topic Re: Desktop Underwriter | APPROVED/ELIGIBLE in Mortgage Loans

Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Tue, 27 Nov 2012 19:55:34 GMT

I am currently using Wells Fargo (I know, I know!) for my VA loan. I received an APPROVE/ELIGIBLE through their DU. My question is basically; What does this truely mean? Is this the best outcome possible in DU? If it is, why does it still have to go to an Underwriter? I turned in all documents requested (W2's, Last 2 months Bank statements, Last 2 months of pay stubs, TSP statement). Now I'm doing the underwriting waiting game. Do I have anything to worry about at this point? My credit is absolutely clean (lowest FICO is 707 from EQ), low car payments (total for both is less that $500 a month), and low balance on CC (less than 10% limit). I just don't understand the purpose of the DU if it STILL needs to go to someone else. My LO reviewed everything (all requested documents listed above) and even re-entered my stuff into DU in front of me. What is the actual Underwriter going to do different?

Re: Desktop Underwriter | APPROVED/ELIGIBLE

RashShakur — Tue, 27 Nov 2012 23:22:07 GMT

BUMP

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Wed, 28 Nov 2012 00:27:50 GMT

The DU just gives them an idea of if you will be approved for the loan, it does not usually take into account all the paperwork. The underwriting team scours all the paperwork and makes sure everything you have told them and given them is correct.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Wed, 28 Nov 2012 01:36:41 GMT

So again, if they (the underwriters) "scour" the paperwork manually, what's the purpose of the DU? I guess, to me, its just an added pointless step in an already long, stressful process. Based on that, it shouldn't matter what you get in DU since there is so many different outcomes you can get in DU and still go to underwriting.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

tooleman694 — Wed, 28 Nov 2012 02:43:09 GMT

Typically if you told the truth about the info that was entered in to get a DU approval the underwriters will just manually check all your docs to make sure and you will get an approval. But sometimes if you have some questional stuff the underwriter might want you to write a letter explaining what the heck happened.

Then you have lender overlays, FHA may say something is cool but the lender may say heck no and deny you. That is what happened to me.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Wed, 28 Nov 2012 13:38:26 GMT

I told the truth and everything I turned in we went over together and verified. Orginally I received the pre-approval over the telephone after submitting the pre-approval app over the computer. I had a follow up interview with the WF LO and was told to bring in all documentation, which I did. during the interview, i filled out the full application, and handed over the stack of paperwork. We then went page by page verifying everything. She then went in a updated my information in Du (address update mainly and exact checking and savings balance to the cents) and ran it again which resulted in the same approve/eligible finding. I guess I'm just nervous after reading all these posts about U/W and the nightmare of finding out at the last minute you've been denied.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

tooleman694 — Wed, 28 Nov 2012 14:01:10 GMT

You should probably be ok, unless you hit some kind of overlay.

DU just approves you based on FHA guidelines, and the underwriter will make sure you fit their guidelines as well.

I had DU approval, went to underwriting and was denied because my wife had issues on her report. A recent late payment on her mortgage. We knew about this so we put her as a non purchasing spouse. DU was cool with this, the underwriters were not.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Fri, 15 Aug 2014 02:46:27 GMT

In April of this year I applied for a mortgage here in Dallas. I got an Approve Eligibe; had good credit of about 675 good income and acceptable debt to income ratios. Went to manual underwriting and was also approved. Got all the way to within a week of closing and got a refer with caution; therefore a denial. The mortgage company ran it 15 20 and 30 years and got refer with caution. The mortgage company did the right thing and refunded my apprasial fee as they never would have accepted the fee if I got a refer with caution up front. I got the news on July 3rd the day before the4th about 11:30 am. At 2pm I called my current lender who felt they could get the loan approved and the loan officer took two hours and submitted my application to the DU underwriting system and got an Approve Eligible. How can one mortage compamy get refer with caution and another get Approve Eligible and they imput the same data? I closed on my refinace this past Friday August 8, 2014. I emailed 4 members of the mortgage company that turned me down/ The DU system is indeed a mystery. Also my second mortgage company which is my current lender the last 6 years had to do another conventional appraisal even though I already had a conventional apprasial that was only 3 weeks old; saying they could not take another lenders appraisal. Why not; they all go thru a third party. What a scam this entire business is.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Wed, 02 Sep 2015 18:35:58 GMT

Hope I can lend some clarity on this issue. I am a mortgage underwriter with a major wholesale mortgage lender.... Often times, even licensed mortgage originators make the incorrect assumption that "Approve/Eligible" means the loan is a homerun approval.... Its not.

