A fix for slow underwriting times

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In a bid to remain competitive with the big banks during the year’s busiest season, one broker is suggesting lenders need to revamp underwriting paperwork policies to expedite the deal process.

“Lenders don’t often look at documents at the same time they get a mortgage request, they generally view them after and you’ve got different people looking at the documents and different people doing the underwriting, so there is a real disconnect, in my opinion,” Denny Segal of Dominion Lending Centres Origin told MortgageBrokerNews.ca. “That could be smoothed out if you had some people in power to do both – make a credit decision and review the documentation, which could break up the disconnect.”

The spring and summer markets are traditionally busiest for the real estate industry, and now that that season is underway, brokers are encountering more frustration completing deals.

Toronto, for example, just had a record month for sales in April, with a reported 11,303 homes sold last month.

“Lenders provide service level agreements, generally speaking, that say they will turn something around in a specified time but you can’t control volumes in the marketplace,” Segal said. “And sometimes not having the ability to communicate directly with the underwriter is frustrating. We have to speak with a document clerk … who isn’t as familiar with the file.”

Still, some brokers are more efficient with underwriting turnaround times, according to Segal.

“It’s just process,” Segal said. “These lenders are big institutions that have way of doing things … there are some in the broker community that are much better than others and that’s where the business goes.”
 
  • Rosemary Madden on 2015-05-07 9:52:20 AM

    Well said and I agree 100% that there is definitely a disconnect between the Underwriter and the "document specialist" the lenders have to realize that a 48 hour or more turn around time for documentation review is not acceptable.

  • Ross Kay on 2015-05-07 10:12:21 AM

    Lenders want to extend and not decrease turn around times for outside agents and a Mortgage Broker must take proactive steps to reduce this issue.

    Of the 11303 homes sold by TREB members last month only 28% were first time buyers who should have all been Pre-Approved to a point where only the home's appraisal is contingent upon the Approval being a commitment.

    Mortgage Brokers need to get into the real estate offices and educate REALTORS on how to maximize the process in their clients best interest.

    Allowing REALTORS and Consumers to follow mortgage approval processes that really mean nothing benefit the lenders and harm mortgage brokers.

    Brokers are the experts. Brokers are Licensed. Brokers save clients $1000's. Brokers need to lead this cause through proactive engagement with both the re sales rep community and the public at large.

    What consumer would forgo a trip to the Bahamas or a new car free of charge simply in order to use a bank directly.

    Bizarre folks, just bizarre

  • Ferdinand Gatt on 2015-05-07 10:20:00 AM

    When the "No Fee" Mortgage Broker system first started 27 years ago, we used to get 4 hour turnaround from several Lenders. Now the benchmark is 24 hours from one Lender and that often ends up being 48 hours because of volumes or vacations or at month end. We have definitely gone backwards as far as turnaround times.

  • OkanaganBroker on 2015-05-07 10:35:19 AM

    There are still lenders out there with quick turn around times and "all in one" underwriting and doc review by one person...In my case they are called Credit Unions! Every time I try another monoline I am disappointed, and most big bank lenders aren't much better...though I did just get a quick turn around from the "new" TD...we'll see how that goes. I am lucky to have some great CU's who value my business and my clients. There may be slightly better compensation elsewhere, or slightly lower rates, but if you cant turn around a deal quickly, especially in todays market...whats the point?

  • Keith on 2015-05-07 11:05:26 AM

    If a broker is not getting a prompt response then consider the following:
    1. Is the deal being submitted in complete form with full disclosure so that an educated decision can be made quickly by the lender.
    2. If the deal is not being submitted as above then guess where it ends up in the que of approvals. It is takes more time then it waits until they have the time. They would rather send out 3 yes then one maybe that needs more detail.
    3. Did you send them a file or request that looks like you are shopping around? How much time would you put into the client if they seemed to be shopping between you, banks and other brokers. Your answer is the same one that lenders feel when they receive the same file.

    Yes, some process' can slow things down. How well do you know what that process is to ensure quick turn around and approval for your client.

    Just my two cents and food for thought.

  • Keith on 2015-05-07 11:05:48 AM

    If a broker is not getting a prompt response then consider the following:
    1. Is the deal being submitted in complete form with full disclosure so that an educated decision can be made quickly by the lender.
    2. If the deal is not being submitted as above then guess where it ends up in the que of approvals. It is takes more time then it waits until they have the time. They would rather send out 3 yes then one maybe that needs more detail.
    3. Did you send them a file or request that looks like you are shopping around? How much time would you put into the client if they seemed to be shopping between you, banks and other brokers. Your answer is the same one that lenders feel when they receive the same file.

