Problem Solving
Andrew Luett
Branch Manager, NMLS #755869, Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank, NMLS #449042. Equal Housing Lender
Andrew has originated and managed millions of dollars in closed mortgage transactions over his 15 years in the lending industry. He currently manages Wintrust Mortgage’s Ravenswood branch.
How can agents help clients avoid application denial?
Although it is not uncommon for clients to have their loan application denied in-process, it’s important to first focus on one specific event before an agent begins showing a potential buyer property – the buyer pre-qualification. Before discussing how a real estate agent might save a denied application, I’d like talk about how to avoid this situation altogether.
There are three items for an agent to proactively consider:
- Focus on the client’s pre-qualification and their understanding of the process.
- Review the pre-qualification letter presented for the right information.
- Do your best to find and work with a loan officer or lender who is honest, thorough and knowledgeable.
Focus on the Pre-Qualification and the Client’s Understanding of the Process. The implementation of TRID means it’s more important than ever for an agent to understand pre-qualification. When TRID began back in October, lenders lost their ability to require supporting documents to verify any information provided to them during the pre-qualification process. This presents an opportunity for agents to set expectations with their clients. Both agents and clients must understand that the more honest they are, both with themselves and with the lender, the more confident they can be making an offer with the letter of pre-qualification issued to them. If the agent can discuss with their client that the only way to know what is affordable and possible is to be thoroughly prequalified, they can ease the worries of potential denial.
Review the Pre-Qualification Letter Presented for the Right Information. As an agent, it is essential that the details of the letter are comprehensively discussed with the potential client – especially if a client has approached an agent with letter already in-hand. This is where rushing to place an offer or get prequalified causes problems. If the information supported by the pre-qualification letter isn’t accurate and/or the documentation has not been provided by the client, agents run the risk of going to contract with uncertainty. If the situation is time-sensitive, prepare the borrower to provide information related to their income, assets and employment immediately.
Find a Lender Who is Honest, Thorough and Knowledgeable. Not all lenders (or loan officers) are created equal. The unfortunate truth is that not all of them spend the time with each borrower necessary to ensure pre-qualification was done properly. Your client should be aware that they can continue to shop for a loan after their offer is accepted. If an agent can recommend a mortgage partner that is upfront and honest, this reflects positively on the agent as well.
If the File is Denied While In-Process. The first step to reversing a denial is investigating why it occurred. Once the reasoning is confirmed, the next step is to investigate potential remedies with the current lender. If the current lender is unable to fix and close the loan, the agent and borrower will need to discuss options with other lenders – if the seller allows for more time. Again, this requires open communication to find a solution to the problem. Then, allow the new lender to investigate and do the proper due diligence to see if the problem can be overcome. Even if the loan cannot close at the present time, the borrower and agent can work to address the issue over time and return to home shopping once it has been resolved.
