| Loan officers who have lost their subprime golden | | | | problem won't happen again and exactly what they |
| goose are streaming into FHA loan origination. Their | | | | have changed in their life to prevent it from doing so. |
| FHA loans are being turned down left and right by | | | | Then have them explain why they feel the underwriter |
| frustrated underwriters who can't believe such junk | | | | should reasonably expect them to be able to make |
| was put on their desk. | | | | the payments. |
| I'm about to place in your hands one of the most | | | | Don't skip any of those points. Once the borrower |
| powerful tools there is to make sure you get your | | | | understands what is needed, let them put it in their own |
| loans approved by FHA underwriters - the ability to | | | | words. |
| excel at packaging a loan submission. | | | | Many loan officers tell their borrowers to keep their |
| First things first. These tips are worthless without the | | | | explanation letter short. Don't fall into this trap. Make |
| proper foundation. Here it is: Make sure you have a | | | | sure the borrower explains everything in tedious detail |
| borrower who really deserves a loan! | | | | to the point that anyone who picks up that loan file 10 |
| I know loan officers think everyone who wants a | | | | years from now can easily understand why this |
| home deserves a loan as long as there is any way to | | | | borrower ended up being approved. |
| squeeze them into the guidelines. Use common sense | | | | Here's a bonus tip: To satisfy the underwriters who |
| though. Make sure you really do believe someone will | | | | don't like to read, always include your own cover letter |
| be able to make the payments before you go out of | | | | in the submission file briefly summarizing the borrower's |
| your way to get a mortgage approved for them. | | | | credit explanation and adding your own interpretation |
| Don't use the typical excuses so common during the | | | | of which compensating factors the underwriter should |
| mortgage boom years that you "aren't their parent" or | | | | consider. |
| "it's up to them to know whether they can make the | | | | When you structure the explanation part of your file |
| payments" or "they'll just go on to someone else." The | | | | this way, you are helping the underwriters make the |
| loan officers spouting those excuses are a prime | | | | decision without having to figure out on their own how |
| reason that today you are having to fight tooth and nail | | | | they are going to justify it. This makes them more |
| to get loans approved that were once easy to close. | | | | comfortable giving you an approval with fewer |
| I'm not telling you all your customers must have pristine | | | | conditions. |
| credit. I am saying you should not be helping deadbeats | | | | Tip Number 3: Document the borrower's credit |
| who haven't changed their habits, but want a home | | | | explanation and solution. |
| because "they are tired of throwing their money away | | | | This is the extra punch even experienced loan officers |
| on rent." Market yourself better and find the people | | | | often leave out, but it is the step which can take you |
| who really did have an unexpected problem ruin their | | | | above the level of the average loan officer into the |
| credit and who have learned their lesson. Remember | | | | category of miracle worker in the eyes of your |
| FHA will cut you off from the program if you allow too | | | | borrower and their real estate agents. |
| many deadbeats through your filter anyway. | | | | Get some documentation to prove the borrower's |
| With that in mind, here are 3 power tips for writing an | | | | credit explanation is true and that their explanation of |
| effective FHA credit explanation letter. | | | | how they have changed things is true. I know this |
| Tip Number 1: Don't write the credit letter. Let the | | | | involves extra work for you and for the borrower. It is |
| borrower put it in their own words. | | | | worth it. If the borrower had a medical problem get |
| Probably not what you were expecting, but this is very | | | | something from the doctor, or include bills in the file. If |
| important. A perfect letter put together completely by | | | | the borrower was laid off, include a copy of their |
| the loan officer can easily be detected by the | | | | termination letter or evidence of receipt of |
| underwriter and it will hold less weight when they see | | | | unemployment benefits. If the borrower said their |
| it. Allow the borrower's own words and own | | | | problems occurred because they had no medical |
| personality to make their way into the letter. | | | | insurance, prove they have it now. You get the idea. |
| Tip Number 2: Don't leave the borrower completely on | | | | Of course the borrowers often have difficulty finding |
| their own to write the letter. | | | | this type documentation. That's why the average loan |
| Most loan officers still simply give the borrower a list of | | | | officer never gets it. Push them. It doesn't take much |
| derogatory accounts and ask them to explain them. | | | | documentation to add considerable punch to your |
| Don't do that. Give your borrower the proper guidance. | | | | case that the loan should be approved. |
| Tell them what you expect from them. | | | | Every day I talk to loan officers crying over turned |
| Sadly, the average high school graduate today is | | | | down files that should have been approved. The |
| functionally illiterate when it comes to the task of | | | | common element in almost all of these cases is that |
| putting together such a letter. You are doing good | | | | the loan officer left it up to the underwriter to figure out |
| people a disservice when you leave it all up to them. | | | | why the loan should be approved. To avoid extra |
| They could probably do a fine job of explaining it | | | | work which might be wasted, loan officers submit the |
| themselves if they were speaking directly to the | | | | loan hoping it will slip through without having to provide |
| underwriter and the underwriter could ask follow up | | | | this documentation. Underwriters don't have time for |
| questions. That doesn't happen anymore, so you must | | | | this. When you put them in this position their answer will |
| help them get it right from the beginning. | | | | be to turn the loan down or approve it with |
| After the borrower explains the details of the situation | | | | approximately four thousand conditions of approval. |
| which caused the credit problems and you have | | | | Times are difficult in the mortgage industry today. The |
| informed them that it is a crime to lie in this instance, | | | | mortgage originators who survive will be those who |
| have them write out exactly why the problem | | | | find a way to help the people other originators aren't |
| happened. Make sure they address and account for | | | | helping. Becoming an expert on FHA loans can be the |
| every single negative item on the credit report no | | | | best way for a loan officer to do that. Use these tips |
| matter how old or how insignificant it appears. Get | | | | to get more loans approved and get more referrals |
| them to explain in their own words why they feel this | | | | from your happy customers. |