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Here are 3 simple ways loan officers can help speed up the underwriting process, close more loans faster, and be more organized while doing it.
1. Cover letters to move homebuyers to homeowners faster
I find many loan officers ignore the opportunity of simply adding a cover letter to loans they submit for underwriting. This may seem like a basic step that is not paramount to the success of a loan being efficiently underwritten – I disagree!
A single-page cover letter that provides a clear summary of the loan related to the credit, assets, income, and appraisal helps processors and underwriters quickly identify anything out of the ordinary. Most importantly, if there is something unique about the loan, taking the time to explain it upfront will save you time later. No need to restate the obvious, but add the parts of the story not told by the numbers. Do the work once: Create a cover letter template you can use again and again.
The last thing an underwriter wants to be confused when they look at a loan file. Help mitigate that risk by including a cover letter with each loan submission. If you keep it neat and organized, I promise the underwriting team will thank you and appreciate your efforts.
2. Stay up to date on guidelines
Loan officers should always be current on program guidelines. Don’t rely on memory – read the AUS reports and pull up the program guidelines for specific loan types such as jumbo, construction/perm, and others. Be mindful of document expiration dates when gathering information so you don’t have to make additional requests of your borrowers before closing. Many investors have shortened expiration dates during temporary COVID-19 guideline flexibilities, so stay up to date on current requirements and look at the documents when you receive them.
Dates on paystubs, bank statements, credit reports, and even year-to-date financial statements are all subject to specific guidelines, and obtaining usable documents makes the entire process smoother and quicker.
3. Accurate information
Accurate information on a borrower’s file is essential to speeding up the underwriting process. For example, if the borrower is divorced, you must submit their file with the proper divorce or separation documents. If the mortgage borrower is using real estate-owned (REO) income you need to complete an income analysis and submit proper tax returns and all associated documents. And if a mortgage borrower has a history of foreclosure or bankruptcy you need to provide accurate documents and review the dates prior to loan file submission.
Loan officers who work with self-employed borrowers (SEB) have extra challenges when providing loan documentation. Accurate information is always important in the loan process; however, with self-employed borrowers calculating qualifying income can be tricky. Be sure to check every section of the 1003 and turn in all documents that are required for the borrower’s situation.
Loan officers who take the time to accurately analyze borrower income will better set expectations with borrowers and save processors and underwriters time trying to figure out where the initial income came from. Always document your calculations within the file submission (even if you aren’t sure if it’s accurate). MGIC has an excellent worksheet to assist with this. As a top-producing loan officer, I have also found that securing full tax returns before the preapproval helps in expediting the underwriting process for mortgage loans.
By incorporating these 3 steps, loan officers can speed up the underwriting process. Start with small changes and adapt as needed. The underwriting process of a mortgage loan is an important one. As a loan officer, finding ways to be more efficient will help the underwriting process go smoothly. Loan officers who are organized in getting their loans ready for the underwriting process will close more mortgage loans.