AT LAST, A GROUP I CAN UNDERSTAND! A PLACE TO LEARN. . . OR RANT. . . ABOUT UNDERWRITERS.
Charles Dailey has introduced a new group, UNDERWRITING, that should be of interest to all real estate agents and brokers who have ever had a home buyer's loan application rejected by an underwriter, which probably includes every agent and broker who has had more than 5 settlements.
WHO WILL WANT TO JOIN THIS GROUP?? Any ActiveRain member who:
Has ever worked with a home buyer who has:
1. Searched for homes for weeks/months/years and finally. . . . finally, find the perfect house,
2. Managed to get a ratified Contract of Sale after a week of serious gut-wrenching negotiation,
3. Made loan application with a loan officer who speaks to the prospective borrower in Uniform Residential Loan Application (Form1003) 'ese.
4. Produced documents to a loan processor who works at a custom built desk the right side of which is a shute that leads to a BLACK HOLE and who was trained at birth to advise borrowers, "If I don't get a copy of your third grade school transcript by 3:00 p.m., your loan application will probably be rejected."
5. Manage to hurdle through steps 1 through 4 only to hear from the loan officer 2 days before the scheduled settlement date in the Contract of Sale with a "Time Is Of The Essence" clause, that. . .
"the file is in UNDERWRITING".
6. Then, about 24 hours prior to the scheduled closing, as you drive to the airport to pick up your home buyer who traveled 3,000 miles to attend the closing, you receive a phone call from the loan officer that the Underwriter wants:
* Another appraisal.
* Another comp with a kitchen in the upper level, such is found in the subject "Bi-Level" floor plan of which only 3 exist in a 10 mile radius and none have sold for 5 years. The Underwriter doesn't want to use the Appraiser's Split Foyer, Split Level, Colonial or Rambler models with similar square feet and amenities. 
* All of the contractor receipts for upgrades to the property in the past 3 years to justify the remodeled price accepted by the home buyer, the county permit office and the appraiser.
*Another appraisal.
While the experience of many real estate agents and brokers will differ from the above actual Underwriter rejects, if you've been around this business very long, you've experienced similar experiences, or heard of them from other agents and brokers.
ADVICE TO AGENTS: BEWARE THE TICKLER FILE: Try to find out from the loan officer if their mortgage company policy is to permit loan officers and processors to operate with a "tickler file" system. This file management system is dangerous to the health of your buyer and their agent. It will insure that the processor will wait until the very last minute to demand additional documentation after the buyer has already produced every document in their possession. Don't do business with loan officers who sell themselves to prospective borrowers and "turn the file over to their processor". The loan officer sold the loan, they should know what's going on with it.
One of my favorite "tickler file" last minute requests is the processor who contacts the buyer with a demand for a letter from their landlord detailing the dates of their rent payments for the past 2 years and if they don't get it to the processor before 3:00 p.m. (the day before settlement), their loan will be rejected. Yes, that actually happened.
Many years ago, I was advised by a wise managing broker, when I inquired about the duties of the Underwriter, that:
- An agent's job is to sell a house.
- A loan officer's job is to prepare the loan application file for Underwriting.
- An Underwriter's job is to blow holes in it.
IT JUST GOES WITH THE TERRITORY.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
_______________________________________________________________________________________________________
Want to learn more about Loudoun County, VA? Join Loudoun County, VA on Facebook!
Lenn, here is the thing. I have never met an underwriter, ever. Never been to a party and asked someone what they do, and they proudly answered, "I am an underwriter". I question if they are real people, or just used as an excuse. I'm just sayin...
Having said that, what a great group? I will have to check that out. Can we really rant there? Oh boy...
Andrea. We can rant anywhere. That's our job.
I've met Underwriters. I remember one that I knew when she was a loan processor promoted to Underwriter by a local mortgage broker.
However, one thing that I noticed long ago was that, even at the annual Christmas party, the Underwriter wasn't there. Mmmmmm.
I'm on board...I particularly like your #4 in the contract to closing (?) steps!
Lenn, Andrea beat me to the punch with her comment.
i have been doing this business for almost 40 years and have met more people that admitted to being IRS agents than would own up to being underwriters.
I normally hear "we forgot something and need a little more time" when I hear" I just talked to the underwriter and they want."..................
Laura. HA! I usually make sure that my buyers produce copies and NEVER originals of docs.
Corie. Isn't it the truth. What I find most angst producing is the last minute requests. I've got to go back and edit to add "the tickler system".
We had this happen just once...not sure there was any system at all...we had loan comittment and the night before closing...after 5:00 the bank called to say they needed to verify the employment of the buyer...huh ?
