I often tell my GA short sellers that, just like getting a mortgage loan in the first place required the submission of applications and documentation, the same will apply when they request their lender to let them out of those loans. Ultimately, more short sales are derailed by the sellers themselves when they fail to return the documentation as requested by their lender's negotiator.
Short sale doesn't mean you can take short cuts.
This article from Connecticut mortgage loan officer George Soutos is a reminder to both new borrowers and current borrowers seeking short sales or modifications that complete and accurate paperwork is still the name of the game.
Last week I wrote a blog titled "What Is The Single Biggest Reason For Mortgage Commitment Delays?" in which I identified the single biggest reason for delays on obtaining mortgage commitment is, documenting assets, and more specifically deposits and withdrawals on bank statements. However, even though this is the single biggest causes of delays, documentation in general is a major issue today, and the reason why Borrowers Need To Provide The Exact Documentation That Is Asked For. Here are a couple of additional reasons why:
- Borrowers many times do not keep important documents such as Paystubs, Tax Returns, W2's, and Bank Statements. All these documents are needed for every Loan Program that requires full documentation, except for Tax Returns, but Tax Returns are needed for anyone that is self-employed, receives commission or rental income, as well as anyone who claims unreimbursed employee expenses. I would never dream of not hanging on to these documents for a significant amount of time, but many do not, so there is a delay in obtaining them. Other documents that I am always surprised that Borrowers do not kept, or place in a location that they can find easily are:
- Bankruptcy Papers.
- Divorce Decrees
- Records of Child Support Payments
- Retirement Award Letters
- Yearly Social Security Statements
- 401K Statements
Not having these items readily available can be an issue, because some of them are difficult to reproduce, and as a result cause delays.
- Borrowers in general do not follow through on documentations that is asked for. When the Loan Originator or Underwriter asks for all pages of a particular document, they mean ALL pages. It does not matter if a page is blank, if it is 1 of 4 then ALL four pages are needed. The Underwriter or Loan Originator do not know that the page is blank unless they have it and can see that the page labeled 4 of 4 is a blank page. Borrowers have a hard time understanding this, so they leave the blank pages out which causes a delay, and then they some times take days to provide it. In the mean time the Loan cannot be underwritten without it. When an Underwriter or Loan Originator asks for something, they need exactly what they are asking for, not close enough, close enough does not satisfy the required documentation.
It is very important for everyone involved in a transaction to make Borrowers/Buyers aware of this. Many Realtors commented on my previous blog stating they talk to their Buyers about the importance of starting to put their documents together when they first meet with them. This is an excellent practice for Realtors to follow, and those that do not, need to consider doing so. By the time I meet with some Borrowers to Pre-Approve them for a loan they have already identified a property they want to purchase, which means there isn't much time for them to put all the documents they will need together. If we all work together, and prepare our Borrowers/Buyers for the documentation they will most likely need, as well as express to them that Borrowers Need To Provide The Exact Documentation That Is Asked For, we can eliminate much of the stress, Loans will be approved much faster, and Closings much sooner.
Info about the author:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or email@example.com