Is the Mortgage Underwriting process horrible for everyone now? (insurance, loan officer, interest rate)
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We are in the process of getting our mortgage completed for a home we are buying in the beginning of April. We have excellent credit, my husband is paid well and has been with his employer for many, many years (well over 10 years) and we have very little debt. We are buying a home well below what is considered a "conservative estimate for us" with a decent chunck for a down payment. I literally copied and sent EVERYTHING they asked for up front. 3 years of tax returns, 2 months of savings & checking, all of the required pay check stubs, explanations of some large deposits from the relocation company handling my husband's RELO...the list goes on and on. But I did it and sent it all in.
We are being asked for the most ridiculous things. We had an insurance claim for our current home's roof and received payments for the new roof which we ended up paying right back out to the roof company. We had to provide copies of the check, sign and affidavit and send them the insurance company damage estimates.
They wanted all of this stuff about the payment we got from the RELO company even though we had the RELO company write out a detailed explanation. It got stuck because they needed a copy of the check. We didn't have the check because it was a direct deposit. They required this complicated work around because I told them I could not send them a check copy that did not exist.
The worst was my husband's bonus. I gave them the pay check stub for his bonus. They were very concerned because there was such a large payroll deposit that was out of the ordinary. He gets a bonus every year in February. I explained that. We don't even need bonuses to qualify for the mortgage but they are still needed crazy documentation because this is a "large deposit".
I transferred money from our savings account to our checking to cover the earnest deposit and now they need all of this documentation on where that money came from even though it very clearly says "transfer from savings". They have my savings and checking statements. I don't keep most of our money in checking. Just what I need to pay our bills and daily living. I always transfer money back and forth from savings to checking. Warning--DON'T do that!!
I'm seriously worried that tomorrow they will be asking for a DNA sample and possibly my first born.
If it is this hard for us to get a mortgage and we should really be EASY I can't imagine what others are going through. Or maybe I just picked the wrong Mortgage Broker!! Is this just the way it is now? If so, this industry is horribly over regulated to the point of being ridiculous. I almost want to rent for the rest of my life. I feel like I'm under an FBI investigation. I literally have around 30 emails from our mortgage processor just today.
I forgot to mention too--they made us get a letter from his direct boss verifying he will not be taking a demotion or pay decrease in our new location. It had to be those words. It was humiliating for him. They had already verified his employment and we sent tons of pay documentation. To get this letter was a 100 step process through the HR department.
What the heck??? Why are there so many hoops now?? Was it the bill passed by Obama in 2010 (Frank Dodd or whatever it is) that is fueling this ridiculous overkill?
Explanation:
In the past, when applying for a mortgage, providing a bank statement was the end of the story. Under the Patriot Act though, there can be much more to it. The act requires lenders to verify the source of any and all large deposits on each financial statement. Most lenders interpret this as meaning any deposit greater than $500. Whether it was a wedding or birthday gift, a rent check, repayment of a loan or any other type of deposit, lenders are now required to ask the homeowner to provide a brief explanation of each deposit, as well as verification of the source. Usually, this means providing a copy of the cancelled check for each deposit.
The most common response from a homeowner to this request is: “That’s none of their business, and why does it have an impact on my loan?” In reality, the bank itself most likely doesn’t care where or how a homeowner acquired the money. As long as they have sufficient funds to qualify, the bank would be satisfied and willing to lend. Under the Patriot Act though that’s no longer enough. Since banks are federally regulated and, more specifically, under the Treasury Department’s supervision, they are required to verify that all funds used for these transactions are not sourced by terrorist-backed funds. The only way to accomplish this is to verify that the funds came from an alternate and legitimate source.
Oh yes, it was quite painful. We just recently closed on a refi that took 5 months of similar UW requests. Some of the UW requests felt very intrusive and offensive. And it took so long that we started having to resubmit some documentation that became dated due to their efforts to drag it out so long. It was like we were stuck in an infinite loop. Reading Elke Mariotti's explanation now makes the reasoning behind the requests very clear.
