Written By: Frankie Lacy, Op-Ed Writer
Underwriters that work for mortgage shops that are non-delegated with private mortgage insurance (PMI) vendors must submit loan packages for review. Those packages are subsequently reviewed by the PMI company’s underwriting team. These packages may also be reviewed by PMI management, sales professionals, and auditors. As a result, it is important to put your best foot forward and present as clean and transparent a package as possible.
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Prior to packaging the loan for submission, it is recommended that the underwriter scrub the loan for duplicates, errors, and discrepancies. Submit the final versions of the loan application, underwriting transmittal, and AUS findings report. Loan factors that affect debt ratio and LTV should also be finalized prior to PMI submission. Waiting to submit the completed package will result in faster turn times and the ability to clear the loan to close without waiting for mortgage insurance certificate revisions. In addition, you build up good will with the PMI sales and underwriting staff. This will allow you to obtain approval on request rush reviews when needed.
If the loan requires a final inspection for repairs, and you can predict that the repairs will not negatively affect value, then the loan can be submitted. This is a time saving tactic when the PMI company turn times are at their greatest during the peak season. However, underwriter discretion should apply. If, for example, the loan is new construction and the original appraisal does not show pictures of the complete home, the loan should not be submitted to PMI until the final inspection and photos are in.
Many PMI vendors allow underwriters to submit packages online. There is an area where the underwriter can upload a pdf version of the complete loan file. When creating the pdf package, the lender’s underwriter should strive to adhere to a stacking order that makes sense. The PMI underwriter should not have to search through the package for documents that relate to one another. Typically when I submit my packages, the file order looks something like this:
Mortgage insurance quote
DU or LP findings
Underwriting transmittal
Loan application
Credit report, credit supplements, and all other LOX’s and supporting documentation
Income documentation, including LOX’s and tax transcripts
Asset statements, gift letters, and explanations for large deposits
Purchase agreements and addendums if applicable
Appraisal reports and AVM’s
Title commitment
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If warranted, the underwriter can include a cover sheet explaining any irregular issues on the loan. This gives the PMI underwriter the heads up and directs them to the documentation trail you are using to mitigate the risk. If the income calculation is complicated and cannot be followed by using the income docs provided, be sure to include a write-up for this as well.
About The Author
Frankie Lacy - As an op-ed writer, Ms. Frankie Lacy is a 15+ year mortgage industry veteran with extensive conventional mortgage underwriting experience. Topics of Frankie's expertise include: Fannie Mae, Freddie Mac, USDA Rural Housing, underwriting to investor overlays, self-employed borrowers, personal and business tax return analysis, rental income, condos/co-ops/PUDs, and more. Frankie is a Davenport University graduate with a degree in Business Administration.
