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Rep. Maloney’s consumer banking hotline bill passes House

National Mortgage Professional
May 02, 2008

Do you want your loan approved? Part IISerafim Ivaskunderwriter, commercial lending, Mortgage Asset Research Institute, Web-based tools Think you have a clean deal? You better check before the underwriter does Previously, the importance of careful and accurate communication with the lender when you submit your loans was discussed. A very beneficial step when borrowing from the commercial lending practice is providing a cover letter that will briefly introduce the underwriter to the borrower and the specifics of the deal. If the deal is a straightforward case, say so. If the deal has some unusual aspects to it, a weakness or a particular strength, then it's even more important to alert the underwriter up front. This will save you and the lender time, and could be the difference between getting and not getting an approval. At a minimum, it will earn you the respect and appreciation of the underwriter, who may now be more apt to try to see things your way and perhaps go out of the way to try to help you with a tough case. Do not expect the underwriters to find the strengths of your deal on their own, and certainly do not obscure the weaknesses! They may miss the strengths, but they will find the weaknesses—that is what they are trained to do. This article will identify another frustrating situation that has wrecked many good deals. However, the problem is very easy to guard against. A few easy steps can save your deal, or at least protect your reputation. In our new emerging mortgage order, where easy loans are becoming extinct and lenders tremble before the ever-demanding dictums of the secondary market, the ability of a broker to maintain his relationship with a lender is more tenuous than ever. The slightest suspicion of foul play will threaten the broker with suspension or termination. To further complicate matters, a suspension or termination by one lender leads to a permanent record in the Mortgage Asset Research Institute (MARI) which, whether justified or not, will impact the broker's ability to sign up with another lender in the future. So, let's be careful! The basics You get a lead. You call the prospective borrower, who tells you what he wants. You ask a lot of questions and, based on the responses, determine which program should fit the borrower's needs. Business is not wonderful these days and you need this deal to close. Do you assume or do you verify that all the facts provided are accurate? At what point do you verify? How do you do it? Where do you check the accuracy of the collected information? Do you expect the lender to do so? You know they will! You already know this, but ... In evaluating an incoming loan file, lenders will look for the following things more intensely: The borrower's ability to make the payments, evidenced by the income and professional/job stability, and the willingness to make timely payments, evidenced by established credit. Especially in the few remaining stated income type loans, they will also look at the reasonableness of the claimed income! Since underwriters may be somewhat unfamiliar with the profession or occupation of the borrower, they will resort to Web-based tools to aid them in determining what a realistic range of earnings for a given profession is. Luckily for the borrower and the loan originator, everyone has access to Web sites like www.salary.com or www.salaryexpress.com, not just the underwriters. Before you submit the loan, take a look at what the underwriter is going to see anyway. If you uncover a discrepancy, you can address it. Web-based references may not always be accurate, but now you have a chance at providing a rebuttal before the underwriter begins to have doubts about your deal. In addition, you must be very careful in describing the job responsibilities. Simply saying that one is a foreman does nothing for you or your borrower. Is this a foreman/supervisor with 20 to 50 employees under control, or are we looking at a foreman who has two part-time laborers helping with the yard work? An incomplete job description may place your borrower on the wrong end of the income bell curve and may cost you the deal. To make matters worse ... Unfortunately, there will always be someone who will overstate his income, his job function or the very nature of the employment, not to mention misrepresenting occupancy intentions. Underwriters have lost jobs for not catching such fraud. In today's environment, even the slightest suspicion that the job may not be what it purports to be could cost you the deal. Did you call your borrower at work? Did you check to see under whom the work or home phone number is listed? If an underwriter calls for verification and is told that the number is a non-working number or is assigned to a private citizen and not the expected company, you have a problem. Yes, you. The borrower will not get the loan and you, at best, will look like the wrong end of a horse. Does a lender want to risk doing business with an originator/broker who does not verify collected information? In a recent example, a chatty receptionist volunteered that she was asked by the borrower to say that he was still employed at the company. In actuality, the borrower resigned a little while before. Obviously, this was a major embarrassment for the broker! Where to go and what to do ... Here is a partial list of sites lenders may use to check employment and telephone listings: www.searchbug.com, www.anywho.com, www.411.com and www.whitepages.com. Beat them to it: Do your own reverse search and place the results in the submission file. Not only will this provide you with the confidence in your loan, but you will earn the respect of the lender! Another valuable subscription Web site gaining popularity is www.rapidreporting.com. This one reports on identity issues, occupancy issues and income filed with the Internal Revenue Service. Does the credit report show numerous known aliases or multiple Social Security numbers? Check this out yourself before sending in the file. Another Web site providing such services as quick income verification (such as IncomePro), appraisal information (such as HistoryPro and HistoryPro Review), identity verification (such as IdentityPro), and even a rating system evaluating Mortgage Brokers and originators on the quality of their loan production (such as ThirdParty Scorecard) is www.corelogic.com. Drawing from a proprietary database of more than 180,000 agents and millions of loan transactions, the ThirdParty Scorecard assesses an agent's loan quality, assigning a risk score to each agent that can be compared against internal, local market and industry performance standards. Another area of growing concern is the undisclosed mortgage or other major financial obligations undertaken just before or simultaneously with the subject loan! New mortgages, as recent as three to seven business days, will be caught when the lender runs a Mortgage Electronic Registration System (MERS) report. If the broker cannot run his own MERS search, one can try to run the Multi-Closing Alert Program, also offered by CoreLogic Inc., which may even catch simultaneous deals being attempted by the borrower. At the very least, you should get the client to sign a statement confirming that no undisclosed major obligations were entered into or are being attempted simultaneously. This may help protect you from the wrath of the lender and a report to MARI, should the lender discover some borrower foul play after your deal closes. Conclusion Today, almost anything about a borrower's identity, address, employment and criminal record can be searched and found on the Internet. Therefore, the question should not be how to obscure or hide unfavorable information, but rather how to beat the lender to the potentially inaccurate information hiding on the Internet. Find it, address it and correct it before the wrong information has a chance to tank your deal! However, if the loan turns out to be other than what you expected, you'll want to "kill" it before it gets to the lender! Use these Web-based tools before you submit the loan and save the results of the searches. You may need them! Educate the borrower in the need to be accurate and the importance of verifying the publicly available information. With the incidences of identity theft on the rise, this could well be another value-added service a good broker can provide. Serafim Ivask is a wholesale account executive at SunTrust Mortgage Inc. and has been actively involved in the residential and commercial mortgage industry, both retail and wholesale, for more than 20 years. He may be reached at (516) 650-3078 or e-mail [email protected]
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