John Pataky is executive vice president of EverBank. He
leads the consumer division, including the banking and
home-lending businesses. Pataky joined EverBank in
2010 to lead the newly formed retail sales/service and
delivery organization. In 2011, he was named chief operating officer for EverBank Direct, the company’s national
banking business. Prior to joining EverBank, Pataky spent
six years leading several divisions at Credit Suisse and
nearly t wo decades with Bank of America/Barnett Bank.
Reach him at (888) 882-3837.
Avoiding Underwriting Pitfalls
Ask the right questions during preapproval to head off issues
By John Pataky
It’s an all too common scenario in the mortgage process: A borrower has filed the required docu- ments and feels confident moving forward with the loan, until that borrower is suddenly hit with a
problem during underwriting. This may cause a significant delay in the loan process and require unforeseen
legwork, leaving the borrower wondering why the
issue didn’t come up in the initial consultation with the
Although it’s impossible for originators to always
identify potential problems that may come up during underwriting, they can play an important role in
streamlining the loan process by recognizing red flags
through their initial contact with the borrower.
The primary path to identifying potential roadblocks with a loan is for originators to know their
bank’s investor guidelines like the back of their hand.
These guidelines outline how loans are underwritten.
The more loan officers familiarize themselves with
their lender’s requirements, the better they will
become at noticing discrepancies in loan applications.
More importantly, they will be able to pose the right
questions to their borrowers early on, which will help
avoid surprises during underwriting.
Every lender has slightly different guidelines, but there
are a few common questions originators should ask
during initial loan consultations and information they
should determine shortly afterward to get a complete
picture of a borrower’s financial background and
Although it may seem standard, originators should
be sure to ask about the loan amount the borrower
is seeking and the range of home prices and locations they are considering because different counties designate different loan limits. What is referred
to as a jumbo mortgage, for example, might be any
loan above $625,000 in one county, but $417,000 in
This information also will be necessary later to help
the underwriter ensure that the lender isn’t taking on
too much risk and that the loan amount doesn’t exceed
the value of the home. Keep in mind that if an originator or borrower uses online real estate sites to gauge
home prices, they should also check recent home sales
in the area, because appraisers will consider the most
recent sales when determining the home value used
for loan qualification.
Once originators have determined the loan
amount and location of a property, they can
calculate the client’s loan-to-value (LTV) ratio by
dividing the loan amount over the home value
or price, whichever is lower. They should then
note whether the LTV falls within the parameters outlined in their investor guidelines for that
mortgage product. Having a higher LTV does not
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