I like to say that I am a rare breed since there are not a lot of independent loan processors (though it does seem to be gaining popularity) and even fewer of us who process for both wholesale and retail. While both groups have unique benefits and detriments, there is one commonality amongst these two lending platforms – the loan process. As we enter another flu season, it seems there is no more apt observation than Benjamin Franklin’s: An ounce of prevention is worth a pound of the cure. The same is true for that which is plaguing our lending methods. Our goal is the perfect file (yes, I said perfect). If you expect anything less, that is what you’ll get. I know it is very easy to blame the loan processor for how the loan process goes, and I am not in any way trying to shuck responsibility for my files. However, I do know that by the time a file has gotten to my desk it has already developed its personality which starts from the very beginning. As a processor I will make your file neat and orderly, but I can only work with what you’ve given me. Taking a thorough loan application and requesting all applicable documentation is more important than ever. Since it seems more people have lending obstacles, you need to discover that obstacle before I do. We all know that a recent hot button has been undocumented deposits in bank statements. I’ve had several files recently where, before submission, I was able to take these bank statements out of the file and rerun DU without using that particular bank account. However, this would not have been possible if the loan originator hadn’t provided me with all of the borrower’s assets. In another file, the borrower had many large non-payroll deposits. Because the loan originator reviewed assets before giving me the file, she was able to turn it over to me with copies of cancelled checks and deposit receipts to show their sources. Sometimes I wish I could give those kinds of loan originators a gold star. When a file is given to me, I translate it from the language spoken by loan originators to language spoken by underwriters, keeping in mind that every lender speaks a different language. If you want a file to be submitted as quickly as possible after reaching my desk, you must also know your lender. How do they want their GFE completed? Do they have specific or unusual forms that the borrower must sign before submission? What about income – do the require tax returns on all files even if the borrower is your basic W2 employee? How is rental income calculated – do they require leases even if the income is on your taxes? Do they want to see mortgage coupons to verify the net tangible benefit? Especially for wholesale brokers this means really knowing the lenders – and I do mean all the lenders – that you brag to your clients about. It sounds great to be able to say, “I have two dozen lenders that I will shop your file with,” but if the lender with the lowest rates is one that you haven’t used in a year then you’re almost guaranteed a painful process. I applaud many of the loan originators I’ve been working with lately for catching these items up front and, more impressively, providing me written documentation for why something unusual should be acceptable. Things like copies of emails between you and an underwriting manager can be invaluable. We forget sometimes that underwriters, just like us, are limited to the file experiences they’ve had. Simply put, they might not know that they can do it until you prove it to them! A hard lesson I’ve recently learned is that communication is the most important component of any file. This is true amongst all parties of a transaction (escrow, real estate agents, appraisers… oh wait, we’re not allowed to talk to them, I meant appraisal management companies) but especially between the loan officer and loan processor. If we are not able to function as a close knit team we risk falling into an “us versus them” situation. One slightly odd thing that I have done for many years is search every client on the internet. Whether it be to get a clearer work history, find a phone number that was incomplete on the 1003, or just to get a feeling for what kind of person the borrower is (you’d be surprised how this can help you build rapport, but that’s for another day), if you as a loan officer found me doing this and didn’t ask me why, you might think it was nothing more than surfing the internet. So getting back to that crazy suggestion I made in the first paragraph, how do we develop a perfect file? We need to be tangibly aware of our weaknesses, and we need to find a way to over come them. Do you have a competitive office? Make a game of it. I know this seems silly, but people are pretty easily motivated – we like to see our names at the top of the list. At one a time, an office I worked for had problems getting in on time – and I mean the whole office. So, we all started dropping money in a bucket every time we were late ($2 for support staff and $10 for originators), and who ever was the first to be on time 10 days in a row, got the whole pot. The culture in our office changed very quickly. Maybe you start tracking which loan originator can submit a full file to the processor. Maybe you track which processors can receive a clear to close approval. Give it a try, you may find an ounce of prevention is worth a ton of the cure.
Amie Wills is a fully licensed independent loan processor in Torrance, CA, who works with both wholesale brokers & retail branches. To contact Amie, email her at [email protected].
