Erin Taylor, my company's very-hard-working loan processor, made a statement yesterday that I thought was so funny I posted it on Facebook. Here's what she said:
"All I did was ask our customer for a simple bank statement, and he acted like I was asking him to have a kidney transplant."
Over the past couple of years, I have written several times about the nonsensical paperwork required to get a simple mortgage refinanced.
When I started my business in 1992, the underwriting was almost as tough as it is now. Documentation requirements loosened gradually over the years until the early 2000s, when it became so easy to get a loan all you needed to do was show a pulse and the bank would write you a check. We all know what happened after that.
Today, the overreaction of the past is as silly as the nonexistent lending standards that got us into our current mess.
Back in the day, as the owner of a mortgage company, I had a reasonable amount of power if I thought an underwriter was asking for excessive and irrelevant paperwork. I would appeal to the underwriting manager. She would look at the situation, and in most cases she would agree that common sense should prevail and would waive frivolous underwriting conditions.
I want to use today's column to warn anyone who is looking for a mortgage to purchase a home or refinance that there is little or no flexibility when it comes to loan documentation. I have no power to waive paperwork, regardless of how ridiculous the requests may be.
Remember that mortgage giants Fannie Mae and Freddie Mac, the companies that buy loans from lenders, are owned by the taxpayer, and despite what they may claim, they are trying to find ways to force lenders to buy back loans -- something lenders do not want to do. This is putting pressure on underwriters to require excessive paperwork, which makes Erin Taylor's job difficult and ultimately forces perfectly qualified borrowers to jump through hoops.
So if you have a loan in process and the processor calls you and asks for additional paperwork, don't whine about it. Get her what she needs. It's not that hard to provide all pages of a bank statement, including the one that was "intentionally left blank." It's not that hard to get a recent pay stub, the terms of your equity line, a canceled check or myriad other things.
Inconvenient and absurd? Yes. Impossible to provide? No.
Until reason and common sense come back into the business, borrowers need to say "how high" when Erin says jump. If a client becomes unpleasant, which thankfully is very rare, I tell Erin to borrow a quote from Marge Gunderson in the film "Fargo": "Sir, you have no call to get snippy with me, I'm just doing my job here"
Henry Savage is president of PMC Mortgage in Alexandria. Send email to email@example.com.