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Today’s Mortgage Process Requires More Patience

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by Peter Boutell, Santa Cruz Sentinel

A few weeks ago I wrote that today’s mortgage guidelines were more lenient and loan approvals were easier to come by than they were 25 years ago. However, today’s loan approvals are much more complicated. They are taking more time, requiring more documents, and require more explanations to borrowers.

Our government has taken over Fannie Mae and Freddie Mac and in an attempt to prevent another meltdown in the mortgage industry, has instituted a wave [as in tsunami] of regulations that we all must adhere to in order to remain in the mortgage business. These regulations have added an enormous amount of paperwork that must be provided by and produced by lenders and borrowers alike. The regulations were supposed to make it harder for unscrupulous lenders to take advantage of unsuspecting borrowers while at the same time make it harder for fraudulent borrowers to take advantage of lenders. These new rules were also designed to make comparison shopping easier so that borrowers could save money. Needless to say, the consequences of these strict guidelines have not produced the intended results.

Not surprisingly, one of the results of these guidelines is that mortgages are taking much longer to process than in the past because mortgage lenders are overwhelmed with meeting these requirements. The amount of paperwork now required to close a purchase or refinance loan is triple what we used to have to produce. The quality-control systems that we must have in place require  verifying and re-verifying information received, which takes countless employee hours.

While there are always exceptions, the paperwork that must go into a borrower’s file has grown exponentially over the years. With tax returns, bank statements, appraisal, preliminary title report, etc. it is not uncommon to have a file that is 375 pages thick. We recently had a file that grew to 784 pages! These files take time to put together, time to review and time to approve. Once we have all the pages that will be required for a file, the file goes in line to be underwritten [we have heard that some banks are taking 15 or more days just in the underwriting queue]. Once approved by the underwriter, the file goes in line to have the loan documents prepared. The documents are then sent to the title company, where the borrowers sign everything [some 50-60 signatures required just on the loan documents] and then the documents are returned to the lender’s funding department where they are reviewed again and the last minute quality-control checks for employment, credit and bank accounts are conducted.

It is a small miracle if the mortgage process can be completed within a 30-45 day period. Some banks are taking 60 or more days to close. In the days of old we were able to complete this process in as few as 5-10 business days. If we lenders, Realtors, title and escrow people, etc. can all stay calm and support each other by setting appropriate expectations, we will have smoother and more timely escrows.

 

 

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Written by appraisalmanagementnews

December 12, 2011 at 2:44 pm

EXCLUSIVE: FSA: Please report fraud suspicions

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by Sarah Davidson via Mortgage Introducer

John Hindle, acting smaller firms manager at the FSA, said reporting suspicion of fraud was “highly valuable” even if brokers had little factual evidence.

He said: “We take all fraud seriously, soft or hard, and as such we would encourage brokers to be reporting all those circumstances.

“We as investigators at the FSA very rarely get handed a well-proven case. It hardly ever happens. Investigations take a huge amount of work and we tend to start with the suspicion – it’s that kind of intelligence that is highly valuable to us.”

And Tom Spender, head of retail enforcement at the FSA, added: “It’s all about building up an intelligence profile.

“You might not have the full answer or the full case but if three or four people raise suspicions about one person that is logged at lenders, networks and with us. It builds a critical mass of suspicion that might trigger an investigation.”

Spender added that it was also far better for brokers to “self-report” than to find themselves caught up in suspected fraud where they might have been aware of a problem.

He said: “It’s much better for a broker to self-report a problem rather than for a problem to be identified to us by a lender and then we go searching.

“A lot of cases don’t proceed to a formal enforcement path and one of the reasons we take into account before deciding where we put our scare enforcement resources is whether the broker finally clicked, realized their involvement and reported it. We really take that into account and it’s very much in the favor of the broker.”

WHISTLE BLOWING

Robert Sinclair, director at AMI, said the industry had failed to help brokers think if they come clean in this type of scenario they would be safe from the authorities.

He said: “It’s that horrible feeling if you’re the broker and you get the fourth application through and then suddenly think things don’t look right. Do I keep my mouth shut, not take any more but hope I’ll get away with it or do I blow the whistle? And where does that leave me?

“Brokers don’t feel comfortable that they would be safe in that situation.”

But Hindle said: “So long as due diligence is followed with integrity then you could feel comfortable that you were doing the right thing by blowing the whistle we would expect brokers to blow the whistle in that scenario.”