    Yes, some process' can slow things down. How well do you know what that process is to ensure quick turn around and approval for your client.

    Just my two cents and food for thought.

  • Ross Kay on 2015-05-07 12:14:07 PM

    Ferdinand,

    Now thats what brokers need to hear. Yes 4 hour turnarounds were normal on weekdays 27 years ago and at times 2 hour approvals could be had if you had some clout with a bank.

    In my case I am talking about the turn around for a REALTOR with a local Bank Branch and not even through a broker, which back then did not resemble what MBs can offer today.

    Back then most good REALTORS themselves carried a dozen or more mortgage factors in their heads but in 2015 a blank stare appears when you ask a REALTOR what the factor is for a 4.79% 25 yr am.

  • Devon on 2015-05-08 9:16:09 AM

    I think we need better service from the lenders but some inefficiencies with less experienced agents could also create bottlenecks. The more time anyone touches a file whether mortgage originator or underwriter/document specialist, the longer the file takes to close.

    Poor information or lack thereof in a submission can also cause delays. I think that we all should underwrite a file before submitting it to an underwriter for adjudication and that means we should have all the documents in hand before a submission so we can determine if we are wasting our time, the lenders and creating a bunch of applications that fill the queue that will be a decline.

    Just my thought but brokerages should spend time training their agents once they have acquired them, and this might take some work but review the applications of newer agents until they are more experienced so that incomplete submissions wont create a 48 hour queue.

  • Devon on 2015-05-08 9:17:23 AM

    I think we need better service from the lenders but some inefficiencies with less experienced agents could also create bottlenecks. The more time anyone touches a file whether mortgage originator or underwriter/document specialist, the longer the file takes to close.
    Poor information or lack thereof in a submission can also cause delays. I think that we all should underwrite a file before submitting it to an underwriter for adjudication and that means we should have all the documents in hand before a submission so we can determine if we are wasting our time, the lenders and creating a bunch of applications that fill the queue that will be a decline.

    Just my thought but brokerages should spend time training their agents once they have acquired them, and this might take some work but review the applications of newer agents until they are more experienced so that incomplete submissions won’t create a 48 hour queue.

  • Tim on 2015-05-10 11:05:24 PM

    Having worked as both a lender and a broker, my experience is that the opposite is true - trying to do both is inefficient and I don't see how underwriting a deal & reviewing all of the accompanying documentation could be more efficient than underwriting alone (and having a second person confirming the documentation).

    Consider the complete waste of time spent confirming 20 pages of bank account history on a deal that is declined by the insurer. Far better to have specialists that can quickly analyze and confirm standard documentation after the approval, and bring to the underwriter's attention should some deficiency come to light.

    Another problem (from an underwriting perspective) is that document review interrupts workflow - "switching hats" and trying to remember, for example, what to look for on an NOA (re: fraud) is cumbersome at best, and makes both processes less effective and slower.

    Without an unlimited number of Underwriters, demanding both functions upfront will greatly slow turnaround times, not improve them! As some of the previous comments seem to suggest, if broker wants good turnaround times it is incumbent on them to review their own documents, and disclose/address any deficiency or request for exception upfront. Failure to do this has far more effect on turnaround times.

  • John Greenlee on 2015-05-13 9:49:20 AM

    Interestingly enough, as this article came out last week, I had both ends of the tape with two different lenders.

    Lender 1 - I submitted the deal and documents on Wednesday and didn't hear back at all until Monday and the documentation wasn't fully reviewed until Tuesday (after the financing condition).

    Lender 2 - I submitted a deal at about 11:30am and submitted documents about 5 minutes later (after scanning them in). The documents had been fully reviewed by 1:00pm and I didn't get the APPROVAL until about 2:30pm.

    Both monoline lenders. Both lenders have a second person review the documents, not the underwriter.
    Both deals went with full disclosure.

    No complaints really with either lender as we do significant volume with both, but it goes to show you that not all lenders are the same on the back end or the front end.

  • Ron Butler on 2015-05-13 10:14:34 AM

    Smart lenders are thinking about addressing the problem of having too much work in April, May, June and not enough work in August, December and January. Here's the answer: incentive based pay for underwriters. In that model the underwriter can work 12 hours a day when they need to and then take time off in slow periods. Perfect for our industry. John Webster and Jim Smith pioneered this concept and now forward thinking lenders are seeing the virtues. Those that combine this system with great tech are the winners in this space.

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