Loan Officers PLEASE Interview Your Borrowers Better

 

Dear Loan Officers,

Please interview  your borrowers better....  The better the interview the less likely unknown challenges come up. If there is a question that you need clarification on - get the documentation BEFORE the Prequalify letter goes out.

Current Nightmare I Am Going Through Now

My loan officer is working with a borrower who wants to buy a home - Let's name the borrower Ted.

Ted finalized a divorce 2 years ago.

Ted is a successful import/export guy - He is a salaried employee with bonus potential.

Ted opened a side business in the middle of 2023.  The side business has taken off and is earning him very good money.  

In the interview process, my LO pulled a credit report and there was an existing mortgage on it. He asked Ted about this mortgage.  Ted said his ex-wife has the home and she has been making the payments.  LO asked if Ted could prove that she has been making her payments from her own bank account that Ted is not tied to.  Ted assured him that the ex makes the payments from an account he is not tied to. 

In the interview process, my LO asked about the new company Ted started. Ted advised that he is making over $300K in profits.  Ted is going to use the monies from his business for the down payment and closing costs.  

In the interview process, my LO asked Ted what does he average in bonus income a month. Ted said about $2000 a month... 

The LO provided a pre-approval letter based on the information provided.  An offer was accepted and I got the file to process....

First challenge - We find out that ex-wife is using a bank account they shared during their marriage - therefore, we have to hit him with the entire PITI+HOA debt (over $4000 a month)

Second challenge - Because borrower is using his business funds for the down payment. We need the 2023 1040 and business returns.... Returns show a $30K start up loss -so now we have ANOTHER hit of $2500 a month in income..

Third challenge - Bonus income - we could not prove that the bonus income will continue as the employer would not comment on this.  The VOE showed the bonus income for 2024 and 2023 and 2022 - (we also provided end of the year pay stubs) - lender wanted employer to confirm how often the bonuses were paid out - if we use what is on the current pay stub and not average last year - our income also can drop significantly.

Borrower wanted to put as little as possible down and get an conventional loan with no impounds....

Now that is NOT possible as we now have a mortgage of $4000 - we did not have before.  We have a $2500 a month income loss that we did not have before and the bonus income dropped drastically.  Our DTI is now 70....

Working and working and working the numbers - I came up with a FHA option but would have to put a lot more down and pay off 3 small credit cards and our DTI is now 57 and we got an approve/eligible.  Ted was PISSED....  We advised if he did NOT use his business assets and simply got a 401K loan for the down payment - we would not need to show the tax returns thus the large loss on his schedule E. Ted refused this option.

We tried another alternative and contacted our friends at Loan Stream for a NON QM purchase, primary home option.  They had a 12 month bank statement program (they accepted self employed 12 months with a history in the industry, which we did).  We were able to flip it to less money down and terms the borrower wanted... Because the loan continguency was coming up - LO did not think it would be wise to go that way as it would take longer to close.  Ted seemed to like it better as there would be less down. But Ted would not make up his mind.

Monday, Ted contacts the LO and out of no where he has a Non QM friend that can do this loan and there are ZERO costs.  He wanted us to transfer the FHA appraisal to the NON QM lender (makes no sense as the appraisal is FHA not Non QM) - We advised Ted if we transfer the appraisal our loan will be cancelled. We suggested that he provide a copy of the appraisal to the new lender and see where it goes.... Ted agreed.  In the meanwhile, I suggested that we move forward as Ted has already paid a lot of money for the HOA certification and appraisal.  Only need a few minor minor documents - Ted has not responded to our muliple requests...

Today, Ted advised the LO that the newer lender is breaking promises and now trusts no one.. What the Hell - seriously..  Ted still won't provide the minimum documents I need for our Clear to Close and his loan continguency is up!

One thing I am seeing a lot lately is desperate loan officers.  Loan officers that are afraid to state the facts and process up front to potential clients.  Because of this I have to deal with non-responsive or angry borrowers that feel very confused.  Educating the borrowers at the very beginning of the application process is critical.

Gathering documentation to support what the borrower states to be true is extremely critical. With this loan - We could have easily started with a NON-QM loan knowing the facts upfront. 

Moral of the story....  Interview borrowers in depth, get documenation to support what they say, and most importantly prepare them on what to expect.... (emails, disclosures to sign, items needed, more items needed, and then some more items, more disclosures etc.)

