Mortgage Underwriting Tools that Lenders Use

Technology, oh technology – how it has turned mortgage underwriting on its head! The regular mortgage process: you get an app, request a credit report, underwrite your deal and submit it to a lender for approval… simple as that, right? Not quite. Mortgage underwriting tools have changed the game.

Look at Filogix – Mortgage Expert has made it seamless for you to take an application, request a credit report, underwrite your deal and submit to lenders – using the same platform.

Technology has made lenders that much more agile and capable of, at the click of a mouse, further vetting your applications. When a lender comes back, for example, and disagrees with the value stated in your application, what made them come to that conclusion?

The tools they use! Look at credit reports: more and more lenders now access the client’s Equifax credit report and TransUnion credit report, which sometimes can produce discrepancies in information.

Well, if you can’t beat em’, join em’. The best way to ensure that you are accessing the same information as your lenders, thus not wasting time on deals that are not going to be approved, is to get in the loop by using the same mortgage underwriting tools that lenders use!

Technology has leveled the playing field because many of the online mortgage underwriting tools that lenders use are also available to mortgage brokers. You are no longer held back because of a lack of accessible knowledge.

If your lenders are checking the TransUnion credit report, for example, on those apps you should look at the TransUnion credit report before submitting the deal to ensure that your lender doesn’t discover something you were unaware of.

If your lender is using tools like Purview For Lenders to validate property values through an automated valuation model, use the broker version of Purview to view the AVM before the deal even gets to the lender. This way you will be able to flag deals where the lender may be more likely to disagree with the value to come up with other contingencies.

You may not be able to control whether a deal fails to close because an applicant changes their mind – but there are many things that prevent your deals from closing that you can control.

Evolving with technology will make you more competitive, allow you to do a better job for your clients, and most importantly get in tune with your lenders so that a higher percentage of summited apps close.

Take advantage of everything that technology has to offer, and stop letting lenders get in control by approaching each and every deal with the most information possible. Contact Purview For Mortgage Brokers today for more about the best programs available:  1.855.787.8439. 

How to Increase Your Mortgage Closure Rates Substantially

There are no two ways about it – closure rates matter. Banks, trust companies, credit unions, mortgage investment corporations and many other institutional mortgage lenders realize and pay very close attention to your closure rates. The reason is obvious – low closure rates means that deals are not closing and there is major expense associated with a mortgage application that fails to close.

Learning how to increase your mortgage closure rates means instituting measures at the application stage to catch information that may be misstated or not disclosed in the mortgage application. Funny enough, it doesn’t take that much leg-work to save your lenders and yourself a world of pain wasting time on deals that don’t end up closing.

Ask lots of questions and listen. When you take the application, ask your clients:

•  If it is a refinance, ask when they purchased their house and what they paid for it. Find out how much the mortgage was at the last renewal/refinance – this can help you identify before doing any work at all if your client is way off on their equity positioning.
• When discussing income, ask clients if they get a paystub with tax deductions. This will help you from learning later that a client who you thought was employed is in fact a contractor or self-employed.
•  Ask the client if there are any other people on title. This comes up quite often in instances of refinances as some people simply forget or don’t realize that they did put a spouse, parent or child on title.
• When discussing the client’s mortgage, ask the client what the mortgage balance was when they purchased the home. If the home was purchased in the past 6-7 years you can guestimate more or less if they are in the ball park on what they think that they owe on the house.

Asking the above questions alone will help you avoid wasting time on applications and allow you to focus your time on good deals and to identify upsell opportunities thus increasing your closure rates.

To increase your closure rates that much more, value and equity position are the next two things you will want to look at a little bit closer.

Many brokers are now using AVMs (automated valuation model) prior to submitting their deal to their lender. Using an AVM, you can validate if the sale price/estimated value is accurate. These come in really handy, especially in hot areas in large city centres like Toronto, because there have been substantial increases to property values. Depending on the AVM tool you are using, you may also be able to look at existing mortgages to validate if the mortgage information provided in the application is accurate.

Substantially increasing your closure rates will go a long way to strengthen your relationships with your lenders – especially A lenders and FIs who track closure rates closely. The little time it takes to perform a little bit of extra due diligence, through questions and searches, represents so much value on so many levels that it only makes sense.

