Suspended Files - If the file did not meet all necessary requirements and more information is needed before Underwriting can approve the loan, the file will be suspended. It is the responsibility of the branch to follow up with the Underwriter to resolve a suspended loan. Underwriting will hold the file and follow up on a regular basis. If the documentation in the file expires before all issues are resolved, then the file will be sent back to the branch location.
Approved - Conditions - This means the file is approved but more information is needed before the Underwriter can forward the loan to closing.
There are generally two types of conditions:
- PTC - Prior to Closing - Underwriting must sign off on the condition before closing.
- At Closing - The condition can be taken to closing and then sent back with the file to the home office.
Approved - Closing - Advise the loan officer of the approval and any conditions. Advise the borrower of approval and of any conditions they need to provide now or bring to the closing. Advise the real estate agent of the approval and any conditions that apply to them such as "repairs". Have the real estate agent call you when the conditions are complete so that a final approval from the appraiser can be ordered before closing.
Closing and Communications - When a definite closing date has been set, you may request the loan closing package by faxing or e-mailing a request to the closing department. You should call and make sure it was received. The closing department will complete the closing package and fax or e-mail a list you are able to print for the closing documents. In today's world many lenders are finding e-mailing to be timely and efficient communication.
Declined Loans - On these loans, it is important that a declination letter is printed as soon as the decision is made to decline. A copy of the credit denial letter should be mailed to the borrower. A copy of the letter should be included in the loan file.
Withdrawn Loans - If a borrower withdraws their loan, for whatever reason, a withdrawn letter should be mailed to the borrower. A copy of the letter should be kept in the file.
It is good practice to review each file at least once a week. This will allow you to notice missing items and obtain the additional documents. It also helps you keep track of expiring documents.
Prioritize files by closing date. Those files closing the soonest should be processed first. As a general rule of thumb, home purchases take precedence over refinances when processing.
Mail - Open your mail daily! When you go through the mail be sure and check that all documents are filled out completely. You are also checking for documents you still need. Now is the time to make the necessary phone calls or write the appropriate letters to receive these documents.
Pipeline Report - Your pipeline is your number of loan closings. Each week you should review your pipeline report to check the loans that are scheduled to close. This is to make sure you are working on a schedule that will allow plenty of time to get documentation in place before a closing is set.
Follow up Documents - When you have been working on a file for a few weeks, make sure none of the documents have expired. Always put in writing the date documents were ordered, received, and follow-up information. This information is used for the Status Report.
Conversation Documentation - After each conversation, document in the file what was said, what was promised to be provided or taken care of, and the date the conversation took place. This is your paper trail for yourself or anyone who may need to look at the file for updating or legal issues in the future.
10 Day letter - If the borrower does not provide the documentation needed, send the 10 day letter to the borrower requesting the information.
Disclosures - Make sure the Good Faith Estimate and Truth-in-Lending forms have been sent out to the purchaser within 3 business days of the application. Evidence that they have been given to the borrower or mailed out should be in the file.
Verification of Fees - Be sure all fees that need to be collected have been collected. These fees would be for appraisal, credit report. Make a copy of the check to have in the file.
Flood Certification - A flood certification needs to be in each file showing whether the property is in a flood plain or not. If it is the borrower needs to be notified in writing 10 days prior to closing that this property requires flood insurance.
Loan Prospector -(LP) -Loan prospector is the easiest form of software for documentation information and help. If each file is sent through loan prospector time is saved for the borrower and loan processor.
Appraisal - Order the appraisal right away as sometimes it delays the processing of the file and submitting it to the underwriter.
Verifications - All verifications must be signed. Check to see if all verifications are complete. The section called Probability of Continued Employment is important. Look at the pay and compare the earnings from year to year and other sources of income bonuses and such. The original must be returned and the file recieved before closing. It is acceptable to fax or e-mail the Verification of Employment (VOE) if the employer will accept a faxed verification but the original with the signature must be returned via mail. Always make sure that the verifications are mailed to the HR (Human Resources) department or personnel. Theses are never sent to an individual.
Verification of Deposits - Be sure that social security numbers, and account numbers match with the names. If the balance is significantly larger than the average of the last two months, verify the deposits that caused the increase. If it was due to a gift, this must be verified as well. If it was due to the sale of an asset, this must be verified as well. The most important question is, "does the buyer have sufficient funds to close?"
Verification of Mortgage - Verify that there are no late payments and that the property address and the borrower's name are correct. This information is on the credit report unless an individual holds the mortgage.
Identification - The borrower will need his/her social security number or federal I.D. number for closing documents. If the borrower is not an U.S. citizen, a photocopy of the Resident Alien Status card must be provided. Check to make certain the identification documents have not expired.
Copy File - Before sending the file to Underwriting, make a copy of the file. There are some programs, which require a duplicate file to be included with the original file. The duplicate file system is used on these loan programs:
- Bond Loans
- Mortgage Credit Certificate - MCC
- Rural Housing - RHCDS
- Veterans Administration -VA