Houses Are Selling Like HotCakes - Really They Are!

 

Houses are still selling like HOTCAKES!  The secret is that the home needs to be listed by a seasoned realtor who knows the market and the area.  The homes that have been sitting on the markets for weeks or months are not being marketed correctly.....

The competion is fierce on good listings.  My mom's home was listed on Tuesday and there are already a bunch of offers over list price.  All offers will be reviewed on Monday.

It can be frustrating when making an offer on a home and your offer gets turned down.  

The best way to get an offer accepted is to get a full credit approval by your broker/lender.

A credit approval is getting approved for everything pending a home.  This means that  you will need to provide your loan officer the following;

Last 2 years W-2s

Most recent 30 days worth of pay stubs

Copies of your most recent 2 months bank statements  (all pages)

If you own rental property or a business  - Send your most recent personal AND business federal tax returns (all schedules and attachments)

Current copies of your current mortgage, insurance, and tax statements (HOA statement if applicable) if you are keeping any properties.

Credit report will need to be pulled.

Another thing that can put you at the top of the list is a Dear Seller letter.  Tell them about yourself and why you want to purchase this home.  Become a person to them and not just a number.

If you are in California or Florida - I can help you.  I have GREAT loan officers that I work with and I can refer the best of the best (in my humble opinion) and I or one from my processing team can take care of you.

You can reach me at Kelly@thecontractprocessors.com

If you are a loan officer looking for the best contract loan processor - I can help you too!

I'm just an email away.

Let The Processor Do Their Job - Best Results!!

I often say that loan processors and loan officers each have their special gifts.  A loan processor is a detail person with the ability to do 100 things at once and close the loan on time or sooner..  A loan officer is an outgoing educator that brings in clients who need a home loan. A loan officer is a guru on rates and the best product for their clients.

Often times the loan officer will start a file before it is sent to processing in hopes of expediting the loan quicker to the finish line.  I have learned this rarely works.  The processor needs to review the documents and submit a complete as possible file to underwriting as our goal is to close fast and with less fuss. The less times an underwriter touches the file - the faster the file goes through.

This month  - I have Cleared to Close 6 files so far - 4 files where I took the reins from the first day and my CTC came in less than 2 weeks..  Two files where the loan officer held the file a little too closely and our closing took much longer as I was unable to communicate with the borrower or review documents in a timely manner.  

When a loan officer babysits their files it prevents them from originating and bringing in new business.  This is what they do best!

When I start working with a new loan officer it can take time for them to trust that I am good at what I do and that I will make their job easier and more lucurative.

I would love to have a conversation with any loan officer that needs outstanding processing for California and/or Florida.  Call me, Kelly today 714-331-8492 or email me at Kelly@thecontractprocessors.com

There is a HUGE difference when working with a processor with over 30+ years experience.  

UWM PA+ - A 3rd Party Processor's Thoughts

When I heard that UWM was now offering processing - I was livid.  I have been a preferred processor with UWM for several years. I have taken their courses every quarter, recommended clients to UWM, and have been UWM's biggest cheerleader with a big RAW RAW RAW....

Thankfully I took the time and called a couple of the account executives I work with there and they explained how it worked..  I truly believe that using their processing service would be a huge disadvantage to the borrowers and loan officer and here is why....

There will be several "processors" touching the files - no relationship.

The "processor" would not have the experience as a full time processor as this is a new program with UWM.

If the loan officer uploaded questionable documents - the "processor" cannot unsee anything - this can cause a lot of unnecessary paperwork.

The processing fee is applied to the loan price adjustment - meaning the $895 charge will be a hit to the pricing of the loan.. Which can affect QM from passing...  (3rd party processing does not affect QM)

Most full time processors are very familiar with UWM and how they work.  We know how to get the CD out at the initial underwrite.  We know how to do the Ultimate Loan Submission.  We know how each department works and their strengths and their weaknesses...

I highly recommend using a real processor to process your loans.  It is more cost effective and the service cannot be beat..

Another Reason To HATE SunWest Mortgage

 

Last week the California Mortgage Expo was in town. For weeks leading up to the Expo, SunWest was on a mission to get us (brokers) to their class.  The class was titled "Divorce Your Processor: The Rise of the A.I.  