For more information about increasing your closure rates please contact Purview For Mortgage Brokers today at 1.855.787.8439.

Smart App Methodology: Accelerated Mortgage Application Underwriting at the Point of Application

In the world of mobile marketing and social media, app means application - a sort of software you install on your computer, tablet or smartphone to play a game or perform a task. App in the world of mortgage financing means mortgage application, which also translates to your bread and butter.

A mortgage application that is subsequently approved and proceeds to close is of great value. A mortgage application that is subsequently declined after being underwritten or doesn't make it through to closing because of some new or undisclosed information is not only not of value but is actually an expense. How great of an expense depends on you!

This leads us to Smart App Methodology. Smart App Methodology is the process where more is done at the application stage to vet the applicant to ensure that the deal is a good deal – both where the borrower and property are concerned.

When you take the time at the application stage, and not post underwriting/approval, to consider what key application criteria can be validated at the point of application, you are more likely to be in a position to identify the most problematic deals at the point of application. When taking a new mortgage application, the standard process is to perform a credit check and ensure that the application’s debt servicing is in line.

When deploying Smart App Methodology you would validate other key application criteria that includes:

•        Home ownership information
•        Mortgage information – current registered mortgages
•        Property value

Most deals that don’t close, fail to close because some information in the original application changes, such as other people on title, un-disclosed mortgages, mortgages that are much higher than what was disclosed on the application, an issue with the property type or value of the property being pledged as security on the deal.

Smart App Methodology improves closure rates substantially because it addresses the most common reasons that deals don’t close, thus greatly reducing the number of problem deals that make it past the application stage.

Smart App Methodology also presents great benefits because validating additional property related information at the application stage will reveal upsell opportunities.

Deploying Smart App Methodology doesn’t mean spending an arm and a leg performing searches or asking your client to supply a mountain of documentation, slowing up the application process. It means considering technology that can enable you to do more.

For example, you may use a tool like Filogix to pull your credit reports, underwrite your apps and submit them to lenders, or use online tools like Purview For Mortgage Brokers to validate property-related information such as who owns the property, value, registered mortgages and more…

Smart App Methodology makes you more efficient, leading to more closed deals and strengthened relationships with your lenders. Purview For Mortgage Brokers can help. Contact us today by calling 1.855.787.8439.

Canadian Housing Market: Report that Current Housing Market More than 60% Overvalued

Well the blogosphere and news stations lit up in January after a controversial sort of Canadian Housing Market report was released by Deutsche Bank. Just about every single publication has written on the subject, from Mortgage Broker News to CTV News to the Financial Post.

What’s all the controversy about? Well, according to CTV’s reporting the top international economist Torsten Sløk of Deutsche Bank has publicly announced the belief that:

·         The Canadian housing market is the most overvalued in the world

·         Homes are overvalued by 63%

·         Canada’s household debt is over 150% of disposable income

·         Canadian housing starts are slowing

In the Financial Post article on the topic, the Post includes 7 charts circulated by Sløk to support the position that the Canadian housing market may be headed for trouble.

The January report echoes a report released in the Huffington Post this past September regarding an Economist article that claimed the Canadian housing market is the world’s most overvalued – their estimate? 25%. http://www.huffingtonpost.ca/2014/09/04/canada-real-estate-overvalued-economist_n_5762286.html

Here are some articles on the topic. We are interested in hearing your point of view.

Financial Post Article (includes the 7 charts) http://business.financialpost.com/2015/01/08/deutsche-bank-reveals-7-reasons-why-canada-is-in-serious-trouble-starting-with-a-63-overvalued-housing-market/

CTV News Article http://www.ctvnews.ca/business/canadian-housing-market-overvalued-63-per-cent-deutsche-bank-1.2180763#ixzz3QmJDPrZ5

Mortgage Broker News Article http://www.mortgagebrokernews.ca/news/canadas-housing-is-63-per-cent-overvalued-says-deutsche-bank-187026.aspx

Huffington Post Blog and Video http://www.mortgagebrokernews.ca/news/canadas-housing-is-63-per-cent-overvalued-says-deutsche-bank-187026.aspx