Underwriters are like undertakers....they either bury you or take care of the final details! I think I will give this group a shot. Thanks.
Lenn....If a complete package is submitted, there should not be a problem....I have purchased homes myself and when I submit my package, there is NOTHING missing....NOTHING.....every tax return, bank statements, cancelled checks, income for present year, savings, cd's, all accounts, savings and checking, I check my credit report before I apply to make sure there is NO misinformation on it.....I get a full committment subject to an appraisal in a couple of days.....many of the problems today are the fault of the loan processor taking the application.....the underwriters have rules to follow....if the documents are missing, that's the loan processor's fault.
Thanks for the heads up on this group. Every day the rules change and even my mortgage people are driven nuts by the underwriters and what they need, and figure out they need at the last minute.
This group is asking to be slammed by upset agents that can't figure out why 24 hours before a scheduled close an underwriter is asking for a laundry list of things they should have asked for 3 weeks ago.
George and Arlene. TOTOH, perhaps a GROUP such as this one will help bridge the gap between agents and Underwriters.
I know from experience that when a buyer is advised that the loan officer or Underwriter needs this or that, I can explain to my buyer why and they are far more cooperative. If loan officers would explain things better, we'd never get to these impasses.
Barbara. Not every buyer knows what a complete loan package involves. Besides, I've seen loan commitments pulled back by Underwriters. We had one that was pulled back by NFCU and we scrambled to get a new lender approval before the closing date 7 days ahead where the seller had 2 BUs.
Gary. So appropriate.
Sally and David. IMO, once is one time too many.
Lenn I am going to comment on here just as I did on Chuck's original post ... I like the idea of the underwriter's group. The basis is sound. And I hope the are UW's who jump in and share. I certainly no none that have time ;)
THE MAIN ISSUE HERE IS NOT UNDERWRITERS, but loan officers not knowing how to do their job. Why do I say that? Well because I have been an LO for 9 years. I spent 6 years brokering to about 12 different lenders. WHOSE JOB WAS IT to learn the guidelines. MINE. It is not the underwriter's job to let a loan go because the LO didn't know what he/she was doing. And it is the LO's job to admit when he didn't know a guideline. I'VE BEEN THERE. I didn't blame the UW. I blamed me. But people are too afraid or not "man enough" to ever do such a thing, so they blame the UW. Sad. Just another case where people are not responsible for their own actions. I feel a blog post brewing ;)
Lenn....that's correct.....most buyers do not know what a complete package entails.....whose job is that to make sure they have the COMPLETE list of documents needed for a COMPLETE package??? it's not the underwriter's job....I agree with steve.
Steve. Your experience is fine and represents the majority of transactions that are rejected.
However, we've had buyers' file rejected by Underwriters just for some of the "off the wall demands" mentioned in my post.
Most of my complaints about processors and underwriters is the "last minute syndrome" that puts buyers' contracts at risk.
They often operate in a bubble and are not accountablele to the consumer.
Barbara. Of course, in a perfect world. However, I've seen files rejected for nonsensical reasons or NO REASON GIVEN.
Being in touch and hands on is very important. Sometimes, I have found that being a "squeaky wheel" helps. Also, if you recommend strongly to clients that they consider working with the banks and loan officers you know well (of course I give several names for them to choose from) then I have more leverage and can do more to help them. I never let my clients do a loan through an online lender for that reason as well....
Ellie. We've had buyers who were already pre-approved by on-line lenders. It often requires that they change early on to get contract acceptance. Local listing agents want to see a letter from a local lender. . . as do I.
Lenn - It happens. You are right. I'm writing a fun blog. I hope you stop by and read it in a bit ;)
Steve. I'm sure I will.
Lenn - as you say, probably all of us have had the "last minute" experience, and like well more than once. I certainly have. Like Andrea, I've never met an underwriter. But they certainly seem to have teh power to cuase great angst and derail a transaction, and, it seems, always at the last minute.
Jeff
Lenn- A good purchase LO is hard to find. Most are like comment #12 described. They blame the agent, underwriter, processor or title for their failures.
On the other hand, Underwriters are not accountable and have seemed to want to kill deals. My biggest issue with underwriters is: meeting the underwriting conditions prior to a lock expiration and closing date. Then the underwriter will add a prior to docs condition (not on the orginal prior to doc conditions) that looses the lock and cause contractual issues with the REPC. Then want the borrower to pay for the lock extensions for their failures. Not to mention possible contract extensions.
Underwriters should be accountable for their failures and not harm the parties to the contract with their mistakes. JMHO....
You know that underwriters are best friends with short sale negotiators....only difference is they break your heart faster. ugh.
