What does a mortgage broker do for you?

By Patti LeVan, Multiline Mortgage Services, Inc.

June 20, 2017

I recently did a search on the internet for the definition of mortgage broker.  Knowing what a mortgage broker actually does, since that is what I do, I found a lot of misinformation.

For example, Zillow defined a mortgage broker as an originator that sells the loan application to the wholesale lender then gets out of the picture leaving the client to fend for themselves.  COMPLETELY AND UTTERLY FALSE!

A mortgage broker finds a client usually through referrals from other clients, attorneys, realtors and other professionals in which a relationship has been established through good work performance.  Trust me, these professionals will not risk damaging their reputations by referring clients to a broker who underperforms.  They, too, rely on a network of referrals especially from clients.

The broker takes an application from the client which includes details of the client’s financial position.  The broker helps the client determine how much they can afford to spend on a home based on income, debt to income (DTI), and a credit report.  It’s important at this juncture to note that Multiline Mortgage doesn’t just look at affordability but also looks at sustainability.  I often tell clients, “I don’t judge you for how you spend your money.  It’s your money.”  My goal is to make the client aware of their financial position from an objective point of view from what I see on paper and to help them decide what they can afford and sustain.  Once the loan amount is established, a pre-approval letter is provided to the real estate agent.

I ask the client to start gathering what is known as the loan package which consists of taxes, pay stubs, bank statements, identification, and asset statements in an effort to prepare for submitting the loan.  I will typically search for loan programs during the house hunting process so I am prepared once I receive the purchase contract.  The lender field is narrowed down to usually three that have the right loan program match.  Then it’s up to which lender offers the better rate and terms.  This allows me to move very quickly after receiving the purchase agreement.

Once the purchase agreement is received, I’m ready to move forward on the loan with the selected lender.  Throughout the loan process, the client works directly with me.  If issues arise, I am there to work them out with the underwriter or others.  Many times there are issues that the client is not aware of because I can resolve them without upsetting the client.  My goal here is to make the process as easy as possible and to take the stress for the client.

So to say that the mortgage broker simply sells an application to a wholesale lender is absurd.  I advise that clients do their homework.  The best place to start is to call Multiline Mortgage Services.  We are transparent.  We tell it to you straight.  Every time.

New DU Version Eases DTI Requirements

by: Jann Swanson

New DU Version Eases DTI Requirements

May 31 2017, 10:55AM

Fannie Mae has announced changes in underwriting for loans submitted to its Desktop Underwriter (DU), Version 10.1.  The new DU version will be implemented on or after the weekend of July 29. The changes are outlined in release notes issued on Tuesday and will apply to new loan casefiles submitted to DU on or after the weekend of July 29, 2017. Loan casefiles created in DU Version 10.0 and resubmitted after the weekend of July 29 will continue to be underwritten through DU Version 10.0.

Among the more significant changes accompanying the new version are the following.

  • The maximum allowable debt-to-income (DTI) ratio that can be submitted in DU will be 50%. For DTIs between 45 and 50 percent, certain additional compensating factors will no longer be required. Cases exceeding a 50 percent DTI will receive an “ineligible” recommendation.
  • The criteria that determines the documentation required to verify a self-employed borrower’s income will be updated and the number of DU loan casefiles eligible for the one year of personal and business tax return documentation requirements will increase.
  • The maximum allowable LTV, CLTV, and HCLTV ratios (LTV ratios) for adjustable-rate mortgages will be aligned with fixed-rate mortgage LTV ratios for all transaction, occupancy, and property types, up to a maximum of 95%. Additional information on the effective dates of this change will be available in the Selling Guide.
  • A loan casefile with a disputed tradeline that is approved with that information will no longer require further action. If such a loan casefile does not receive an Approve recommendation, the lender must determine the accuracy and completeness of the tradeline information. If the borrower is responsible and the information accurately and completely reports the account, then the lender may manually underwrite the loan if it is eligible. Tradelines reported as medical debt will continue to be excluded from the disputed tradeline identification and lenders are not required to investigate disputes.
  • DU is regularly reviewed to determine if its risk analysis is appropriate. Version 10.1 will include an update to this risk assessment and it is expected to increase the percentage of Approve/Eligible recommendations received by lenders, particularly those with DTI rations between 45 and 50 percent.

The new DU version will also contain changes in or will generate new messages about underwriting issues in the following areas:

  • Income and Employment Updates
  • Property Inspection Waivers
  • Student Loan Cash-Out Refinance
  • Employment Offers
  • Multiple Financed Properties
  • Site Condo Reviews
  • Timeshares
  • Homebuyer Education

Version 10.1 will also support the final Consumer Financial Protection Bureau rule implementing amendments to the Home Mortgage Disclosure Act (HMDA) which modified the reportable data requirements related to collection of information of borrower ethnicity, race, and gender.

Fannie Mae says that with the release of the DU Version 10.1, Version 9.3 will be retired.  Effective the weekend of July 29, resubmissions of loan casefiles to the old version will not be accepted although applications and Underwriting Findings reports will still be available for viewing. To obtain an updated underwriting recommendation after the retirement date customers must create a new loan casefile.