What Do You Need Now!
On the mortgage side of the real estate transaction we see many different types of people. It really is amazing that I find there is no difference in orientation, color, or even wealth. The differences I do find in people is in attitude, discipline, and ‘coachability’. I feel these are the things that make people different. These are the things that truly matter when taking a borrower from application to the closing table.
There is a section on the loan application (Fannie Mae form 1003 which is referred to as a “ten o three”) where there are a series of questions asking the borrower and co-borrower about, sex (m or f), race, and if you are hispanic or non-hispanic. I have found this set of questions very offensive and they really upset me to even have to ask them. I don’t care if they are male or female, or purple or green, I don’t care that they are Hispanic or not. All I care about, is can I really help them get into a home. I want to know about their attitude, are they buyers on an emotional high and buying too much home or are they reasonable with their purchase and budget.
Just as importantly, are they coachable, even when I tell them, do not put cash in their accounts, don’t apply for credit for the new furniture, don’t move money around from account to account without first talking to me about it. Don’t go on a shopping spree loading up on the credit cards. This may sound crazy but even wealthy people do it. Filling up the credit cards, changes your credit score and could affect the final rate you’re offered.
Most importantly I want to know how disciplined they are, are they going to get their documents to me in a timely manner, do they have all their paperwork ready to go or do they even know where to find their stuff?
The undisciplined people are the hardest to work with. They are the complainers.
They spend more time and energy trying to figure how to avoid getting you documents than trying to figure out where they put them. These are the people who can’t find the shoes they took off the night before. These are the people that cannot tell you how much money they make or how much they spend a month on bills.
It seems like every day the government is coming out with new laws that drives us absolutely nuts, but these new laws have the undisciplined consumer on the edge of suicide. Some of these so called laws are designed to help actually cause more stress and problems because the people who write these rules are clueless when it comes to reality.
The law makers most often have no idea how to even monitor or measure the success of the rules they implement and specifically, how QM’s 3% cap on points and fees is affecting credit availability. Lenders continue to argue that the cap is too restrictive and even the National Association of Realtors began surveying mortgage underwriters on the QM rule last year and found that roughly 47% of the respondents said they were unable to close a mortgage during the first quarter of 2014 because of the QM rule. That number grew to 64% of respondents who said they could not close a mortgage in the third quarter, according to the latest report available.
“There’s a small number of people who aren’t getting houses because you just can’t document the repayment proof. You just can’t get there no matter how hard you work the loan,” said Robert Messer, executive vice president and chief financial officer of the $2.5 billion-asset American National Bank of Texas based in Terrell.
It’s bitter sweet to know that we are not alone with this issue in our state and that the problem is nationwide. There are a lot of people who do struggle through the loan process. Documentation is the most irritating part of the process were as the underwriters actually go through every line item on your bank statements. They need to prove that you do not have any other debts which you are paying for, that do not show up on the credit report or that you are receiving cash of any sort which may seem illegitimate to them. I guess the proper term would be to say undocumented.
All this leads to back to the loan process where, as the loan originator has to go back to the borrower requesting more documents to justify a debt or check written out of the borrower’s bank account. These items often snowball into bigger events such as getting complete documentation of divorce papers or probate and estate documents. This further adds frustration with having to deal with other family members or ex-relations.
Something as simple as a deposit into ones bank account can lead to several questions from an underwriter to satisfy the rules with in ATR/QM (ability to repay and qualified mortgage). For us, having to call the borrower whether disciplined or not the first words out of their mouth is almost always “What do you need now!” The sound of frustration and irritation.
This is something that no matter how much we prepare a consumer at the beginning of the mortgage loan process, it seems to be a surprise to them when we reach that point in the process. It’s very common for most people to underestimate what we have told them in the beginning. We find that if the consumer is coachable,then we can get most anyone into a home, sometimes it just may take a little more time than we first expected.