Loan officers can expedite the underwriting process during periods of high mortgage volume by following a few easy steps when submitting a borrower’s loan information.
I was a mortgage underwriter for 20 years. I know what it takes to have a mortgage loan approved quickly because I work as an underwriter. I’ve been a top-producing loan officer for the past six years thanks to this insight. With the volume of mortgages that many loan officers are handling, I believe that now more than ever, we need to address the pipeline and process to better understand where we can become more efficient. It will save you time to track down missing information or fix errors later in the process if you put in a little more work to prepare the file for the underwriting process.
These three easy steps will help loan officers close more loans more quickly, expedite the underwriting process, and maintain greater organization while doing so.
Loan officer vs. underwriter
Two distinct roles that are essential to the loan process are those of an underwriter and a loan officer. Here, we examine each position in greater detail and what part it plays in the house-buying process.
What do loan officers do?
When a borrower needs a mortgage, they work directly with a loan officer to connect them with a lender. Loan officers meet with potential borrowers, collect applications, obtain all paperwork required for loan processing, and assist borrowers in making sure they have all the requirements to have their loans approved. A loan officer can also educate prospective borrowers by explaining the loan application process and the requirements for loan approval.
What do underwriters do?
After receiving an application and compiling the required paperwork, the loan officer forwards everything to the underwriter. The underwriter’s responsibility is to examine all supporting documentation and assess the borrower’s risk level. If the underwriter requires more information from the borrower in order to make a decision, they will frequently get in touch with the loan officer. An underwriter will consider factors like credit scores, LTV and DTI ratios, as well as the kind and value of the property being bought, when assessing the potential risk. Furthermore, an appraiser and an underwriter collaborate to ascertain the true worth of the assets serving as loan collateral.
How do loan officers and underwriters work together?
Underwriters and loan officers collaborate, but they do so virtually. Working closely with the borrowers, a loan officer gives the underwriter the information they need, which the underwriter then assesses. A loan officer is not allowed to try to sway the underwriter’s judgment. In terms of communication, an underwriter can explain their loan decision and offer educational information about the loan guidelines and requirements for approval, while a loan officer provides the information and allows questions regarding an approval or denial.
What is mortgage underwriting?
An underwriter assesses the risk of approving a borrower for a mortgage as part of the home loan process. This is known as mortgage underwriting. The underwriter considers a number of factors during this process, including a steady work history, the borrower’s capacity to manage credit and repay the loan, whether the property’s value can support the loan amount, and the state of the market, including a stable job market and economy.
The mortgage underwriting process
Although the underwriting procedure differs from lender to lender, it generally consists of five main parts. Although underwriting can take a while, it can go more quickly if the required paperwork is prepared and submitted.
Pre-approval is typically the first step in the underwriting process for a borrower. A borrower submits financial details, including income, debts, and credit history, for pre-approval. After reviewing this data, the lender grants pre-approval for the maximum amount of financing that the borrower is eligible for. Remember that there is no guarantee of a mortgage and that further steps will be required in order to secure one.
Income and asset verification
Verification of income and assets takes place both during the preapproval phase and during the underwriting phase after the borrower submits an offer on a property. The underwriter examines a variety of documents, including tax returns, bank statements, investment accounts, employment histories, and much more, in order to assess this information.
After the borrower locates a house that fits their budget and submits an offer to the seller, a property appraisal will be carried out by the underwriter. The appraisal evaluates whether the amount offered to the seller is reasonable by examining the property’s condition and nearby comparable properties. The lender is unlikely to approve the mortgage if the home is valued significantly less than the sales price.
Title search and insurance
To make sure there are no outstanding debts or other legal claims against the property, a title company searches the property’s records. Liens, mortgages, easement rights, zoning laws, unpaid taxes, and other things can be examples of this. To safeguard the lender, a title insurance policy is issued after the title company certifies that the property is free from claims.
Making a lending decision
The underwriter carefully examines all the data after it has been obtained about the borrower and the property to decide whether or not to approve the mortgage application. At this point, the underwriter will either accept, reject, or ask for more information in order to make a determination.
How loan officers can aid in the underwriting process
There are certain things a loan officer can do to facilitate the underwriting process, even though they are unable to exert any kind of influence over an underwriter throughout it.
