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You Need To Know Who-Is In Your Loan Application Process

While everyone who has ever purchased a home is aware of the Loan Officer that took the application for their loan, and has somewhat of an idea that somewhere in the middle is the Bank, then the loan finds its way to the Title company and then you are at the closing table. Truly if it was always that simple there would not be loan escalations, waiting periods that seem to never end or even rejected loan applications.

So for today’s HARP (Home Affordable Refinance Program) mortgage market, I will break the process of the path of your loan and how it may go,  while it is in HARP process. (Note: over the next few posting in this category- know the players of the mortgage industry, I will be going over the job descriptions and responsibilities of each player in the loan process)

Before I proceed any further, it is important that you do know how your loan is processed,  and that it is indeed a process. The best way to I can  describe it to you what process is like:

Imagine if you were to sit down with a custom home architect, and laid out your desires for how you would like your custom home built. Describing  how you would like to sit on your patio and watch the sunset or rise. You description of your floor plan and layouts all of the details that you envision for your custom built home. You realize that the architect is taking your application of how you would like you home designed.

The Architect then takes your information and creates a plan, then passes the information on to the custom home builder. The custom home builder has to pull permits, get surveyors out to your property, to determine how much land leveling or dirt must be brought in. Then the foundation of your custom home is laid out, checked and inspected, then the foundation is poured to the specifications that the custom home builder and the architect have provided. Local building codes must me met before each step of your new custom home will be built. From the foundation to the final wall being put into place, the electrician and plumbing are all required to meet the building codes required by LAW.

Whether you are aware of it or not, your loan is a customized loan, it is not a pre-packaged ready to move in tract home. It is built to your needs, and must meet the requirements set by law. If you are able to grasp that your loan application is unique and must be handled as such you will be a much more contented person during the loan application process.

The Mortgage Players

The Loan Officer

The first person or contact with your loan application is going to be the Loan Officer. The Loan Officer should be aware of the type of loan you are seeking.  Your contact with your HARP Loan Officer can be made in person or online with the bank. Due to the different types of loans that fall under HARP some banks will only receive and work on loans that hold the 1st mortgage on your home. The familiarity of your previous loan is all on record with your current mortgage holder. So unless you are completely disgusted with your current Mortgage Bank or feel that you are not getting the level of Customer Service throughout the life of  your current Mortgage stick with your original bank. It may make your processing easier to achieve.

The Processor-Mortgage Specialist (MS)

Processors are your guide for your loan. They receive your loan application, review the details of your application. While it may seem to you that this process should be rather simple and easy perform there are many aspects to your loan that may need to be considered,everything from employment, to payments on your current loan, origin of payments if there are certain circumstances  involved in your refinance, such as removing a currently listed co-borrower due to death or divorce-separation. Before your loan is able to advance your MS must make sure that your Loan Officer has indeed provided them with all or correct information, prior to moving your loan to subordination or to underwriting.

Subordination Process

If you have like so many other homeowners have taken a 2nd mortgage on your home, you may not have taken the 2nd with the 1st bank. So your new application to wrap your loans together must be approved by the 2nd bank for the buy out of their loan. Many times your application may come to a screeching halt if the 2nd mortgage bank drags their process out. The bank to which you have your loan application is not able to make the 2nd mortgage holder perform their due process and make them release your 2nd any faster than the 2nd lien holder is willing to perform. For the 2nd Mortgage Bank, they view your new loan as a loss of income and in some cases willing to draw out the subordination paperwork over a period of 8 weeks or longer. Some 2nd Mortgage Banks have even denied agreement for their lien to be bought out by another bank.

It is important for you to understand that if you are wrapping your loans into one mortgage note, and your loans are currently held at different banks, this will extend your loan process. The Bank to which you are applying for your  new loan has to bring all of the financial players and benefactors together in agreement to move your loan to underwriting. The bank that is holding your 2nd or even 3rd lien has a contract with you, and do not have to agree to a buy out. While most banks with 2nd or 3rd liens are agreeable to your request and will process your subordination as fast as possible. However, you again must realize with the added processing to your loan, you are in line with the 2nd and or 3rd lien holding banks, and they as well are working as quickly as possible as well.

All of the fit throwing with your Loan Officer to make your application process faster will not do you or the Loan Officer any good. Some Loan Officers will press and ride the MS or their Site Manager to make your loan go faster, while this will cause delays for your loan and other loans that are being processed along with yours it will not make your loan process faster.

Underwriters

Underwriters take the loan from the MS and begin the process of your loan from a more physical point of view. Firstly, if you are converting from a conventional loan to a FHA, Fannie Mae, Freddie Mac loan, you may not have escrowed your monthly mortgage payments to pay your taxes or homeowners insurance, the Underwriters must determine the amounts that are currently owed and add them into your mortgage application amount or if your Loan To Value is askew they determine what you must bring to the table. Other aspects, such as termite bonds, flooding, or if you are located in a current FEMA , National Disaster Area, the list goes on and on.

While some applications are in themselves a quick resolve, and will get to the Title Company who has to validate that your home owners title has no liens that have been placed upon your property, everything from over due taxes, to unpaid bills that a contractor has legally placed a lien, insurance requirements are met the list is not endless but it is required before you can close your loan application.

Before You Go To Closing

Once your loan has been through this process with possible subordination completed and with an Underwriter, your loan goes back to the MS who may have a list of information that is required from you, it may be that all of your documents are in order and the MS should contact you and provide to you the entire package of what your new applied for loan will contain and what monies you may need at closing.

Your refinance loan application may dependent upon an appraisal, or a home inspection and or you may be expected to have another requirement such as termite bonding etc. A great Loan Officer, one who is in the business as a professional whose business is based upon longevity and referrals will be a great asset and help to you for this process. The bank who you have an application for a loan has appraisers, you Loan Officer and or MS will make you aware of any processes or documents you may need to get completed before your application can move to the closing table.

Much like the custom built home, the inspections must occur and be signed off as completed, you, as the soon to be new home owner must inspect the home to see if it is what you want to have, and are willing to agree upon it. All of this must happen before you actually can sign the final papers, and have home ownership.