor / underwriters are rushed, they may forget to reconcile the cashed check against the verified balance in the bank account. This can result in being short funds to close, or worse, an unsalable loan.

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When all the documentation and loan characteristics are submitted in one complete package, the underwriter can review each loan component individually and as a part of the complete picture. The underwriter may be able to justify one weak area of the loan with compensating factors found in other areas of the file. There may be explanations for large deposits into the bank accounts already included in the documentation.

Many underwriting questions can be answered with a thorough review of the application, credit, income, asset, collateral, and title documentation. In fact, the underwriter may make a judgment call to approve an exception or rationalize a more aggressive decision without any further involvement from sales. Full packages are the way to get your loan closed quickly with the lowest margin for error.

About The Author

Frankie Lacy - As an active NAMP® member and a NAMU®-CMMU designee, Ms. Frankie Lacy is a 13-year mortgage industry veteran with extensive conventional mortgage underwriting experience. Frankie is also a mortgage instructor for Mortgage Underwriter University ( Topics of Frankie's expertise include: Fannie Mae, Freddie Mac, USDA Rural Housing, underwriting to investor overlays, self-employed borrowers, personal and business tax return analysis, rental income, condos/co-ops/PUDs, and more. Frankie is a Davenport University graduate with a degree in Business Administration. If you're interested in becoming a writer for NAMP®, please email us at:


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