Post-housing market collapse, getting a mortgage got tough. Rather than a joyous experience and a simple process, the journey from application to closing on a mortgage loan sat in the same realm as root canals, DMV visits, insurance claims, and getting faulty credit fixed.
Since that time (nearly a decade ago!), much has changed, but there’s still a stigma attached to the loan process. Much of this has to do with 3 things: poorly trained Loan Officers, companies slow to adapt to new technology & processes, and the overlays some lenders stack on top of traditional guidelines.
Overlays are when a lender requires documentation beyond what is traditionally required for a specific program. For example, while Fannie Mae may require only a verification of employment to document income, some lenders may require 2 years W2 forms on top of that – the request for W2s would be an overlay. Overlays can result in additional layers of paperwork, and additional rounds of documentation requests along the way as overlays present themselves.
As technology progresses, lenders have access to all sorts of data verification systems behind the scenes. Further, for many loans, automated underwriting systems have come to advance to a point where not a lot of documentation is required. If lenders are set up to verify income through a 3rd party, verify assets through a secure online platform (of course, with borrower consent), and do a check for data accuracy on clients without the client providing anything, then the amount of paperwork needed from start to finish can be quite minimal. In some cases, a copy of a photo ID, a signed authorization to obtain a verification of employment, and a copy of an insurance declarations page is all that’s needed from a borrower to get from application to closing. However, not all lenders and mortgage outfits are equipped or willing to use the tech available, making the process more burdensome for their clients.
And of course there are horror stories about poorly trained Loan Officers requesting round after round of documentation because they don’t know any better. “Ok Mr/s Borrower, I need a paystub today” then the next day, “actually, I need a months worth of paystubs and 2 years W2 forms”, and the following day, “actually, all of the above and 2 years tax returns”, etc, etc, etc. A poorly trained or inexperienced loan officer can make the process much more tedious than it has to be.
How Simple and Fast Can it Be?
Let’s look at a recent, real life, MasonMac example. 13 days from application to clear to close (with a holiday weekend in the middle of that). Borrower’s income was salary and steady, so their employer documented their income – they sent in 0 income documents. It was a refinance without the need for asset documents. There was no additional income, no credit issues nor explanation needed. Borrower was required to send ID, insurance, and a quick note about a previous address. They e-signed their disclosures, appraisal and title were ordered and received within a week, and the entire loan process was wrapped up in just 7 business days.
Not every loan is that fast. If we have variable income, or income derived outside of salary, there will always be additional documentation. If assets are needed, we need statements. If a loan is extremely complicated, the paperwork will need to go along with it. The loan process overall, however, is not the monster we had to deal with in 2013. Today, the process at MasonMac is quick, streamlined, and easy to navigate thanks to agency-direct underwriting, the newest and best in technology, and the incredible team working behind the scenes.
Have questions about the loan process, our loan products, or anything else from the MasonMac world of mortgages? Ask an expert for an instant response or give us a call today!