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I guarantee you’re going to get this mortgage, I think. June 20, 2005

donna's homeWhy does the mortgage business seem so insane and unreliable?

Well, there are a couple of reasons. One reason is there are a tremendous number of loan officers who have no experience but who are pretending they do. As loan officers, our job is to make your loan work. When we look at a loan application, we examine all possible reasons we can find that could be a problem. These are things like properties under construction, borrowers who are out of work, too much debt, not enough income, complex income situations, low credit scores, title problems, and much more. Loan officers with lots of experience have seen so many different situations with such complex problems they know how to evaluate a new loan and spot potential problems. Where we run into trouble is with the underwriters. These folks work for the lenders and they review all of the information sent to them from the loan officer. They have guidelines and matrices which tell them what’s acceptable and what’s not. Underwriters will ask, or what we call “condition”, for certain things to satisfy the lenders or the investor’s requirements. These could be things like a letter from you explaining your situation, copies of canceled rent checks, proof of self employment, disability award letters, bankruptcy discharge paperwork and a whole slew of other things.

If any of the underwriter’s conditions cannot be met, we try to find a way around the condition. Instead of canceled checks, I recently used the front of the checks and 6 consecutive bank statements showing the checks had been cashed. I had a client whose house was built without any permits due to a strange building law on Orcas Island. I’ve also had a borrower who quit his job 3 days before his loan was supposed to fund. The underwriter called his employer to verify his employment, then the underwriter called me. I called the client. Oops! That deal died. We hope to evaluate your situation and to predict the underwriting conditions closely enough to guarantee your loan. The problem is, each lender underwrites a different way. Each loan has its own weird nuances. I have one client who didn’t even know he was in a bankruptcy!

When we tell a borrower we can do their loan, what we really mean is “we think”. What we would like to tell you and what I tell my clients is this…Every loan has problems. Yours is probably no exception. I’ll work hard to make your loan work but there’s always a chance the underwriter will come up with some condition which will stop us. If your appraisal passes the lender’s review and your title report is clean, that’s good. If your income, assets, employment and credit are all in good shape, that’s good too. If all the planets line up precisely at 2:23pm on the day you are supposed to sign your loan documents, that might help too. But, until the lender pushes the big red button with the word “fund” on it, all I can say is “I’m pretty sure I can do this for you”. That’s all anyone can tell you. This is one business where there are no absolutes or guarantees.

Russ Shulman is a frequent writer for the Journal Newspapers and President of Trusted Home Mortgage of Lynnwood. He can be reached at Russ@wearetrusted.com or (425) 712-0282

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