Oh what a web we weave! The entire mortgage industry seems to be a bit out of control these days. Congress, the Fed Rule, the Dodd-Frank Act, Elizabeth Warren and the Consumer Financial Protection Bureau (CFPB), overlays, disclosures … I don’t know about you, but all of these new regulations are starting to grate on my nerves and the nerves of the very customers they are designed to protect.
Recently, just 48 hours prior to a closing on a purchase, we were told by our wholesaler that they didn’t realize that the Federal Housing Administration (FHA) case number was pulled on Sept. 30, 2010, four days prior to the Oct. 4, 2010 changes in the Upfront Mortgage Insurance Premium (UFMIP) and they insisted that we pulled the number.
On Oct. 26, a Realtor referred a client whom I had never met or spoken to before that day. Unlike most clients, “Susie” gave us EVERY SINGLE DOCUMENT WE NEEDED within 24 hours of applying. Susie is the model customer, and I wish I had a 100 clients just like her. She was easily qualified for her purchase. Unfortunately, due to “too many property issues,” they backed out of the first deal they had.
When we issued her Good Faith Estimate (GFE) and did the calculations on the 1003, we used the new one percent UFMIP and 0.90 percent annual premiums. For the sake of the lessons learned, put aside whether the old or new guidelines were better for my customer.
On Nov. 5, she found another property and by Nov. 16, she was under contract for a January closing. The appraisal was ordered on Nov. 30 and we got it back on Dec. 7. The file was underwritten and approved on Dec. 22, subject to proof of a few minor repairs being made. On Jan. 5, we were waiting for those fabulous words “CLEARED TO CLOSE,” when we were informed that the loan amount on the title was wrong because the loan amount needed to be increased to take into consideration the OLD FHA UFMIP of 2.25 percent instead of one percent.
As you can imagine, some interesting conversations took place between my processor, the underwriter, myself and the account executive. Meanwhile, I have a first-time buyer e-mailing and calling hourly to make sure everything is okay and that the closing would still take place on Jan. 7.
On the evening of Jan. 5, I was informed by our account executive that they are still trying to determine how to deal with this case number. When I asked if this change in circumstances was going to require an additional three days and delay the closing, I was informed that it is NOT a change in circumstances, and if it reverted back to prior to Oct. 4 guidelines changes that, “the broker (us) would have to eat the 1.25 percent additional UFMIP.” Now I don’t know about you, but those words don’t sit kindly in my mind! Are we not the customers of our wholesalers?
Fortunately for everyone, me and my processor both keep every single e-mail related to a particular loan file. And there it was … on Nov. 30, a string of e-mails between my processor and the lender employee assigned to overseeing issuance of case numbers detailing a conversation regarding the fact that a case number had been assigned to the property several months back for another borrower. Remember, we did not meet our borrower until Oct. 26 and she did not find this property until Nov. 5.
So what’s the lesson for all of us? There are a few that we learned from and hope they will help you too!
►First, in this tidal wave of regulation, lenders, underwriters and closers are forgetting about the people they are supposed to be protecting and serving. We should all step back for just a moment after we originate the loan and remind ourselves who we are really serving.
►Second, when a major change takes place, maybe people should pay a bit more attention to the details most affected by the change. I don’t think we will leave it up to the lender and assume “they MUST know everything.”
►Third, does a lender really care so little about their relationship with their wholesaler as to simply say “let the broker eat it” especially when the documentation proves they were the ones making the decisions? Sometimes, in all the chaos, an initial reaction is not the end resolution. Patience goes a long way in allowing people to react without reacting to their reaction! Got it?
►Fourth, keep all communication and correspondence, no matter now insignificant it may seem. Thank God for our loan manager program. It keeps track of every document, and time and date-stamps every single thing that happens on our files. Making notes in your point of sale system where no documentation exists is also critical.
►Fifth, let calm prevail. Screaming will never help a conflict. Our policy is that no matter how bad things are, everyone must maintain a professional attitude. Our account executive was quick to return calls and e-mails, went to bat for us and stood up for what was right.
So how did it all turn out? I am watching the clock! It’s 9:50 a.m. on Jan. 6 as I write this. I was told at 9:15 a.m. this morning that it would be resolved within the hour, and as soon as I get the phone call, I will finish this article. I am still waiting at 10:00 a.m. … still waiting at 10:10 a.m. still waiting at 10:19 a.m. and 10:29 a.m. strikes! Our account executive just called and guess what? Not only is the lender assuming the additional 1.25 percent cost for the increased UFMIP, but the customer gets the lower monthly MIP (0.55 vs. 0.90) and the loan is closing on time! Always give your lender time to work through issues. They will usually come to the right conclusion.
Okay, so we got lucky this time. But if this article can prevent just one customer, broker, mortgage loan originator or wholesaler from the angst and stress of this type of situation, it was worth the time to write it.
Deb Killian, CRMS of Brookfield, Conn.-based Charter Oak Lending Group LLC d/b/a Danbury Mortgage is a member of the National Association of Mortgage Brokers board of directors. She may be reached by phone at (203) 778-9999, ext. 103 or e-mail [email protected]