My husband and I have excellent credit, fantastic debt to income ratio, and chose to refinance with the same mortgage company that we had been making on time payments to for 8 years. We foolishly thought it would be a no brainer refi for us.
Of course, it didn't help that our mortgage rep wasn't on top of things. In addition to other foolishness, she had our original home cost as $1 on the closing documents and we had to repeatedly fax/email the same documentation multiple times because she lost items or claimed she never received them. Neither she nor her supervisor was ever available by phone. When we passed the closing date because of this, she informed us that we were no longer locked into our low interest rate, but she would try her best to make sure that our interest rate wouldn't increase. We were just finally exhausted and decided it wasn't going to happen, so we quit trying to contact her. Two months later, we received notice that she was no longer an employee and we were reassigned to someone that had us closing two weeks later.
Quite simple: your loan officer isn't taking the time to explain to you why such things are needed which could be done with a bit of a short-term history lesson called Dodd-Frank.
The other issue I do not see discussed here is security and the fact lenders are going "paperless." I've never seen so much paper in my life to go paperless. But seriously, we aren't to have a paper on our desks. No matter how much I try to make sure each of my subject lines contains the subject matter in my email, my lazy buyers will reactivate an email I sent 3 weeks ago with a different subject matter to send me a much needed document, so if I do have to go back and locate it, it will be in one of the last places I look. And many times, I have to put the search off to the end of the day or even another day, to deal with what I can find. I've been thinking about this lately - I have a standard email I send ("what not to do") at first contact that has prevented a high number of faux pas, maybe it's time for another when we actually start ("help me help you").
I have found that 95% of all issues revolving around the mortgage process can be resolved with better communication. See, we agree we've crossed over to stupidity in many ways, but it doesn't mean we can change it. Only you can, by voicing your displeasure to your elected officials.
The other issue I do not see discussed here is security and the fact lenders are going "paperless." I've never seen so much paper in my life to go paperless. But seriously, we aren't to have a paper on our desks. No matter how much I try to make sure each of my subject lines contains the subject matter in my email, my lazy buyers will reactivate an email I sent 3 weeks ago with a different subject matter to send me a much needed document, so if I do have to go back and locate it, it will be in one of the last places I look. And many times, I have to put the search off to the end of the day or even another day, to deal with what I can find. I've been thinking about this lately - I have a standard email I send ("what not to do") at first contact that has prevented a high number of faux pas, maybe it's time for another when we actually start ("help me help you").
The difference here with me is I am the furthest thing from a lazy buyer. I always respond immediately and am very clear in the subject line on what I am sending. What I have noticed is that I send information and the processor just doesn't seem to be able to match things together to present to the underwriter to help the explanation process so I end up resending and letting her know what she might want to send together as an explanation. It frustrates me too because I hard copied everything up front and several times have been told that it "must not have been uploaded" etc. I specifically stayed up until 1 oclock in the morning one night preparing and labeling the packet of documents to try to avoid these issues. How frustrating is it to do that and then get an email: "It appears you have filed your 2012 income taxes. We will need copies of those" ...when you have already labeled and sent them in. It's like these people are not even reading the file and just assuming they need to ask since they had to ask on the last two files they were working on!!
Elke Mariotti provides some great info that I wasn't really aware of; however, I still think it is ridiculous because it seems that all common sense and efficiency has completely been thrown out the window. I guess this is a recurring theme whenever government gets overly involved in a process.
I'm in the loan application process as well with closing next week.
So far so good..they haven't asked a single thing.I gave her all the documents needed on .pdf format and she went through everything. My LO is really on top of her game though. She was an underwritter for 15years.
I also made sure everything needed was in my saving account and seasoned for 2+ months with no big deposits (just got my yearly bonus deposited though..I hope it doesnt cause problem. She told me since I have enough funds without it, she doesnt need the paystub) so thats the only account they are looking at.
I'm still stressed hoping that everything works well for closing next week (she told me we are on schedule).