Their emails were like this:  "Learn how to divorce your processor and then invest that time and money you save into doubling your business.  The technology is here today. A productive Originator should spend 100% of his time marketing, sourcing, and havesting new relationships. Unfortunately, Orginators burn 80% of their time on unproductive work - babysitting their loan or they spend a lot of money hiring "processors" to do the babysitting..." 

The fact that SunWest put processors in quotes really got my goat.  

SunWest started making calls to the future Expo attendees - they called me TWICE.  I asked them if the knew who they were calling.... 

SunWest has always been a horrible company to work with. They are so awful that my processing company would charge more to process their files.  I as the owner refused to work with them for many reasons.  They would lose uploaded documents all the time..  You could not reach an underwriter. The customer service is in India.. (that alone bugs me - we need to keep our jobs here - but that's a different blog). Their site was NOT user friendly.  I can only imagine a loan officer trying to navigate their site and on top of that use the AI service... Supposedly the AI is now empathetic.....  Oh my gosh!

Working with a 3rd party processor has a lot of benefits and we get the job done.  Something artificial intelligence cannot do.  

Loan Officers DO NOT PAY for our services.

Contract Processors review documents BEFORE uploading and have the philosophy that less is best to avoid any potential challenges.  

We know lenders and how they work and the best way to close loans quickly.

We develop relationships with our borrowers to ensure them we are on task.  Answer any questions they might have. Hold their hand if needed.

We are pushy  - We work on behalf of our client the loan officer and we will push to get the file thru to the finish line.  

We don't get paid  unless the loan officer to gets paid - We have our time invested as well.

We work how the loan officer wants us to work  - we develop the best streamline to accommodate the loan officer's needs.

#RantOver - email me today so I can prove to you AI will never outshine a real life processor.

Kelly@thecontractprocessors.com  - Serving California and Florida

Why Should Loan Officers use Contract Processors

Loan officers may choose to use Contract Loan Processors for a variety of reasons, including:

1. Time-saving: Contract Loan Processors can handle much of the loan processing work, which saves the loan officer a significant amount of time.

2. Cost-saving: Contract Loan Processors may be able to offer loan officers competitive rates for their services, which can help reduce the overall cost of the loan processing.

3. Expertise: Contract Loan Processors have experience in loan processing and can provide expert guidance to loan officers, especially in navigating complex loan requirements and regulations.

4. Increased Efficiency: Contract Loan Processors can help increase the efficiency of the loan processing process, which can help loan officers close loans faster and more efficiently.

5. Focus on Core Business: By outsourcing loan processing tasks to Contract Loan Processors, loan officers can focus on their core business activities, such as finding new clients and developing business relationships.

Contract Loan Processors can help loan officers save time and money, increase efficiency, and provide expert guidance, enabling them to focus on their core business activities.

How a broker can get started with 3rd party processing

 

I receive many calls and emails from potential loan officers that would like to take the smart leap into working with a 3rd party loan processing company.  There are several questions that are asked and answered.  Here are the top frequently asked questions.

1.  What are your fees?                                        

2.  What are your turn times?   Within 24 hours or less.

3.  Do I work with one processor or several?  We try to have each loan officer work with 1 processor.

4. What do you need from me?

Completed application via 3.4 or POINT (PCF)

Lender information - AE contact information, Comp plan information, logins for lender and credit

Program information along with rate and impounds?

Current income, assets, mortgage statements (all properties owned), Insurance statements (all properties owned), HOA statements (all properties owned)

Current credit report.

Escrow/title information

Purchase contract (if applicable)

5.  What does the processor do?

Create the initial disclosures based on the information provided by the LO

Pre-underwrite the file to ensure the file will go as intended.

Follow up with all items needed for a complete file

Work with borrowers, LO, underwriting, and title/escrow.

Handle submission, approval, and closing conditions.

Order appraisal ONLY with written authorization from LO and borrower.

Once loan if funded - file will be audited for compliance and sent to broker

6. What won't the processors do?

Lock a loan

Discuss rate and pricing with borrowers

Create file from scratch and find a lender/home for the borrower (you would be surprised on how many LOs want us to do this)

If you are a loan officer in the state of California or Florida - We can help you.  Contact Kelly today! Kelly@thecontractprocessors.com