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   ARTICLE   |   From Scotsman Guide Residential Edition   |   October 2012

It Takes a Team to Close a Loan

Working as a unit makes for smoother closings and happier customers

At times, it seems like all the hands involved in creating and closing a loan are independent, but that is not the case. Mortgage loan originators, processors, underwriters and funders are all interdependent. Not being located in the same office — and sometimes not even working for the same companies — can add to that isolation, but originators do not work alone. Even within the same company, it can seem like each person is an island, and people may not realize how their actions affect others, especially the borrower. By examining the interplay of the whole team, you can discover how to bring everyone together to work as one and achieve the goal of closing the loan — and making the borrower happy.

Often, originators do their piece of the loan process and then pass it on with no real thought to the next steps or the person who will be working on the file. No matter where it is in the process, the loan seems to get further away and less under your control. When the underwriter conditions a loan, it can seem like an immediate wall goes up, making the underwriter an adversary instead of a teammate. There are ways to make this a different experience, however, starting with the hand-off from the originator to processor.

"When handing the skeleton file to the processor to start gathering documents, it’s best to include a well-written explanation of the loan because the processor likely did not meet with the borrower."

When handing the skeleton file to the processor to start gathering documents, it’s best to include a well-written explanation of the loan because the processor likely did not meet with the borrower. This document should cover the type of loan being sought, the basics on how the file should be put together, how income is received, if there are any gifts involved and anything else that may be quirky about the file. By doing this, the originator and processor start off on the same page, and from there, communication between the two is critical. Processors are the ones reviewing documents as they are received, and they will notice if something comes back different than expected. If you already have strong communication established, you can work together to either get additional documentation or adjust the file as needed.

Now that the originator and processor are working side by side to accomplish the same goal, it’s time to bring the underwriter into the group. The underwriter is not the processor — they are there to validate the documentation to ensure compliance with guidelines. They can turn your file around 180 degrees from how you submitted it, however, especially if the file is not fully processed or if they must try to figure things out for themselves. Again, one simple upfront step can make all the difference for your deal. Just as you did with the processor, compose a detailed letter to the underwriter that includes loan type, assets, how you calculated income, any credit quirks or why a debt may be omitted, and if there are any property issues. This will help ensure that the underwriter is on that same page with you and is part of your team.

Many underwriters strive for a one-touch file, so if the file is properly documented and explained, it means less returns to the underwriter for review. This not only makes the underwriter happy, but also the processor and the originator, as well, because they have less to do after submission and will not have to keep returning to the borrower for items. The borrower will enjoy a much smoother loan process, as well.

With the originator, processor and underwriter on the same page, now it’s time to coordinate with the funder. Before submitting the file for funding, make sure everything is in order — that your loan amounts are correct; that you are not exceeding cash-out limits; and that closing costs are not higher than estimated at the application, causing a shortage on assets. One of the single most important things that you can do for a funder is to use an updated HUD-1 and payoff demand (if applicable) before you request your lock and documents. The second item that will get the funder onboard is to have as many conditions signed off before docs come back. It’s great to submit conditions to come back with docs — and some have to come in that way — but if you can submit all other conditions for signoff before docs come back, this will minimize return trips to the underwriter. This will not only keep the underwriter happy, but also funders won’t have to go to the underwriter for much, making their reviews quicker, which makes them happy, as well.

Finally, set up your closing dates while keeping rescission times in mind, so that you don’t hit month end without enough time to fund. If there isn’t enough time to fund before month end, the file must go back for re-draws. The underwriter will have to ensure the payoff demand is current and payments are made, etc., and that doesn’t make anyone from the originator to the funder happy. This small detail can make a big difference in keeping everyone on your team on the same page and with the same focus on closing the loan.

To ensure that everyone from the originator through the funder and the borrower are happy, are on the same page and have the same vision, use these simple but powerful steps.

By communicating and keeping an eye on key details, you will close more loans more smoothly. You also will feel more like a team, and a happy team is willing to go the extra mile to make things happen. In the end, borrowers and funders alike will appreciate the ease of your loan process, and they will continue to seek your business.


 


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