If loan officers really know their loan programs and underwriters, the last minute demands for more documents should be rare. A good loan officer has experience and should not be surprised when additional documents are requested. They should know how a file needs to be packaged, as well as what needs to be in it. (Although, I've heard of a few who just like use their "power" to cause last minute problems!)
One of my best friends from college is an underwriter. She hates her job and has been threatening to quit for about 20 years. They all seem to feel over-worked, under-paid, over-stressed and unappreciated. I guess that's why they take it out on borrowers!
I'm not getting much feedback sympathetic to Underwriters. Mmmmmmm.
I agree that the file must be in A-1 condition before presented to the Underwriter.
That said, some of the experiences our agents have had were unreal and appeared to just designed to kill a deal.
Good post. I laughed, I cried, it became a part of me.
I keep an addendum to extend close of escrow in my back pocket at all times.
Lenn - LOL at your post. I too read that post about the underwriter group and it will be interesting to see how it develops and the kind of responses it gets.
I also read Steve's post too. While I agree it is the LO's duty and responsibility to package the loan properly, it is not necessarily the LO's fault when underwriters go psycho on a perfectly packaged file, which I am starting to see so much more these days.
A good LO knows and understands not only guidelines for the loan products they originate but they also are well versed on the guidelines and overlays for the lenders that they work with. When underwriters start asking for things that are in direct conflict with their own guidelines, then its time for a good LO to escalate the matter to management and make them aware of situation.
I've said it before and I will say it again, when we (LO's) have to start educating inexperienced and incompetent underwriters on what their own guidelines are then there is something clearly wrong with this picture. JMHO
BTW: A good LO doesn't lose control of their buyers loan file - ever! I have an absolutely phenomenal processor who is a processing GODDESS (she's actually a former underwriter). However, having said that, her job is to take care of all of the administrative tasks and to make sure my loan file is perfectly packaged, every i dotted and every t crossed. She actually has little to no contact with my client - that's my job!
When a problem arises with a file, she takes care of the minor issues but anything major, like ridiculous underwriting conditions, then it's me who gets on the phone with the underwriter to resolve the problem. I know what's going on with my files at all times and that's the way it should be. Once again, JMHO.
Donna. Thanks. You get it. If you were in my market area.. . . . . .
I'm off to join now. Thanks for the heads up about the group. I have a LO that's much like Donne and won't loose control. I love it when my buyers take my advise and use her. When they don't, I've been through underwriter hell from time to time.
Lenn, cute post and certainly a view most of our industry happens to get of what an u/w is. Personally I am glad to call a number of them my friends and yes, we do get drunk together!
You said "They often operate in a bubble and are not accountablele to the consumer." and nothing can be closer to the truth. That managing broker you quote was spot on and a different way to say what he meant would be:
The Realtor represents the buyers and/or the sellers
The Loan Officer represents the borrower and the lender
The u/w represents and Lender and the end investors
The borrower is nowhere in that u/w description on purpose. Supposedly that is how we maintain the "quality" of our portfolios. Truth is though, it's the great LO working with the great u/w that manage to show the human element of any loan application, and that is how you get difficult deals done!
Gerry Suarez, Jr.
Your FHA Loan Pro!
Lenn - this post is very timely to me, to say the least - I'm against all odds with the underwriter wanting documents from my buyers that have already been submitted weeks ago at the 11th hour. In the meantime closing date expires on a bank owned property and per diem rates are being charged to no fault of buyer.
Then, about 24 hours prior to the scheduled closing, as you drive to the airport to pick up your home buyer who traveled 3,000 miles to attend the closing, you receive a phone call from the loan officer that the Underwriter wants:
* Another appraisal.
I can now see why your blood is boiling. :)
I am lucky that our processors are former underwriters and have been doing the jobs for many years. They can anticipate (almost) all the surprise conditions per the individual lenders. By knowing the "quirks", it helps us trememdously. Even with all their experience, we are still getting weird requests. We get requests for copies of docs already in file (have to tell them where to find them in their efolders - again). I actually had one underwriter tell me that instead of telling her where to find it, just send another in as I was wasting more time showing them that they already had it. Granted this was a huge file, however, their efolder system has specific places to put docs and it's there, so duh...
The best one is always the surprise "we need another appraisal needed" that comes after we get the final approval. They've had the appraisal for two weeks and just now decided to get another one two days before closing. Better yet, I'm having to pay for it - not the customer (not due to disclosures, due to THEIR rules).
I'm glad I'm not the only one who's had these "surprises". Of course, the listing agents can't understand why the FHA loan isn't closing within two weeks to start with. And the "I've never had this problem before, we need to get another lender". Bad thing is they are right, the customer can take my completed package and get it to close at another lender within a week. This has happened too many times.