If you had $200,000 to hand out to complete strangers, wouldn’t you be cautious who you gave it to? Of course you would!
This is why, at the beginning of your transaction, you will be asked many questions about you, your finances and your credit. You’ll need to disclose everything.
Why? The mortgage process is a great equalizer; it does not matter if you are rich or poor, every consumer is treated as though they are lying and committing fraud until we prove otherwise. No matter how much documentation we collect up front, you will likely be asked to produce more throughout the process. This is a painstaking process. Accepting the multiple requests for redundant documentation necessary for lender approval and making those documents available as soon as possible will make the approval process easier.
The Loan Officer is the first set of eyes. The processor is the second set. The underwriter is the third set of eyes. Quality Control and Doc Prep are the fourth and fifth sets of eyes. We try to get everything upfront, but we’re not finished until all sets of eyes are satisfied and we are at the closing table. Expect requests from each set of eyes as your file goes through the process.
As an underwriter, when a client (or someone they need a document from) doesn’t want to provide documentation or refuses repeatedly, the question asked the client is, “What are you (or the person you need that documentation from) trying to hide?” You really do not want an underwriter asking this question. It’s in your best interest to cooperate. Remember, in almost every transaction we are bringing the largest check to the closing table.
If the lender asks for a specific document, give them EXACTLY what they are asking for, not what you think “should be OK” – because it won’t be. This is where the approval process tends to go off the rails: we ask for specific documentation and you supply something else. If we ask for a bank statement and there are 5 pages for that bank statement, send them all 5 pages and not just the summary. If you don’t comply and send us the summary, don’t complain when we ask again.
The reason the mortgage approval process is now so rigorous is because of the recent mortgage crisis. Lenders have to be very careful to make sure borrowers have the ability to pay back the loans. Higher underwriting standards should mean fewer foreclosures in the future. Government data shows that less than 2% of loans originated in 2009 that were resold to Freddie Mac and Fannie Mae went into default after 18 months, down from more than 22% default rates for 2007 loans when far too many people were lying and committing fraud on mortgage loans.
I know you may be frustrated at times—especially if we have to ask you for more paperwork. Remember, it could be worse…you won’t be asked to provide a blood or urine test or give up your firstborn child (even though you may want to at times).