What to do About ALL Those Requests from your Lender?!
Most home buyers go into the process of getting a mortgage thinking it’s not going to be easy. But they still become offended at the type of information the lender requests. Then they begin to resent it. And even worse, when the lender appears to be asking for the same thing again and again, they become angry and uncooperative.
When the number of mortgage defaults starting rising, the big insurers Fannie Mae and Freddie Mac looked closer and found the reason: substandard and fraudulent loans. Since Fannie Mae and Freddie Mac purchased these loans with the understanding that these were solid loans, they forced the lenders to buy them back. So instead of the insurers absorbing the losses, those losses went right back to where they started. This has caused many lenders to go out of business and the remaining lenders to tighten their underwriting policies.
While it’s great and advantageous to have a large down payment, excellent credit, steady employment and sufficient income – these alone no longer guarantee loan approval. What’s more important these days is being able to document, with hard copies, all the necessary criteria to meet the underwriting guidelines. By going to great lengths to substantiate your ability to meet these guidelines, the lender removes the threat of being forced to buy back your loan should you default at a later date. Hence, the innumerable and repetitious requests for documents.
At the time you first apply, your information is matched to the underwriting guidelines of a certain package the lender is offering. The person collecting this information may be a broker, loan officer, mortgage consultant, etc., but their job is to assess the approvability of you for the particular loan package. It’s called ‘papering’ the file – filling it up with the reams of information you provide. This papering validates the information and ensures its accuracy.
The information collected will include your employment history, the field you work in and how long you’ve been in that field, as well as your current income and income history. It will include an accounting of all of your financial assets and liabilities. It will most certainly include your previous mortgage history. The information collected by the loan originator is then handed off to the underwriter who gives the loan final approval. Once the underwriter gets the file they can ask for any other information they feel is needed to document your ability to pay.
Now that you understand the why, it comes down to this… providing the information requested, and exactly the information requested and in a timely manner. Do not fall prey to thinking you’ll give them what you think they need – or trying to withhold information because they’re being invasive. If you want the loan, give them what they ask for!
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