The Underwriter is Asking Too Many Dumb Questions...
I finally called my buyer the other day to ask him how things were going between his lender and him. He admitted that he wasn't very pleased with her at the moment. It turns out that the underwriter had gotten her to call him a few days earlier to ask him for copy of his CPA license. Considering that he's putting down 20%, has a middle FICO score that would make any banker blush with envy, and was supposed to close next Monday, it struck him as absurd that they suddenly wanted this document.
I told him that I was getting rather suspicious myself. Earlier in the week, they had asked me to get them a photocopy of the earnest deposit check, which I had. Then the next day, they said the underwriter wanted a photocopy of the back. "Why?" I asked, "that's a first." I told them that I never photocopy the back, and that if they wanted proof that it had been endorsed over to escrow correctly, all they had to do was ask escrow for a receipt as we'd send it there weeks ago. Then, they called me again, now saying that the underwriter wanted to know what phase the unit was in. Now, if this were a house in a subdivision where the last phase was on the top of the hill with sweeping panoramic views and half-acre lots, I could possibly understand this question (although the appraisal would have covered the issue). But this is an 800-square-foot condo, give or take a few feet. Nevertheless, I dutifully verified that there had only been one phase for the entire complex.
Then I tried to get the lender to tell me when we would get loan docs. We should have gotten loan docs last Monday, taking into account that the lender, the buyer, and the property are in 3 different states. But she wouldn't let me pin her down. I even just asked if it was now impossible to close by the middle of next week, and she wouldn't answer either "yes" or "no." Instead, she told me that she would call me back in a couple of hours to give me a clearer idea. Several hours later, I called her and had to leave a message. She then left a message for me, saying that the underwriter had gone home early for the weekend, so she still didn't have an answer for me.
At which point, I called my buyer and told him that I suspected that the lender, a mortgage broker, no longer had an investor to finance his loan. The mysterious underwriter was making ridiculous demands on us just to make it look like the lender is getting something done when, in reality, they're running around desperately trying to find someone else who will do the loan they promised him. After all, American Home Mortgage basically went the way of the dodo bird this week...
I recommended to my buyer that he contact a mortgage banker I know immediately and get a back-up loan started. I warned him that it would probably cost more, but that he needed someone who could definitely fund the loan and ASAP. The sellers have every right to dump him at this point, but they probably wouldn't because they don't have a lot of choices in this market. At the same time, they're a nice young couple with a baby, and they've already had to move out of the area for a new job. He certainly doesn't want to make them have to scramble to pay the mortgage for another month.
Consumer Affairs article on American Home Mortgage
I told him that I was getting rather suspicious myself. Earlier in the week, they had asked me to get them a photocopy of the earnest deposit check, which I had. Then the next day, they said the underwriter wanted a photocopy of the back. "Why?" I asked, "that's a first." I told them that I never photocopy the back, and that if they wanted proof that it had been endorsed over to escrow correctly, all they had to do was ask escrow for a receipt as we'd send it there weeks ago. Then, they called me again, now saying that the underwriter wanted to know what phase the unit was in. Now, if this were a house in a subdivision where the last phase was on the top of the hill with sweeping panoramic views and half-acre lots, I could possibly understand this question (although the appraisal would have covered the issue). But this is an 800-square-foot condo, give or take a few feet. Nevertheless, I dutifully verified that there had only been one phase for the entire complex.
Then I tried to get the lender to tell me when we would get loan docs. We should have gotten loan docs last Monday, taking into account that the lender, the buyer, and the property are in 3 different states. But she wouldn't let me pin her down. I even just asked if it was now impossible to close by the middle of next week, and she wouldn't answer either "yes" or "no." Instead, she told me that she would call me back in a couple of hours to give me a clearer idea. Several hours later, I called her and had to leave a message. She then left a message for me, saying that the underwriter had gone home early for the weekend, so she still didn't have an answer for me.
At which point, I called my buyer and told him that I suspected that the lender, a mortgage broker, no longer had an investor to finance his loan. The mysterious underwriter was making ridiculous demands on us just to make it look like the lender is getting something done when, in reality, they're running around desperately trying to find someone else who will do the loan they promised him. After all, American Home Mortgage basically went the way of the dodo bird this week...
I recommended to my buyer that he contact a mortgage banker I know immediately and get a back-up loan started. I warned him that it would probably cost more, but that he needed someone who could definitely fund the loan and ASAP. The sellers have every right to dump him at this point, but they probably wouldn't because they don't have a lot of choices in this market. At the same time, they're a nice young couple with a baby, and they've already had to move out of the area for a new job. He certainly doesn't want to make them have to scramble to pay the mortgage for another month.
Consumer Affairs article on American Home Mortgage
posted by Alma Jill Dizon, Riverside Realtor @ 11:17 PM
3 Comments:
At 11:52 AM,
Consumer Mortgage Reports said…
This is about survival of the fittest. AHM is JUST a conduit - NOT a direct lender. A good friend of mine at Wells Fargo, a major buyer of AHM paper told me that this is NOT a spill over into the conventional market, but it is about mitigating risk and reward.
AHM underwrites the loans and sells them to 1 of 4 major buyers, At that point, they initially make the VAST majority of the revenue and then pass on the loan.
That is what they are a pass thru, just look at the dividends they paid out. Everyone saw how much they made and now its tightening AND now the big 4 better control their risks without sharing in the rewards.
At 10:53 PM,
CHL underwriter #1 said…
I am an underwriter in the secondary market and these condition requests are pretty standard. I am assuming the loan was stated income and verified assets due to the request for the CPA letter. I can say secondary markets have really tightened up underwriting standards tremendously, even since this blog was posted. The underwriter is just making sure all of the i's are dotted and t's are crossed which is what is required in the market right now. If the CPA letter was not in the file. The loan would not have been saleable. The condition for the copy of the back of the check was not far fetched. But, I'm sure had you gone back to the lender with a copy of the escrow receipt that would have sufficed. Don't be afraid to take the next step and negotiate with the conditions if the substitution makes sense. Good Luck. I Hope you are still prospering in this market.
At 11:53 AM,
Alma Jill Dizon, Riverside Realtor said…
If it'd been stated-income, I'd have understood more the underwriter's hesitation. But the buyer had a mid-FICO score of about 800 and was putting 20% down. It was quite odd.
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