Another year and yet more challenges obtaining a mortgage loan. I am shocked at how often I am asked by lay people, and even more troubling, financial professionals, if banks are still lending mortgage money. At first glance, that might seem like a reasonable question, but the reality is the money is still there to be lent, it is just more time consuming and challenging to go through the process to get it.
Investors which provide the money for mortgage transactions are in the midst of the backlash from the era of troubled loans that were made. Many have had to endure audits that result in buying back mortgage loans made years ago because things were not perfect with the loan file or other items may have been overlooked or missed. This creates an atmosphere of extreme skepticism with every loan request and ends up becoming the over-documentation of every loan file. The consumer is obviously the recipient of this new found love and depending on your loan officer, processor, underwriter, and even post-closer, you will experience something tied to our new world of mortgage lending. So, what can you as a consumer do to alleviate as much of this as possible? Simply be prepared to provide what will seem like more documentation than is necessary for your loan request. This will, in most cases, come in a couple of waves. The first wave will obviously be when you make loan application; your loan officers' experience will dictate how the traditional second wave materializes. The second wave of documentation requests most often comes after the file has been reviewed by an underwriter and he/she has questions or requires some sort of explanation and/or further documentation to validate or verify something that was uncovered while underwriting your loan. Welcome to the world of a conditional approval. Ideally this is not happening on the day you are supposed to close, but that is not out of the question in some cases. After this second documentation request, you should be approaching the finish line and ready to break the ribbon as you cross the line.
The other recommendation I have for you, above the understanding that over-documentation is just a fact of life today, is to be proactive in your communication with your loan officer. In an ideal world, you will be hearing constantly from your loan officer throughout the process. The unfortunate thing these days is most loan officers will not proactively pick up the phone and just check in with you. The idea being they don't want to bother you but a few times with requests or calls with nothing much to say that is different from the last time you spoke. You should take the initiative and check in from time to time and just ask if there is anything you need to provide that may have been overlooked or that he/she thinks might be needed now that the process has begun. If you end up working with a loan officer who does not respond to your calls or makes you feel like you are bothering him/her, I would suggest changing loan officers. Our role has most definitely changed over the last few years and we need to be even more vigilant during the processing of your loan. Rest assured that we don't aim to look like we are calling daily for more stuff, it just sometimes appears that way. If we weren't being asked or required to provide certain things, we would most certainly not go there. Be patient with us and the process and know that we both are still working toward the same goal, your loan closing.