Pay no attention to the man behind the curtain....but really, that is how loans get done-all the work goes on behind the curtain. What the borrower knows is one day they come in and sign a bunch of papers and then wait, occasionally being summoned to run around and gather things for underwriting and then they close. So I thought that for today's blog I would take a moment and talk about what happens when I slap a file shut that has your name on it containing all the documents that you just signed.
Typically once a loan application has been signed there are a few things that the originators at Tippecanoe Mortgage have to do to prepare the loan for submission. One of the tasks is obtaining an electronic approval known as DU or direct underwriting. The file is uploaded to the Fannie Mae website and submitted for electronic approval. This is a first check on whether or not the loan has all the qualifications required for Fannie Mae to purchase the loan. Typically, if what we have entered onto the application is correct we do receive an approval. (If we felt we wouldn't you probably wouldn't have gone through the exercise of signing a loan application.)
Once we have those results we turn the file into the person called the loan processor who works with the file on a daily basis as it goes through underwriting. The processor is a very important part of our whole operation. While I may be the face of Tippecanoe Mortgage that you see or hear from on a regular basis, for all intents and purposes the loan is off my desk. My role is to communicate what the lender needs from you in order to approve the loan, information that is relayed to me from the lender by the processor. Our processor is a critical link in the smooth management of the loan. Once in awhile I am called upon to use problem solving skills to obtain information or solve some type of issue with the loan package, appraisal or title work that has to be resolved prior to closing. For the most part at this point my role is communication.
As I mentioned the processor's job is to prepare the loan file for submission to the lender which is done electronically. Then she communicates with underwriting to be sure that all the items needed to make an underwriting decision are available to the lender.
During this process the fees that are charged are evaluated using a government compliance model by the lender to be sure all government regulations are met. At the same time the title work is ordered so that there is a title history available on the property and title insurance issued to protect the buyer against any claims that might turn up that were not found. In other words if Uncle Frank wandered off to Alaska fifty years ago and turns up claiming that he owns the house...the buyer is insured so that their interest is protected.
ochistoricalblogspot.com
At this time we also track down home owner's insurance for the property, obtain verifications from the borrower's employer, verify bank statements and rental payments. Once in awhile we have to update credit payments on the credit report. The appraisal is ordered at this time to ensure that the home is worth the purchase price. Just a bit of added information on appraisals-we are not allowed to talk to the appraiser. Our role in the process is to place the order. We are not informed of when the appraisal will occur, nor are we allowed to discuss the appraiser's report with the appraiser when it is returned. All we can do is check with the listing agent to be sure that the appointment has been made. From that point we have an idea of when it will be returned and can check to see the ETA of the report but until it is made available to us we are as in the dark as anyone else.
The most time consuming portion of the process has to do with gathering all the conditions set out by the underwriter to approve the loan. Both the processor and I work on these items-me contacting the customer, the processor all non customer related items.
At some point I will lock the interest rate. Typically we have until about five days prior to closing to set the rate for the term of your loan. Some folks prefer certainty and ask me to lock them in at the time of loan submission. Others have a bit more of a gambler's nature and are willing to play the market so to speak, in hopes that they will get a bit better deal. If my client is one of those folks I always keep a close eye on what is going on because the rate the buyer wants may only be available for a few short hours.
Once the underwriter has received everything needed that satisfies the requirements of the loan they will issue what is known as a "clear to close." This means the loan passes all the smell tests for the rules of the loan and the rules the eventual investor has set for the loan to be sold. Then the loan will be lined up to go to quality control for a next to final check to be sure everything required is in the loan file. Quality control is concerned with any documents that might not be complete or verifications that may have been left out of the file.
While quality control is going on, back at the ranch, the processor at Tippecanoe Mortgage is ordering the documents needed for the lender to create the loan package a well as sending any invoices that need to be paid at the time of closing. Some of these invoices might be home owner's insurance, any inspections left unpaid etc. In some cases we are required to pay off credit cards or collections in order to close so invoices for those items would be included. The lender will do a final check to ensure that the borrower is still employed. Once all this has been done the lender will allow the closing instructions to be sent to the title company and the final closing details are finished up. Once in awhile someone other than the seller will be signing for an out of town or unavailable seller so the title company is required to handle the legal documents that allow a third party to sign for the seller. Once in a great while the buyer cannot be present, but if that is the case, the buyer's power of attorney has to be cleared by underwriting before the clear to close is issued.
Prior to the clear to close the title company has done a last minute update to be sure no liens or judgments have been filed on the property in the time between the initial title search and the closing date. Property taxes have been verified and sent to the lender so that escrows can be calculated and tax pro-ration amounts are correct. The final step for the title company is to create the settlement statement in accordance with Federal regulations and have that statement approved by the lender. Once all that has been done, and only then may closing proceed.
Whew! It' s finally over, one would think!
But you would be wrong. There is a post closing audit that happens as well. Normally the borrower will be totally unaware of this process, but every once in awhile something pops up that is incorrect or missing. At closing the borrower is asked to sign a form that he/she would assist in correcting or completing anything needed for the file. Blowing a request for a new signature or document is not a good idea. The lender has remedies, including calling in the loan-so pay attention the ten days after closing to any and all communication from the lender.
Chances are you probably never wanted to know all this...
No comments:
Post a Comment