It's time. All your documents are in ordered, your property has been appraised and now you're ready to close right? Well, not quite yet.
Your loan application and all supporting documents must be reviewed and approved by an underwriter. What??? You may be thinking "but my loan officer told me I was pre-approved, the processor told me they had all the documents they needed". That is all true but ultimately your loan must be approved by an underwriter. The underwriter is the one who makes the final decision on your approval. It is their job to make sure that all of their company's guidelines for lending are met. They are not out to get you (although it may seem that way), they do not make stuff up to drive you crazy (although it may seem that way) and they usually don't get any pleasure in adding conditions to your loan approval (although it may seem that way).
The underwriter will review all of the information and make a recommendation based on the information that has been provided. Sometimes the recommendation is a denial. Typically though, the recommendation is an approval based on certain conditions being met. This is called a "conditional loan approval". The terms of this are sent to your loan officer and the mortgage processor. If items are needed from you, they will request those and they should notify you of they are waiting for items from other parties.
Once all the conditions have been met, the underwriter will issue what we in the mortgage business call a "Clear to close". This means that your loan has been final approved and can move forward to the lenders closing department.
BEth this is a great blog. I dont think a lot of buyers a) understand who the underwriter is and b) understand even less about what they do.
Beth - Good basic information that is helpful. Nicely done. I take it being a Forbes..you are no relations to the magazine? So how many times do you get that one? :)
Great information Beth. This is the final hurdle for an actual approval and sometimes the conditions can be tough.
I'd go one step past Heather and say that a lot of buyers don't even know that the underwriter exists. As I mentioned on your previous post, this is a great series.
That is some helpful information Beth. Thanks for stepping up to clarify it. It is very frustrating at times. I feel that sometimes I can't get a straight answer. I've dealt with one agency that continued to put a certain amount of hours timeframe on when i'd get an answer for my buyers.
yes there is a clear distinction for job roles between underwriter, originator and processor ...
Underwriters have always reminded me of the Wizard of Oz. Pay no attention to the man behind the curtain.....They take the blame for nearly every derogatory happening once the file leaves processing. Delays in settlements are always blamed on the Underwriter, when in fact, it's usually the originator, processor or applicant themselves that cause the delay.
Heather- I think you're absolutely right and worse, I think we tend to forget to tell them!
Kevin- It's about as basic as you can get. I figured this is more like Cliff Notes. Any more complicated and it stops being helpful to the average consummer. And my name is Just Beth No Relation. Yup, I've heard that a few times... :-)
Mike- Those final conditions can be brutual. Don't you love the requests for 7 additional comparables on the same block, sold in the last week??
Erik- Thanks again!
John- It IS frustrating. There are so many moving parts in a loan transaction and sometimes just finding the one person who will or can give you an answer is very difficult.
George- I get the feeling that a lot of consumers don't know that.
Scott- It's my favorite pass time, unless of course I happen to be the underwriter on the file.