Meanwhile Rob Killeen, director at London-based broker Capital Fortune, said reporting suspicions about other introducers was imperative to deter fraudsters.

He said: “If people think there has to be firm black and white evidence against them before they even get reported to the FSA then that’s the tip of the iceberg and will leave 99% of people’s behavior unchanged.”

DOMESTIC VIOLENCE

Killeen, who practiced as a barrister in London for 12 years prior to becoming a mortgage broker in 2005, said the reluctance to report suspected fraud reminded him of attitudes to domestic violence.

“In 2002 and 2003 the police wouldn’t make any arrests around domestic violence because if there was no firm evidence and she wasn’t black and blue then the police just weren’t interested.

“There was a huge campaign with lawyers that made sure police took those cases seriously. The result was police would get involved when there were just allegations that someone may be committing domestic violence behind closed doors.

“Mortgage fraud is very much a behind closed doors situation and brokers should be reporting sharp practices. Until we move away from that culture of acceptance, which I think we are but there’s a long way still to go, we’ll never eradicate fraud.”

WOOD FOR THE TREES

But Pat Bunton, director of operations and compliance at London & Country, raised concerns about the practicalities of reporting brokers without firm evidence.

He said: “If you are going to start saying this guy has done this wrong you need to be clear they have actually done something wrong.

“Otherwise we will just have chaos; if you suddenly ask brokers to report every suspicion they have it would be unstructured and you won’t see the wood for the trees.

“There also wouldn’t be enough resource to investigate all of those cases. But where you have clear evidence that something untoward has happened that certainly should be reported and the regulator should commit to investigating that as well.”

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Written by appraisalmanagementnews

November 22, 2011 at 8:24 pm

Google Enters the Mortgage Loan Business

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Business News Express via Melissa O’Neill

LoanSifter, Inc. (www.LoanSifter.com), provider of the mortgage industry’s most complete and intuitive product and real-time pricing platform, announced today a strategic relationship with Google Inc. that gives consumers access to mortgage loan products and real-time pricing based on LoanSifter’s technology, including side-by-side comparisons of mortgage loan products from multiple lenders through Google’s Comparison Ads.

Google’s Comparison Ads help consumers shop for mortgages online by retrieving quotes based on the borrower’s specific loan criteria.  Through a strategic relationship between both companies, Google will leverage LoanSifter’s industry-leading technology – which automates pricing for lenders using the largest real-time database of investor pricing and eligibility content available in the mortgage industry — to provide Google users with information on mortgage products and pricing from the lenders using LoanSifter.  When Google users get these rates, LoanSifter’s lenders will receive qualified online leads.

Greg Ulrich, production manager at Fairway Independent Mortgage Corporation in Colleyville, Texas, believes that Google’s popularity provides a great opportunity as another channel for borrowers to reach the company, without substantial investment costs.  ”This saves us money, allowing us to pass a greater savings to the consumer,” Ulrich said.

“We chose LoanSifter for our Google auto-quoting because it enables us to customize our pricing more accurately and effectively,” Ulrich added.  ”Other vendors require manual supervision, which would have been problematic in keeping up with market shifts.”

Consumers who search for popular mortgage-related terms or phrases on Google are drawn to Google’s proprietary mortgage Comparison Ads, where they can anonymously provide details such as their desired loan amounts and credit scores.  Google will then retrieve multiple reliable offers from dependable lenders, placed side-by-side so the borrower can compare them.  After investigating different scenarios and choosing a lender, the borrower is then able to contact the lender by phone or e-mail.  Borrowers do not have to fill out lengthy forms or click through walls of advertisements in order to access up-to-the-minute loan products and rates, and the leads generated to lenders are anonymous, so that borrowers can protect their private information until they are ready to move forward in the mortgage process.

“Our relationship with Google will be of tremendous benefit to both lenders and consumers,” LoanSifter President Bruce Backer said.  ”A growing number of borrowers are using the Internet to find the best possible mortgage deals, and Google’s immense popularity makes it a first stop for many.  Borrowers benefit from the side-by-side comparison in an open marketplace, while lenders benefit from LoanSifter’s ability to accurately price mortgage scenarios on their behalf.”

 

 

 

 

 

 

 

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Written by appraisalmanagementnews

November 8, 2011 at 11:14 pm