I’m glad to be the newest addition here at Lenderama, and I want to thank Todd for the great introduction. I also have a confession to make. I still use my HP12C to figure payments. Don’t get me wrong, I do rely on that new fangled computer thingee, but I think better with a calculator in my hands.
Anyways, for my first post here I need to vent. We, like a lot of companies, send out a survey to the borrower after every loan closes. The idea of the survey is to see what we did right, what we did wrong, and find ways we can improve our loan process. I look forward to getting these surveys back because I pride myself on doing a good job and I like the pats on the back that the surveys usually provide. But I’m dreading the survey results on one loan I now have in process. The thing is, it’s a slam dunk loan with well qualified buyers – 40% LTV, 800+ Ficos, low ratios and plenty of reserves. They are getting a great rate on the program they wanted and I’ve kept them informed of every step of the loan process. So what’s the problem? The problem is that I asked them for documentation, which they didn’t want to provide.
Here’s the thing. I did the loan for the borrowers on a previous home and everything went as smooth as silk. When they bought a new home I expected this to be a low stress transaction. But right from the start they were offended that I needed so much personal information. They saw this as an invasion of their privacy and insisted that I didn’t need to see their tax returns and that the first page of there bank accounts (showing several large deposits) was more than enough proof that they had plenty of money to close. The last time they did a loan the documentation was minimal. But as we all know, things have changed.
My borrowers finally did get me what I needed and the loan is approved and ready to close. But they are still not happy that I made them jump through flaming hoops in order to get approved and they blame me personally. In a way I totally understand how they feel. Some loans are so common sense that you know there is no risk involved – not that that argument will play with the underwriter. We’ve gone through a period where documentation was almost an afterthought and now we are back to the old days where everything has to be accounted for. Most borrowers read the paper, know that lenders are tighter with their money than they used to be and expect to provide whatever their loan officer asks for. Others, not so much. And I know I’m going to hear all about it when I get that survey back.
I know how you feel had a person lose his job and then could not understand why I still could not close the loan. Now, I am even banned from the Realtors office
I feel for you. Still waiting for cooler heads to prevail at the underwriting / investing level. I know I’d rather lend my own money (and I do!) to someone with lots of skin in the game, great credit, and reserves up the yinyang, even as an NIV deal, than to an upstanding citizen with 5% down who can prove his income. When the chips are down, these guys have no problem walking away from a loan if the home value goes down. I’ll take the guy with more to lose any day.
I completely understand, Peter. We’ve even experienced underwriters who completely ignore AU findings, request alt doc, and then continue to nitpick from there. So, we’ve been preparing clients up front to expect the worst with documentation in this current market and that really seems to help.
This is an across the board issue and as a title agency, my staff and I are constantly reassuring borrowers that their experience isn’t unique. I can’t tell if loan originators aren’t discussing this or the borrowers aren’t hearing the message. At any rate, once we explain the transition back to traditional underwriting and the learning curve that lenders are in, people seem to relax because it makes sense when they tie it together with what they have seen on TV.
The really surprising part for me is how many borrowers aren’t that tuned into the mortgage crisis. I think because we are consumed with it that we forget most people aren’t. Giving a bit of background about how the lack of documentation helped to create the foreclosure process and how the documentation being asked for now is reasonable and normal takes the edge off.
The important word here is NORMAL. Even if a borrower still isn’t entirely happy, knowing that they are not being singled out helps a whole lot.
Great post!
Thanks for all the great responses. I think Diane hit it on the head. This is the new normal, some people are just slower to accept that it applies to them than others.