Nathan Rufty is a mortgage coach and trainer with Mortgage
Marketing Pros, a company that works with loan officers to
develop marketing plans that increase leads and closed loans.
Mortgage Marketing Pros was created by a producing loan
officer and a master marketer to teach mortgage professionals
how to create their own businesses without relying so much
on one or two streams that can dry up without warning.
For more information, visit mortgagemarketingpros.com.
Reach Rufty at (909) 731-1218.
Lose the Loan, Not the Lesson
Learn guidelines and ask questions to ensure every loan file is complete
By Nathan Rufty
Mortgage guidelines change so often that it can sometimes be hard to keep up with them. Loan originators are not ex- pected to know every underwriting
guideline, but they should at least know the basics
and have a clear understanding of the program matrix.
Anyone can originate a turndown, but identifying a
viable loan at the beginning of the pre-qualification process is what separates great originators from the pack.
Originators want to close good loans that can then
be sold on the secondary market. This all starts with
originators gathering and reviewing all items required
by the guidelines. If you are unsure about an upfront
condition, be proactive and connect with your account
executive or underwriting department to get your
questions answered early.
Seek answers early
The last thing a loan originator wants to hear is that
a file was declined because of a condition that could
have been addressed while completing the initial loan
application. From the first contact with the borrower,
ask a lot of questions to determine if you need to
gather supporting documentation during the qualification process.
At this first visit, find out about credit issues that
might present problems, such as short sales, foreclosures, collections, judgments, late payments, charge-offs and disputes. In addition, determine income
sources. Can the borrowers provide paystubs and
W2s? Are they Schedule C earners, Schedule E filers,
self-employed? The answers to these questions will
determine what documentation will be needed.
Finally, determine the borrowers’ assets that will be
used for reserves, downpayments and closing costs
You will need a paper trail for these funds through
checking, savings and CD accounts, as well as gift
funds from donors, retirement or 401k plans.
Gathering documentation early will leave nothing to
chance that may lead to a declined loan. Originating
a clean and complete file from the start will ensure
a smooth and stress-free loan process. Gathering as
much supporting documentation as possible also will
paint a better picture for underwriters and investors
about what the borrowers are looking to achieve with
Specialize and study
One way to learn and stay abreast of guideline changes
is to specialize in a couple of loan programs, such as
U.S. Department of Veterans Affairs (VA) purchases,
U.S. Department of Agriculture (USDA) refinances,
or first-time homebuyer programs. This ensures you
know the guidelines for those programs like the back
of your hand. You also will become the go-to loan
officer in your area on those programs.
Pick a niche program you would like to work with
and talk with your company’s underwriters or an
agency rep to find out what pitfalls to avoid before
getting too deep into the loan process when originating loans under those programs. This will help
you avoid uncomfortable phone calls to borrowers,
homeowners and Realtors because loan requests get
declined. It is your job to originate a complete and
thorough loan file before submitting it to underwriting for review.
Underwriters will follow the same guidelines you
must follow when looking to close a loan. They are
looking at company guidelines and agency or investor
guidelines to ensure that loan can be sold. So, before
a Loan Estimate gets issued, make sure you feel confident that your loan will fund. If you have any concerns
about a loan, talk with the underwriter immediately so
you don’t waste your borrower’s — or anyone else’s —
time, money and energy.
Take time to review
On the flip side, spend time reviewing loan approvals you get back from underwriting. See what they
requested while reviewing the loan file. This will only
make you a better originator. Make it a goal to submit
loan files to underwriting only once to receive full loan
approval. This will speed up your processing time.
The days of gathering limited amounts of paperwork
and throwing incomplete loan applications to processing are over. To be a professional loan originator, you
must spend quality time with borrowers and put all
the pieces of the puzzle together for the underwriter
to issue a clean approval.
This helps the underwriter ensure that once a loan
funds, it will make it off the company’s warehouse
line to make room for new loans to come through.
Working with underwriting and understanding the
guidelines ensure that you put the best interests of
your borrowers and your company front and center.
Slow down and review all documentation. Learn
what underwriting is reviewing so you can catch those
issues and address them before they cause a delay.
When you take short cuts, you can miss items, such as
a court-ordered child deduction coming out of your
borrower’s paystub every two weeks that negatively
impacts the debt-to-income ratio.
In a case like this, you very well may lose the loan,
but don’t lose the lesson. In addition to losing this loan
because of an item you should have caught early, you
also may lose the Realtor as a referral source, as well
as any new business you might have gained from the
borrower had you saved the loan.
You are not the one who put the borrowers in the
financial position they are in, but with your guidance
you can watch out for their best interests and present
options that can save their loan. But you can only do
that if you fully understand the program guidelines
and ask the right questions upfront.
n n n
All originators want to close loans, but they must
close loans that perform and meet guidelines to
ensure they and their companies succeed. To succeed at making better loans, never be afraid to ask
for help from underwriting, account executives, or
agency reps. When you are unsure about a guideline — perhaps one of those in a gray area you do not
quite understand — pick up the phone. That’s a much
better call to make than the one to your borrowers
when their loan gets declined. n
early will leave
nothing to chance
that may lead to a