In 2017, a Complete Application is still the Holy Grail
Astonishment: That's the emotion I felt as I reviewed the home loan application process for a friend recently. I reviewed the initial application documentation requirements and said that the request seemed a little light; not as many documents requested as I would expect. Certainly, the stack of disclosures were in-line, but I was worried that there would be subsequent requests, particularly given some of the things that I knew about my friend's profile. But there it was, so I told my friend to expect further requests, and be prepared for even more requests - more bank statements, more income documents - and clarifications following those submissions.
In fact, that's exactly what happened! Several weeks later, the lender requested an additional set of documents, in addition to several explanations. The irony of this; I could look at my standard complete application checklist and see that the originator could have requested this at the beginning. My friend didn't get too bothered by the requests because, hey, it's the mortgage business. Don't they always do this?
This happens when a loan officer requests only the explicitly required documentation without looking at the customer's profile and fails to field underwrite how extenuating circumstances might change that.
Consequences of Incomplete Applications
1 - Loss of Credibility
Why would the loan officer create the impression that he didn't know exactly what documents his or her underwriter would require? If there was an agent involved, how would the agent perceive him? (I doubt that, if this had been an agent referral, the loan officer wouldn't have much luck with repeat business from this deal.) Did he or she really think the documents wouldn't be needed at some point??
2- Loss of Time and Money
Effectively, this back and forth, which occurred twice, delayed the underwriting decision 2 weeks. Not terminal for the eventual outcome, but a waste of time; the borrowers time AND the loan officer's not to mention the time of the mortgage lender's staff.
3- Loss of Loan Options
Different loan programs and guidelines can change the documentation requirements. Being tied to a limited set of documents might limit the borrower's choices, because requesting additional documents or satisfying an additional set of underwriting criteria may take too long to meet a closing time frame, or require too much risk or effort.
It's 2017 - Manage the Process and Request the Information UPFRONT
Ultimately, the loan originator owns the process. If you are a loan originator, having a system to ensure that you effectively communicate and obtain all documentation means you will engender borrower and agent loyalty, as well giving you more time to source new business instead of chasing down conditions. Our Complete Application Kit, part of the Loan Officer's Marketing guide, is an example of this kind of tool.
PerfectLO can help you with all of these mishaps, errors and headaches. Our interactive smart mortgage software asks one question at a time and takes and completes a thorough non intimidating loan interview. At the same time it builds a Perfect DOC CHECKLIST for your clients. White labeled, Mobile Friendly and Multi-Language. For more info email firstname.lastname@example.org or call 800-277-1687.