I can agree that having everyone under the same roof helps, but the part about having a clean track record with your investors “does not” close your loans any quicker. It helps you fund your loans quicker. If you are telling me that you underwrite and close your own loans, why do you keep bringing up your track record with investors? I have an idea why this is mentioned… it’s called marketing and making yourself look stronger to the average person who doesn’t understand the whole mortgage process. Hence why you are pushing 10 day closings. And this is easily accomplished if you aren’t closing that many loans and if they are all DU approved. These are just my opinions from 17 years in lending. But I will say this, using the phrase “guaranteed 10 day closings”, even if you can do them, is very scary. Just like those that can close loans under 620 credit scores to 580… yes, it’s on their matrix on what kind of loans that they can close, but it doesn’t mean that they can close them.

Overall, I hate to assume, but the loans that you are closing in 10 days are deals that aren’t hard… need credit work… missing some assets… Are you telling me, when I client calls you then, that the guarantee sticks? Or is the guarantee offered after you scrub your client down to their underwear to make sure your guarantee will hold up? Hey, just asking the questions because of how I read this…

Valid questions?

Here are three points to consider:
1. Why can I do it faster?

Perhaps because the banker that I work for is better capitalized and has a better track record with the investors that it sells its loans to. So, our investors have developed a satisfactory level of trust with our quality controls.

2. Does the fact that they can complete the loan transaction in 10 days imply that they are “rushing through the important parts”?

First, you need to ask, does a longer loan processing time equate to higher quality control? The answer is no. With every loan that I close I obtain and review supporting documentation, independently verify income, employment and assets, review credit for compliance with FNMA or FHA standards (including the removal of “authorized user” accounts to ensure the validity of the credit history), obtain written statements that no new credit has been obtained that is not on the credit report, obtain an independent appraisal according to HVCC or FHA standards, obtain copies of tax transcripts directly from the IRS and compare to documents provided, and review the purchase contract for nuances and pitfalls. Then it is submitted to a DE underwriter who does that again. The question is how long does it take to do that with a residential loan file? It doesn’t take more than two days to actually perform the review as listed above so the question is how good are my logistics and communication related to gathering the required information to underwrite the file and moving the file from processing to underwriting to closing? I can tell you that it makes it a lot easier and faster when my processor sits across the hall and my underwriter and closer are down the hall.

Here is how we close loans in ten days:
o My bank has a clean record with its investors.
o My bank does not have problems obtaining the funds needed to actually close the loan.
o My team has a sense of urgency from start to finish.
o My team is all located under one roof.
o 2009 technology for communications.

3. Who is the “you” that you are referring to when you ask “will it cost you more money”?

If I overlook something and close a loan that should not have closed, what are the consequences?
o The loan becomes uninsurable by FHA
o The loan becomes unsalable to an investor
o I am not compensated for my work
o My company incurs losses from the unsalable or non-performing loan.
o I lose my job and/or my credibility.

So, I am — and my bank is — the “you” that you are referring to. I bear the risk. Fortunately, I work for a company that is well capitalized and is willing to bear their portion of the risk.

Respectfully,

Steve Lines
Senior Loan Officer and Ex “Big-4” Auditor

Amazing. I am going to add that one to the list of “you can't make this stuff up” stories I have heard about or seen.

Thanks for stopping by!