Lender/Broker Communications

can telephonesCanadian Mortgage Professional ran an article that illustrated how vital communication is between a broker and underwriter.

Melissa Coburn, an underwriter with Paradigm Quest Inc., was quoted: “As soon as I get a deal, I am calling or e-mailing the broker at every step of the process so they know what’s going on…I try to communicate at every step so they’re not worried their deal is being sat on or lost in the shuffle, and because of that the trust builds.”

That is a standard by which all underwriters should be measured.

This is no more true than when lenders promise a specific turnaround time. Some lenders, for instance, will “guarantee” a 24-business-hour turnaround on approvals. They’ll even put it in a written “service level agreement” (SLA). 

That’s great. 

The problem is, from time to time, lenders get busy and ignore their own SLAs.

From a broker’s standpoint, there is little more damaging to trust and loyalty than when a lender promises X and delivers Y.  When a SLA is 24 hours then the broker should hear something in 24 hours. It’s that simple.

Even if it’s a quick email from an underwriter saying that their queues are backed up, and the file will be reviewed tomorrow. That is incredibly appreciated, compared to no word at all.

Brokers who send deals to lenders with SLA’s often do so because they know what turnaround times to quote their clients. In an age of flimsy service promises, lenders who acknowledge these commitments and notify brokers in advance when SLA’s can’t be honoured—will get loyalty back in spades.

  1. I always strived for exceptional service when I was an underwriter. The problem was that too many of my collegues plainly and simply did not give a S*** since they have experienced only good markets and good economies.
    The over 20 years in the mortgage business as well as the financial planning industry taught me a lot. Great service and delivering on SLA’s is always important – not only on good economic times.

  2. I’ve had dealings with certain underwriters at Paradigm and suffice to say I was not impressed with the service. Slow responses (>72 hours turnaround for pretty much a straight forward switch, I had to get the BDM involved), then the underwriter that was initially working on the file suddenly went on leave and the one that took over was a disaster reaching by telephone and responding to emails. I personally don’t care if the new underwriter had all the files dumped on them.

  3. I think it is a fine line, having an u/w that keeps you too much in the loop can also be counter-productive. We are too busy and deal with 100+ emails daily so limiting the follow up to a simple got your deal send me the purchase agreement is all we need. If you put the proper notes and detail the file correctly there really should be no back and forth needed. All of our lender partners will have a deal back to us in 4 to 8 business hours or less or they call to give an update if not. Merix is definately not one known for providing fast service in my experience. at least 3 to 4 business days at best.

  4. It amazes me that some brokers can comment on one single experience with any lender over this blog, and yet they have zero accountability for their own service levels and frankly inexperienced and unprofessional conduct. Some of them are only focus on the eating what the kill and getting paid, and have zero accountability for the outcome of the mortgage performance, the client experience and the lender,s experience. I’d love to see the Blogs from all the lenders who deal with Loir or jason or any other broker who blogs unprofessional trash talk. It’s a partnership, end of story

  5. Thanks as always for the comments everyone…
    Steve: There are so many exceptional underwriters out there that the slow/unmotivated underwriters really stand out. Your point about maintaining consistent service during busy periods is dead on. Sometimes lenders run promos and service deteriorates from a 1-day turnaround to a 3-day turnaround. It’s almost like there’s no forethought or capacity planning at all. When rates soar or lenders run rate specials that are 20 bps below the nearest competitor, they’re going to get deals. That means staffing levels have to be augmented. We are, after all, in a service business. And for God’s sakes, if turnaround times suffer, keep brokers informed (daily if needed).
    Lior: Email response times for substitute underwriters is often horrendous. There are exceptions however. As for Paradigm, our experience has been outstanding since we got a dedicated underwriter and fulfilment person. But everyone has different experiences and I understand that.
    Jason: I know where you’re coming from about email volume. We’re thinking of hiring a dedicated email reader (literally). In our shop, constant communication with clients is a necessity. So many of our clients come off the net and never meet us that constant contact is the primary means of building the relationship. That’s why delayed lender communications really pull a nerve. So I guess if one had to choose between too many and too few updates, too many would be the lesser evil. At least you can always delete an email. The most important thing is that lenders keep brokers informed when they can’t deliver on promised timelines.
    Robert: When it comes to lender comments, it’s important to remember there’s always another side to the story. I was at a lender conference last week where a broker stood up and trashed that lender in front of 100+ people. It was very disparaging and, if you didn’t have your own experience with that lender, it might have turned you off to them. That same lender happened to be a top lender partner of ours, so her comments didn’t affect our opinions one iota. We merely considered the source. So, barring censorship, the solution I’d propose is to remember that every lender has good people behind it, and a few bad apples. People shouldn’t judge until they’ve eaten enough apples of their own.
    Cheers,
    Rob

  6. Never did understand this big focus on turn around for approvals. As a broker we should know the lenders policies and know that the deal is going to get approved, at least in 90% of the time. The more important thing to me is getting the lawyer instructed and the deal funded. After all I don’t get paid when the deal is approved, I get paid when it is funded.

