Monday, January 16, 2012

Mortgage Underwriting Process Tips

Getting through the mortgage underwriting process today will probably be one of the most frustrating experiences of your life. No amount of empathy or understanding will make it better.  However, there are a few details your loan originator should be monitoring in case there is a need for additional documentation.  The originator should have the documentation in the file BEFORE it ever goes to the underwriter.  This could really save a lot of time and confusion.

Your home address is such a simple thing and silly to think it could cause delays.  IF ... the addresses on the credit report do not reflect what is on the 1003 there could be problems.  Your loan officer/originator should look at this information and if there is a variance it should be document in the file with a letter of explanation.  A mortgage underwriter would see this discrepancy as a red flag. The underwriter would ask for documentation and your file would be set aside.

The loan officer should also look on the credit report for any alias names that may have been used in the past.  Anything unusual or out of the ordinary should also be documented or your file will be set aside.

The credit report offers so much information.  The number of inquires should also be checked.  If there are inquiries from other mortgage lenders a Red Flag will be noted.  Or, ...  if there are numerous other inquires for credit the underwriter will want to know what is up.

This is the tough one.  Your loan officer should look at your bank statements to make sure they reflect your monthly income.  Large unaccounted for deposits are a red flag.  Also large debits that don't reflect current creditors could also be questioned.

Any of these red flags can cause delays with underwriting.  This is just a few examples.  Once an underwriter starts to see discrepancies in a file they become cautious and it seems to be a never ending story.  Mortgage underwriting in today's market is "A Brave New World".  So, try to document stuff before the file is ever sent to the underwriter.  Good Luck.



    Key constituents Of FICO score:

    The possible FICO reasons are:

    Amount owed on accounts is too high.
    Delinquency on accounts.
    Too few bank revolving accounts.
    Too many bank or national revolving accounts.
    Too many accounts with balances.
    Consumer finance accounts.
    Account payment history too new to rate.
    Too many recent inquiries in the last 12 months.
    Too many accounts opened in the last 12 months.
    Proportion of balances to credit limits is too high on revolving accounts.
    Amount owed on revolving accounts is too high.
    Length of revolving credit history is too short.
    Time since delinquency is too recent or unknown.
    Length of credit history is too short.
    Lack of recent bank revolving information.
    Lack of recent revolving account information.
    No recent non-mortgage balance information.
    Number of accounts with delinquency.
    Too few accounts currently paid as agreed.
    Time since derogatory public record or collection.
    Amount past due on accounts.
    Serious delinquency, derogatory public record, or collection.
    Too many bank or national revolving accounts with balances.
    No recent revolving balances.
    Proportion of loan balances to loan amounts is too high.
    Lack of recent installment loan information.
    Date of last inquiry too recent.
    Time since most recent account opening too short.
    Number of revolving accounts.
    Number of bank revolving or other revolving accounts.
    Number of established accounts.
    No recent bankcard balances.
    Too few accounts with recent payment information.
    Keep in mind that your credit report changes day to day as you make payments or increase balances. If you pay off your credit cards in full every month but your credit score is compiled before your payments are reported to the credit bureau, your score will reflect those balances. Generally, the total balance on your last statement is the amount shown on your credit report.

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