What's happening at your lender's office?

the days of jamming loans through the application process are long gone. Many of the housing bulls here fail to realize that all of the funny money loan programs are gone (FHA is as close to subprime as lending will get). The underwriting criteria
has changed dramatically. A down payment (real money), a real job with verifiable income, strong credit 720 fico or more, and reserves are now required to get decent rates. I firmly believe that if this criteria was used over the last ten years, there would be no housing/credit crisis. We should never deviate from prudent lending practices, never, ever.

Rona - There is a process called pre approval. This eliminates the nonsense that you describe.
I will not deal with a buyer unless they are pre approved.

Pre Approvals have not gone through the underwriting process yet. The only thing that has been verified is the credit score and possibly income. Even with a pre-approval the process that Rona describes is accurate.

FYI, I just had a MAHA Soft Second close at 4.25% fixed on both. Great program!

Also, before writing an offer, the buyer or agent should call the lender and discuss turn around time.

NF - You must be thinking about pre qualification. Pre approval requires a full application ,and is an enforceable contract. Playing the game with those who are not pre approved is a waste of everybody's time.
I have recently closed in two weeks with pre approved buyers.

RE Maven, You are right, but you are wrong. Fully pre-approved buyers -- those that have an application on file -- are still seeing nonsense with being put in the pile behind refinancers and being shuffled to the bottom by out-of-office underwriters. Pre-approvals are not enforceable contracts. They are still subject to final underwriting, which happens after the property appraisal. The lending rules are changing. Therefore, if the investor changes the requirements, the borrower is subject to those changes. This is a change from what was normal until very recently.
NF, you are describing a pre-qualification. The letter you get from your lender says you are pre-approved through automated underwriting. That is not enough to be certain that your loan will be approved. Not by a long shot.

Hey, borrowers, are you getting your loans held up in underwriting?

things seem to be taking longer than in previous years...a bit more due dillligence I believe is happening on the underwriting side...I was actually asked to send a new Fax of Bank statements, because the page # was cut off!!! This is from a couple that is mortgaging at only 20% of Gross Income and over 760 FICO scores...Also mortgage brokers seem a bit confused with fluxuating rates and sudden changes in regulations...holiday season doesn't help either...we suppose to close in 30 days (refi), but broker locked rate in for 45 days, becasuse they new it wouldn't close in time...by the way, there is really no such thing as a pre-approval...one can still be denied by the underwriters...it happens often enough...

A pre-approval is an enforceable contract...yes, but that is provided that all the terms and condtions that the preapproval is subject to have been met in acceptable fashion.

It's a credit approval only, no sales contract, no appraisal - technically a conditional commitment in the state's opinion, but a loan approval that is subject to providing bank statements, paystubs, w-2's, showing sufficient funds to close...is not really an approval. It just says that if you can back up on paper what you've told the lender, the credit is approved. If that preapproval was issued on 11/31/08 and pmi companies all changed their guidelines on 12/1/08 (which they did BTW) that preapproval may not be valid anymore, even though it was when it was issued.

Many loan originators will issue a preapproval over the phone, especially those who are a bit desperate for business - they just want toget the deal, and throw the spaghetti against the wall, but the days of walls and spaghetti made of velcro are gone. Now it's teflon lined steel walls, and the spaghetti best be ferrous. That's my bad analogy for "it's gotta stick on a deeper level than just looking sounding smelling or tasting good."
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The very best lenders will *always* prioritize purchase loans over refinances. If a loan originator submits a loan application that is incomplete, that will hold up the process. Borrowers who don't provide requested documentation, completely, when asked, - that will hold things up too. Any broker or lender who does not prioritize purchases over refinances is making a grave mistake.

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I think a big part of the challenge is defining a proper set of expectations at the beginning as to what is required to get a loan approved. Part of the problem that needs t be overcome is that the American consumer has been spoiled by years of "CLICK - you're approved for the credit card, the mortgage the car loan - it takes minutes." Those days are over when it comes to mortgaging a home for a loan.