  7. Mike has the best response in this thread, too many inexperienced brokers are wasting the lenders time. Learn the products and policies so when you send it it you know it will be approved, not hope it will.

  8. I don’t know about you Mike but I work in a competitive business. If my client can walk in a branch and get approved the same day, I damned well better be able to offer the same service.

  9. Everyone wants to submit deals that will be approved but it’s not always cut and dry. A lot of times even your BDM won’t know if a deal will be approved. I’d rather get the decision quickly instead of making my client wait three days.
    Approval time is also a factor on purchases with short condition removal periods.

  10. I’ve worked at 4 different lenders including branches, before becoming broker. Anyone who thinks any lender has underwriters sitting in a closet waiting for the bond market and cost of funds to change so they can bring 20 or 30 underwriters out of the closet so they can offer rate specials is either niave or totally uneducated when it comes to business. There are high volumes periods and low in every market. The vast majoritynof underwriters work huge amounts of overtime during peak cycles. Thats this industry operates, exactly like every other industry.
    Approval times are vital for everyone, from the borrower, to the underwriter to the lawyer. The individual who has the most control ober the entire process is us, the broker. Get you customer’s doc’s in and accurately on time. Well in advance. Waiting until one week before closing is bs. And hen we blame then underwriter and lawyer. Take ownership for then process. Then cash the chq. If we don’t believe we are part of the problem, go ask a mtg broker in the US. Oh wait, we can’t, there aren’t any left any more. They all thought turn around time was the most important element as well. Wonder what they would say today? Maybe parntnership with the lender?

  11. Hi Robeet,
    Appreciate the perspectives. There’s definitely no argument on the point about volume cycles. We all know that underwriters put in serious overtime when needed and God bless them for it.
    The subject of the above post was merely this: Certain lenders with SLAs need to honour them more consistently and/or manage turnaround expectations better, especially during volume spikes. That way brokers can properly set client expectations and be competitive with turnaround times in other channels.
    There’s zero disagreement that brokers also need to do their part. That’s really a standalone issue from lender policy, however. On this site you’ll find whole articles on broker responsibility.
    Regarding US brokers, as most are aware, their demise was multi-factored and primarily related to moral hazard, an absence of underwriting, outright fraud in many cases, opaque securitization, and onerous government regulations. I’d respectfully take the other side of any argument that suggests a desire for faster turnaround times lead to their downfall. :)
    Cheers,
    Rob

  12. Too much rambling, Robert. I don’t know you or how you operate but on one hand you say turnaround is vital, on the other hand you say that there aren’t any U.S. brokers left because they put too much emphasis on turnaround time. Which one is it then? And yes, we know that submitting the supporting documents at the last minute is a dreadful tactic used by some amateurs but that’s how the business is. I submit all my documents with the application and with some lenders it still takes 3 to 4 business days (as Jason indicated) even at low tides.
    I can tell you for a fact that approval time is very important. If you can secure a client a commitment during the same business day (or even within 24 hours), that leaves a very good impression.

  13. It is absurd how some people here are blaming the broker. How on earth is it our fault when a lender takes three days to do something they should do in one? You can’t lump all brokers in one pile and insinuate we aren’t doing our jobs. Lenders make thousands of dollars off our backs and those of us who are efficient shouldn’t apologize for expecting good service.

  14. As a borrower going through a Refinance right now, I found this topic quite interesting, we submitted all required documents within 2 hrs of request,and within the time frame laid out by Lender for Nov 10/10 closing, hear nothing for the last week ,today they send instructions to the Lawyer requesting payout statment be returned 3-5 days before closing, it is now 3 days before closing, Lawyer is closed Monday, so it cant be done, I told Lawyer to hold off ,dont want to be rushing the fine print, broker defends this as happens all the time,first time using Broker and dealing with Big Orange Lender, may just go to existing Bank lender and refi through them, way less drama,live and learn

  15. Service sucks all over. It took TD two weeks to review our mortgage application and documents. I really don’t think these banks hold their paperwork people accountable for turnaround time.

  16. They said Documents had to be in by Oct 31 for the Nov 10 Closing, everything was submitted by Oct 28th
    Why the Rush? Because the Documents I recieved and Comittemnt I signed had a closing date/advance of Funds of Nov 10,I didnt choose it, they did.
    I then submitted the documents before the date they stipulated and I took Nov 10 as “the date” and planned accordingly, ordered renovation supplies, that I need to travel to pick up, which means arranging family schedules ect, ect ,ect. all hinging on the Closing date they put on the contract
    Just like I assume when they say in writing that the Mortgage payment is due on a certain date , they mean that date, or should we just pay when we get around to it, they shouldnt be in a Rush for payment,seeing it is just a Refinance.
    If they couldnt close in that time frame, than they should have said so,and if it than was really important to me I could have made my choice where to refinance based on how soon I needed the money, at least I would have had the information to make my deciscion based on my needs

  17. I understand you expected a specific closing date but refinances commonly close late. This isn’t a problem specific to one lender. Every lender puts refinances at the bottom of the priority ladder.
    On the other hand I do agree that you should have been made aware of this possibility. Moreover, someone clearly dropped the ball if it took your lender one week to review documents and instruct your lawyer.

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