Writing cover letters
Make sure all of the information you give the underwriter when submitting a loan application is understandable and clear. Add a brief cover letter that explains anything that might seem out of the ordinary, summarizes the information provided, or tells the borrower’s story. This will save numerous questions that might need answers during the process and help provide information to the underwriter up front.
Staying up-to-date on guidelines
It is your responsibility as a loan officer to remain current on loan guidelines, including document expiration dates. The underwriting process requires gathering the required paperwork, and it’s critical that loan officers submit documents that adhere to strict guidelines. The underwriter will have to request more information if the submitted documents don’t follow these guidelines, which will delay the underwriting process.
Providing accurate information
Loan officers must make sure they have the most up-to-date and comprehensive information on the borrower before submitting an application to the underwriters. For instance, you will need to submit additional paperwork with your loan application if the borrower has disclosed additional income from self-employment, real estate income, child support, or alimony. The underwriting process moves more quickly when this information is gathered and provided early on.
For a loan transaction to go smoothly, loan officers and underwriters must work together. But there are a number of difficulties that could come up when working together. The following are some of the most typical difficulties you might run into:
For a loan transaction to be successful, loan officers and underwriters must communicate effectively. Inadequate or incorrect communication can result in hold-ups or even loan rejections. Underwriters are required to promptly notify loan officers of any concerns or gaps in information, and loan officers are required to furnish accurate and comprehensive information to underwriters.
In a loan transaction, loan officers and underwriters might have different objectives. Underwriters are often more concerned with minimizing risk than loan officers are with expediting the loan closing process. Tension and conflict between the two parties may result from this. It’s critical that loan officers and underwriters communicate well with one another and collaborate to find a solution that satisfies everyone’s needs, including the borrower’s.
When processing a loan, loan officers and underwriters are subject to a number of regulations. Penalties and legal repercussions may arise from breaking these regulations.
Due to the heavy workload they frequently handle, loan officers and underwriters may experience burnout and make mistakes. It’s critical that both sides efficiently manage their workloads and let their supervisors know about any worries or problems.
Because the mortgage industry is becoming more and more dependent on technology, some loan officers and underwriters may find it difficult to stay up to date with the newest tools or software. It is imperative that both parties obtain sufficient training and support to guarantee their ability to utilize technology in an effective and efficient manner.
Loan officers and underwriters working together
Although loan officers and underwriters have separate responsibilities during the home-buying process, they also need to collaborate to make sure that all required paperwork is obtained in order for the underwriting process to proceed. A competent underwriter will make an effort to inform the loan officers of the paperwork required for every scenario that might arise. The loan officers then work to make sure this paperwork is obtained in order to speed up the process.
Good Vibe Squad can help you find qualified buyers
We at Good Vibe Squad are aware of the significance of leads for a loan officer. However, we also recognize that not all leads are created equal. Filtering procedures are used by our Unfair AdvantageTM system to eliminate low-quality leads that won’t qualify for a loan. Rather, our system provides leads who are prepared to buy a house and are highly likely to be eligible for a mortgage. To find out more about how we can improve the lead generation for you…
FAQ
Do loan officers communicate with underwriters?
5. Communicate with Underwriter & Borrower. You must have open lines of communication as a loan officer with both the borrower and the underwriter on the lending side. You don’t have to get too involved, but you should communicate with the underwriter often.
Can a mortgage lender override an underwriter?
A lender override is highly unlikely. But the lender might look for a different product or give the borrower advice on how to qualify down the road. The lender may also ask for the application to be rewritten in the event that new information or an extenuating circumstance arises.
Do underwriters want to approve loans?
The underwriter works with you to ensure that all of your documentation has been submitted and assists a mortgage lender in determining whether to approve your loan. In the end, the underwriter will work to prevent you from closing on a mortgage that you cannot afford. Should you be ineligible, the loan can be denied by the mortgage underwriter.
Do lenders and underwriters work together?
Although loan officers and underwriters have separate responsibilities during the home-buying process, they also need to collaborate to make sure that all required paperwork is obtained in order for the underwriting process to proceed.
Read More :
https://www.goodvibesquad.com/blog/can-a-loan-officer-influence-underwriter/
https://blog.ruoff.com/do-loan-officers-and-underwriters-work-together