A big part of loan processing and underwriting these days is that underwriting guidelines have for the most part gone back to 1996/1997. There are fewer people in the industry, and there is more work and paper required on every loan. T's not only need to be crossed, they need to be crossed with the same pen in the same fashion.

There is more paper required - w'2's bank statement s(complete, meaning all pages, even the blank ones and the cover page, with all deposits over 41000 explained and source of funds documented.

I think there may be many people who have bought and sold homes in the last 10 years, both consumers and real estate professionals, who just now are starting to see underwriters ask for things like a letter of explanation for the $1286.73 deposit to XYZ bank on 1/2/3 date, and provide evidence that the funds came from an acceptable source. This is what every loan was like 10+ years ago, and it's going to be this way for quite some time in my opinion.

Rates fluctuate as often and as much as the stock market - anyone in the lending industry who doesn't understand this will have a very diffucult time managing borrower's expectations. In past years, it was normal for rates to fluctuate from .125% to .25% from one week to the next. The new normal is for rates to fluctuate as much as .25% from one day to the next, and often times change a couple times, both up and down within a given business day. Also, recently not all rtes levels move the same. The lower rates - those where you would have to pay points or closing costs are significantly lower than the rates that are higher but have no closing costs. Only those who track the mortgage backed securities market in real-time will be able to have an accurate feel for what rates are currently doing, but it is impossible to predict what rates will do. Run away from any mortgage person who suggests watching the 10 year treasury to tell what rates are doing, or who says the Fed cut rates so mortage rates should be lower now/soon/because of that.

All I want to say is buying a home for the first time is the most stressful thing my wife and I have been threw. We've recently went threw a huge relocation process and that fails in comparison in regards to the stress level of this. My wife and I were "pre-approved" electronically for our home loan, so full of excitement we went out and started looking for a home to call our own right away. Well a few weeks into this portion of the process our broker called and to our dismay he advised us not to place anymore bids on any homes and he was to forced to send our loan out to another lender as he couldn't get us approved in house. We have been in underwriting with this lender for almost 2 weeks. Just this past friday my broker called and said the lender needed my wife's most current paystub, which I left work to get and faxed right away but once again another friday came and went and nothing. Now were starting to become angsty. Were continuing to save money but wondering what is the hold up. Our broker said to remain patient but man....................were praying to get that call from the broker tmrw....Pray for us,,,,,,,,,

We are in the same situation. We have been in underwriting for 2 weeks. We were supposed to settle last Friday, that came and went. We were supposed to settle no later than Wendasday, 3-4-09 to lock in our percentage rate. Again, that came and went. My loan officer is telling us to be patient that it will happen. Just things are hectic right now with the home purchasing and refinancing due to the rates being low. We are going into our 3rd week of underwriting. Please, let this be over with already.

Well me and the wife finally got threw our crazy loan process, my broker called shortly after I posted the last msg and advised that we had been approved for the actual loan. Now this is where the fun begins.....we thought...man.........we have seen over 30 houses and since were looking at only REO's this has been a another stressful part of this process. The majority of the homes we have looked at have either been trashed......and when I say trashed I mean the a/c units completly gone, entire kitchens ripped out, holes kicked threw walls, tubs missing, no doors broken windows and this is to say the least. We are looking at REO homes simply because we believe were going to find a steal something like 3000 sq ft 5 bed 3 bath for 140'. So that's all we've been lookn at but again Trashed. Just this past week we had a bid accepted on a home that my wife and I ended up really liking, and although the entire house needs TLC were up for this challenge. We just opened escrow and have inspection on Wednesday. If gods willing we hope nothings wrong with the home as it was just built in 2006. My realtor came by this weekend to get EM and explained to us that now we wait.......were like wait, we started Jan 21.....so moral of this long drawn out story is, just when u think ur good something comes up. The lesson I've learned threw all of this is, credit is not to be taken for granted, the dumbass mistakes I made as a youngman has come back to hunt me as a man and its unfortunate I didn't react. To even be in this position is crazy so were going to pray to be closed on the date agreed lock in a great 30 year rate, and live happilly ever after.