Last month I wrote about the challenges mortgage professionals are facing as a result of changes to mortgage underwriting guidelines. Based on the responses to the article, this topic clearly struck a chord. Some readers felt the
changes were long overdue while others were concerned about adapting to them.
address that latter point, I contacted some mortgage underwriters. The mission was to collect their advice on how to get deals
quickly approved in this new environment. I went in hoping to get exclusive
insider information but, not surprisingly, their advice turned out to be simple
Know the lender’s guidelines – Underwriters were
unanimous on one thing: too many applications are being submitted that don’t
meet the lender’s basic guidelines. This results in inefficiencies, delayed
response times and declined applications. Policies vary from lender to lender, including minimum square footage, rental income offsets and maximum
mortgage amount, to name a few. In the words of one senior underwriting manager: “Don’t
submit applications that you know won’t fit, ‘just to try it.’ Establish a
good reputation with the lender by being known as serious, competent and a hard
Know your client– Ask the right questions and the tough questions. For
example, why has the client had four jobs in three years? Why is the spouse not
going on title? If a client is unwilling to provide a satisfactory response to
a question or hesitates to provide supporting documents, this is a red flag.
Dig deeper in these cases because if you don’t, the underwriters will, resulting
in delays or declines.
Be honest – Detrimental information should never
be withheld for fear of a decline. Misinformation is usually exposed
eventually, and can sometimes damage a broker’s reputation with a lender. If
new information is revealed just before closing, the clients and agent could be
left with no options for financing.
Submit a complete application – Lenders and insurers require complete
applications for a reason. One area that’s known for incomplete information is
the client‘s assets. A senior underwriter put it this way: “The
client’s balance sheet is important. Omitting properties or assets
because [they’re deemed] not required for the transaction is a very bad idea.”
Provide good notes – Good notes paint a picture of why the file should be
approved. Enter concise notes and make sure they’re relevant to the credit
decision. Underwriters often receive irrelevant details such as a client’s
family history, religious background, or appearance (seriously). That the
applicant is “the most gorgeous man ever”, a soccer coach or related to
the mayor is not going to affect the credit decision.
ratios are under scrutiny in the broker channel. Keeping the above principles
in mind will improve your service to clients and your status with lenders.
Karen Beattie is Business Development Manager at NEXSYS Financial Inc. Karen has been involved in the Canadian Mortgage Industry for 20 years, starting at the lender level and then working as a mortgage agent. She now specializes in underwriting and document validation.
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