Magazine article Mortgage Banking

Reinventing Wholesale

Magazine article Mortgage Banking

Reinventing Wholesale

Article excerpt

Pava Leyrer believes that salespeople "wake up every day unemployed." That attitude puts urgency into what she does as president of Heritage National Mortgage, Grandville, Michigan. Leyrer has spent 33 years in the financial services industry, and while she's worked at large institutions, for the last 11 years she has been a mortgage broker.

At times, Leyrer wishes her wholesale lending partners were as eager for business as she is. Documentation requirements that seem excessive are becoming routine for mortgage brokers. All bank deposits "over $50 are being scrutinized" by underwriters, says Leyrer. And that occurs even if those funds aren't needed for the loan to go through.

"Every guideline is followed to a 'T,'" adds Steve Haney, president of Provident Lending Corporation, Colorado Springs, Colorado. Although he understands lenders are concerned about loan buybacks, he says, "They've lost all common sense."

Leyrer says a client who sold some art in a yard sale before obtaining a home loan gained extra scrutiny from her wholesaler. To document the funds received for the artwork, she had to submit photos of the piece, get estimates of its value and then show the purchaser's check. Haney recalls an underwriter asking him to "prove the VA [Department of Veterans Affairs] disability benefit will continue" for a borrower seeking a VA loan. Guiding borrowers through these situations is difficult, since waiting for loan approval is stressful even when the process is easier.

Loan buyback demands are causing lenders to place increased attention and resources on "compliance and loss mitigation," explains David Olson, president of Access Mortgage Research & Consulting Inc., Columbia, Maryland. "It's so hard to fight Fannie Mae and Freddie Mac," he notes, when they claim that a loan sold to them is fraudulent.

But efforts made to assign blame for past mistakes cause lenders to ignore today's positive opportunities, asserts Paul Mattila, president of Cascade Northern Mortgage Inc., Vancouver, Washington. While it's appropriate to require credit scores and to fully document loan applications, some lenders now "are going too far" with extra demands, he says. Fannie and Freddie aren't approving borrowers who have been involved with a foreclosure in the previous seven years, notes Mattila.

"Non-payroll deposits are always questioned," he adds. A borrower who recently sold a vehicle for cash and put those funds in a bank can't use them for closing because there's no paper trail, Mattila says. Some underwriters, he finds, will go so far as to assume the undocumented deposit was a loan. …

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