My areas of concern:
-appraisal was done Sunday but report hasnt come in yet (that I know of)
-we are purchasing this home as a new primary residence (and keeping exisiting one and rent it out after we close) and I hope underwriters are convinced that this in fact will be our new primary (and that they dont require rental agreement)
Doing Conventional 30years fixed 20% down.
Good luck to you!
Quote:
Originally Posted by BacktoCO
This is long and kind of a vent....
We are in the process of getting our mortgage completed for a home we are buying in the beginning of April. We have excellent credit, my husband is paid well and has been with his employer for many, many years (well over 10 years) and we have very little debt. We are buying a home well below what is considered a "conservative estimate for us" with a decent chunck for a down payment. I literally copied and sent EVERYTHING they asked for up front. 3 years of tax returns, 2 months of savings & checking, all of the required pay check stubs, explanations of some large deposits from the relocation company handling my husband's RELO...the list goes on and on. But I did it and sent it all in.
We are being asked for the most ridiculous things. We had an insurance claim for our current home's roof and received payments for the new roof which we ended up paying right back out to the roof company. We had to provide copies of the check, sign and affidavit and send them the insurance company damage estimates.
They wanted all of this stuff about the payment we got from the RELO company even though we had the RELO company write out a detailed explanation. It got stuck because they needed a copy of the check. We didn't have the check because it was a direct deposit. They required this complicated work around because I told them I could not send them a check copy that did not exist.
The worst was my husband's bonus. I gave them the pay check stub for his bonus. They were very concerned because there was such a large payroll deposit that was out of the ordinary. He gets a bonus every year in February. I explained that. We don't even need bonuses to qualify for the mortgage but they are still needed crazy documentation because this is a "large deposit".
I transferred money from our savings account to our checking to cover the earnest deposit and now they need all of this documentation on where that money came from even though it very clearly says "transfer from savings". They have my savings and checking statements. I don't keep most of our money in checking. Just what I need to pay our bills and daily living. I always transfer money back and forth from savings to checking. Warning--DON'T do that!!
I'm seriously worried that tomorrow they will be asking for a DNA sample and possibly my first born.
If it is this hard for us to get a mortgage and we should really be EASY I can't imagine what others are going through. Or maybe I just picked the wrong Mortgage Broker!! Is this just the way it is now? If so, this industry is horribly over regulated to the point of being ridiculous. I almost want to rent for the rest of my life. I feel like I'm under an FBI investigation. I literally have around 30 emails from our mortgage processor just today.
I forgot to mention too--they made us get a letter from his direct boss verifying he will not be taking a demotion or pay decrease in our new location. It had to be those words. It was humiliating for him. They had already verified his employment and we sent tons of pay documentation. To get this letter was a 100 step process through the HR department.
What the heck??? Why are there so many hoops now?? Was it the bill passed by Obama in 2010 (Frank Dodd or whatever it is) that is fueling this ridiculous overkill?
The definition of "Good Credit" has changed to the point that now, there is no such thing as Good Credit.
There is only Qualifying Credit. Many, many, many 800+ fico buyers purchased homes and investment properties based upon Stated or Alt-Doc income requirements. Many of them lied. Many of those homes foreclosed. And the World Economy crashed.
So, seeing all of that happen, doesn't it make sense that, yes, now you actually have to document your income, but also the flow of your funds? The Large Deposits thing is a bit of an over-correction, but I'd rather deal with that, and rest easy knowing that people, and banks, really can't get away with a fraction of the fraudulent activity that went on earlier in the century.
So, nitpicking rates in the 3%s, wailing over having to actually document income and financials - really?
So, nitpicking rates in the 3%s, wailing over having to actually document income and financials - really?
I think it's all a matter of perspective. When you're in the middle of the process, frantically trying to collect every little scrap of financial documentation, worrying about whether or not you're going to be able to close on time (if at all), can be extremely frustrating and sometimes maddening.
However, when you're a few months past a successful closing and enjoying your property, you can look back at the experience with less disdain and anger. The pain of underwriting is temporary, the benefits of locking in a great rate and buying a house when the market is down is far more lasting.
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