What’s your process of taking an application? Do you send a full application package to your clients or let the lender’s you work with do it?
Great questions I’ve been asking lately and have found out so much in the world of mortgage broker loan origination about what steps Broker’s take in doing applications. I’ve been lucky to have been trained by some of the best in the industry and today I want to provide guidance on these steps, as there is a definite need.
1st things first, I call it the “bar application” and that is the application or flow sheet or initial questionnaire or mini app, if you will, that helps you gather the 6 pieces of information together that constitutes an application. I don’t think I need to go over that, but in reality many Broker’s think or use that same application to get the info filed out as their application they send to the lender. NO NO. Do this, retype the application on a fresh 1003 when you have gotten that mini app info and the borrowers certification and authorization signed to pull credit. That way all the liabilities are in there, and you can actually price a loan out. That way there are details of a transaction that are approximate and all the fields are at least 75% filled in. You and I know just about every app is not 100% complete. Use a mini app to gather the info and gain permission with a Borrowers Cert and Auth signed to pull credit.
2nd Create your application package out of Caylx, Encompass, or Byte. Use a lender’s application system such as UWM’s for example to mimic the disclosures you send to the client yourself. With TRID now there is a ton of lenders that want to disclose for the Brokers, and they may have some mini submission that you send in order to have them disclose. Well truth is as a Broker you should be doing your own application package. Trust me the CFPB will not punish you for over disclosing. It’s a great habit. So at the time you have all the info to do the at least the 75% filled out application (contains all six pieces of info) the 1003 you send to your client should be accompanied with the following. All HMDA, ECOA, homeowners counseling, LE, and other regulatory disclosures on your part. That way you officially are giving the full application package yourself to the client to sign. You should flag these forms and create an application package out of your LOS when you send the application to the client it contains these forms. (again mimic some lenders disclosures of an application package whom ever you use)
I’ve found that some brokers separate the 1003 and the LE and are taking the time to gain the supporting information from the client at time of the 1003 being signed and then within 3 days later sending the client the LE to sign. WOW! I never did loans like that, nor do most banks. The minute that 1003 is given to have them sign it is accompanied by the LE and all other disclosures. I find that some people just don’t know what they don’t know on how to originate loans with certain steps in play. They just “followed” the laws and applied them. Well that’s great and all, but I can remember a time I used to sell SAME DAY SERVICE. When I took an application in a conversation with a client on the phone, scrubbed their credit with them, pitched two or three options, DU’d the loan and sent them the full application package all ON ONE PHONE CALL. Most of those truly interactive clients would have the most engaging conversations with me over like an hour. I can still remember the echo of the BELL we used to ring in the call center every time we got a “book back”. (all disclosures and supporting info to go to underwriting). There is a ton of value you can give your clients by doing this in a one or two step process to take the application.
Then of course where most LO’s seem to pass the puck is COMPARING the information you place on the 1003 with the supporting information that they give you. Yes you want it to match. But the “initial” 1003 doesn’t have to be the signed one that is 100% accurate. I would at least update the point file or lenders system and re-run DU one more time prior to submission. That way you know even the 1003 that shows 75k in income when the supporting docs show 71k your still working with an approved loan. There is no need to change the initial application to reflect 71k and then have the client resign. Just submit the one with the 75k on it, but CHANGE THE AMOUNT you have in the point file or system of that lender, so the underwriter is on the same page with you when they get the loan. I think we’ve all heard the old saying garbage in, garbage out.
So check your process today, mimic a full application package from your lender of choice in your own LOS and start disclosing everything yourself. Somewhere down the road you will thank yourself for doing so. Regardless of how that loan is actually submitted with any given lender. There is lenders submission forms, lender specific forms etc, and what’s needed from one lender to another that may be different. So when you put together your submission package to the lender of your choice there is a need to pick and choose some of the forms you have signed and disclosed to be submitted. Some forms you won’t include. That’s ok, there’s nothing wrong with that. Again the CFPB will not punish third party broker’s who over disclose and have their own set of disclosures they do as well. All you need to do is keep them in your vanilla folder for the time required by your state at least. Simple.
Sell Well – JUICEMAN