At well run companies, mortgage staff is typically ahead of most borrowers, appraisers, title companies, attorneys etc. when it comes to obtaining documentation to approve applications. Unfortunately, well run companies are more of an exception than a rule. Many companies out there are affected by varying degrees with any one of the following problems:
1. Chronic understaffing - A great deal of mortgage brokers, mortgage bankers and even well known national lenders have some type of problem when it comes to staying on top of mortgage paperwork flow. In an effort to save money and enhance profits not all lenders hire enough employees to handle the volume of applications they take in. The result often times, is good faith estimates that are not sent out on time, loans that sit on a desk and are not entered into a LOS in a timely fashion, and borrower docs piling up near the fax machine or the mail room. Understaffing is an industrywide problem and plagues many lenders to some degree. The most acute problems occur during periods when rates drop and lenders experience an influx of applications from more borrowers who want to refinance. Easier refinances oftentimes get priority over more difficult purchase transactions during times like these by overworked staffs. Staffing problems are also deeply interrelated with the training, sales problems, and competition for the best employees, mentioned below.
2. Undertrained employees - Lack of training is common problem in many areas of the mortgage industry. It is most evident in the loan officer and processing department. Loan processing is a stressful job and a combination of understaffing, few schools that teach processing in depth, and low pay at many companies, leads many processors to try out the job and then quit and move on to other professions. Mortgage companies are often times reluctant to invest more in employees who may move on to the next firm once they get a certain level of experience. The result is many processors learn their trade on the job, (where mistakes are made) from other loan processors who are many times overwhelmed with their own work load.
There are companies where the processing department may be well run, but in order to bring in more applications, large numbers of inexperienced loan officers are hired. Most lenders expect to lose a significant number of the new hires and problems with insufficient training make themselves evident in the sales department. The problem of fixing incomplete or poorly written applications then falls to the processing department where instead of moving the application further along, they waste significant amounts of time collecting documents that should have been collected at the initial application.
Problems with poorly put together or incomplete loan files also make themselves especially evident at mortgage brokers who have undertrained or overworked processing departments. Since mortgage brokers source their loans to external wholesale lenders, too many mistakes waste a great deal of time with documents going back and forth from broker to lender for corrections. The problem becomes compounded by the fact many wholesale lenders themselves often find themselves understaffed. You can have poorly trained processors at a mortgage broker sending incomplete borrower files to a wholesale lender with an overworked, undermanned staff.
3. Focus on Sales - Some companies are so focused on marketing and getting your application, that closing loans in a timely manner is less of a priority. The number one goal at companies like these is to get the easiest loans closed first and they do not mind if they lose a slightly more difficult loan to another company. Often times it is the customer who finds out too late into the process and must then go shop another lender after waiting weeks for approval that never came.
Intense competition for your application also contributes to this problem and is related to all other hurdles mentioned above Many lenders know a consumer will shop 3 or 4 lenders and apply at least at 1 or 2 others. Good companies will do their best to process loans and issue approvals to beat the competition as fast as possible. Unfortunately many brokers and lenders fall short of that ideal. What happens with bankers who know they are not equipped to handle more applications is a form of mortgage triage. Instead of the best service for all applicants they start trying to feel out which borrower in their eyes is most loyal or seperate out those who have paid an application fee versus those who haven't. Borrowers most likely to close with them in their eyes deserve the most attention and the others get put on a backburner. The problem here is that perceptions about customer loyalty often become over a period of time a banker or broker's rationalization for bad service. Honest lenders will commit to full service once they take your application and keep you informed when there are problems instead of leaving an application in delayed mortgage limbo.
In order to be fair to the well run lenders out there, the mortgage process is a complex one and not everything that goes wrong or slow is the mortgage companies fault. There are borrowers who are slow in getting important documents together and many problems can pop up that are beyond both the borrowers and mortgage companies immediate control. Title problems are a prime example and can take a very long time to correct. A bank or employer that is slow with a verification of deposit or employment is another. Many times when a borrower is refinancing, the bank whose mortgage is being paid off all of sudden becomes very slow in providing the final payoff number. Without a payoff, the loan cant get to closing even if all the other paperwork is in and processed properly. The culprits behind the slow payoff is usually someone on the other end being petty or spiteful.
In addition to being able to deliver good rates, a mortgage companies ability to close your loan on time is a very important component of the mortgage process. It can be critical in a purchase where a closing must occur by a certain date (due to a mortgage contingency or some other factor) or in avoiding blown/expired ratelocks. Its is extremely difficult for consumers on their own to find out who the service leaders in their local mortgage market are. Most consumers find out they are at a slow lender very late in the process after a long wait for an approval that has yet to come.
LoanShoppingPros.com does its best to screen bankers and brokers who are able to more promptly process, underwrite and close your loans on time. We do not have total control over the lenders in our network so we cannot with absolute 100% certainty guarantee that all loans will be closed at the quickest pace possible the way would in an ideal lending world. Our lenders do know however that future referrals are based on the way they treat current customers therefore they have much more of an incentive to treat you well as an individual mortgage shopper. We often call on behalf of our customers to check on problems with individual applications and we collect a great deal of consumer feedback from our referral base. Our employees are good at identifying bottlenecks in the loan process and where they come from and can be a great help in pointing you in the right direction towards a banker or broker who is both a PRICE and SERVICE leader in your market.
