Tuesday, June 03, 2008

query: how do mortgage underwriters take

I'm taking a good guess here because I used to be a mortgage underwriter back in the ole days when FICO wasn't king and underwriting involved the human brain. I gauge my reply on the return of manual underwriting and the likelihood that we have plenty of newbies looking at files who are now learning from their aged underwriting teachers just how to make these credit and saleability judgments.

The underwriter will take about an hour with your file once the file gets onto their desk - give or take 20 minutes or so. The issue really is how long it takes to get your file onto that desk.

We are living in the aftermath of a credit hurricane that trundled mortgage processing and underwriting staff and blew up all the rulebooks that the remaining staff had come to know and love. The business of mortgage banking is short staffed with folks who are having to re-learn their craft one file at a time.

This is good because it's a restoration of quality in decision making. This is hard on borrowers and loan originators and real estate agents because the greater real estate community and consumers have come to expect instantaneous decision making.

The rule is patience. I am hearing that it takes a file roughly two weeks to make it through the underwriting process.

Trust me, this will get better. Eventually you should expect manual aka human underwriting to stabilize at roughly 48 hours, give or take a day or so as volume swings.

In the meantime, don't totally freak if your mortgage lender calls you for more documentation because your loan application has been suspended. That simply means that you aren't rejected but you aren't approved. The mortgage lender thinks there may be merit in your loan approval but needs you to help them support a positive decision with truthful documentation. Cooperate and help your lender help you. Sometimes a good attitude is the tipping point in a manual credit decision. A mortgage underwriter is assessing your ABILITY to repay and your WILLINGNESS to repay. Willingness is all about attitude.

1 comment:

Tyler, The Wealth Creation Guy said...

Diane,

Great post! You're exactly right. These recent changes have been great for our market and I'm looking forward to everyone getting back in the swing of things.

In regards to underwriting turn times. The 'type' of loan (Fannie Mae vs. FHA vs. Freddie) plays a big part in the amount of time you should expect to wait to hear back from underwriting. FHA is the painfully long loan to wait on right now. Some lenders are booked out as far as two weeks. I think the reason is because loan officers are finally being forced to learn how to put an FHA package together and it's MUCH different than sending in a conventional file.

Hopefully with time, things will get much better!

Great post. Keep up the great work!

Tyler, The Wealth Creation Guy