First, lenders pay human beings called underwriters no insignificant amount of money to review a loan file, and evaluate risk. A computer program simply cannot do this. DU Approve/Eligible is only the first step.... It basically says, "Based upon the information submitted, the loan APPEARS to meet the agency eligibility requirements." The key word is APPEARS.... Things are not always what they appear.... For example, there are some things that DU cannot determine, such as how many other properties a borrower may own, and if they have sufficient reserves. It requires a human being to look at that. Also, there may be other things that impact your credit worthiness.... I recently declined a loan that received "Approve/Eligible" findings.... Because the borrower had racked up over $4,000 in bank overdraft fees in just the first 6 months of the year.... That was a huge red flag for me as the underwriter that this borrower was not managing their finances responsibly, and would present a significant risk.... That is information that does not appear on any credit report, and is not submitted to DU.... There are also other things that may not be taken into account. Loan originators will often manipulate the loan data, just to get that coveted "Approve/Eligible" finding.... They'll sometimes submit inflated income figures, or put down higher bank balances than you actually have.... We as the underwriters scrutinize the bank statements, and the paystubs, and the tax returns.... Yes, perhaps you make $4000 gross per month.... But then when we take a closer look at your paystub, we see you have a wage garnishment for $200 a week for child support.... But you didn't disclose any child support on your application.... and DU has no way of knowing about it since it doesn't appear on your credit..... so now we add that $200 as an additional liability, and suddenly that "Approve/Eligible" becomes a "Refer w/ Caution/Ineligible". In addition.... There are some things that FannieMae or FreddieMac require be documented in a very specific way.... Perhaps you have $40,000 in the bank.... but what DU doesn't see is that you deposited $30,000 of it last week.... Where did that $30,000 come from? Was it a gift? Gift funds aren't allowed on investment properties.... Was it a personal loan? Unsecured borrowed funds are not allowed...... and we have to make sure if it was a loan that the payments have been accounted for in your debt ratios...... Also, while you may have been honest.... Not everyone is. I had one borrower who provided us with paystubs, but when I looked at the paystubs, I found another red flag..... When I asked the borrower for an explanation, he came clean and said, yeah, those weren't "regular" paystubs.... it was his SEVERANCE pay.... He'd been terminated from his job..... he was trying to get cash out of his house because he had no income anymore..... and when he used up the money, he'd have likely defaulted on the loan and left the mortgage company to foreclose.

For these reasons, and many more too numerous to mention, THAT is why even with Approve/Eligible DU findings, the file still needs to go to an underwriter for review.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

happy0510 — Wed, 02 Sep 2015 22:57:42 GMT

Azuretech, thank you for chiming in with your perspective. You guys are so mysterious to us and we are quite frankly scared to death of you! I went through UW in 2010 for the first time and it was just an awful experience. At one point my Husband was caught staring at the ceiling. It's like getting naked in front of the world. I am about to do it again and this time I am prepping for a stronger file.

Everything you wrote makes sense. I just have one question.

How were you able to find out the applicant had 4K of ODs in the 1st 6 months of the year? Did they have some showing on the 2 statements you received, then you asked for all year? I can't imagine how someone can rake up that many fees! It seems impossible!

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Wed, 02 Sep 2015 23:19:00 GMT

On my statements, it shows a total $ YTD in fees. We've had some as well but we are in month 9 and its like $335 (10) so a few got by because we have auto bill pay and both of us get paid the same week every two weeks and sometimes timing just doesn't work out. Of course, I could stop all my auto bill pays and just pay manually and then I would show no overdrafts at all and bills would be paid within a reasonable time frame but I didn't think of that by the time we went into UW and now it's too late. The good news is this month is clean so my LoE is accurate that it's not a normal occurance - it's just something that has happened occasionally. The month prior to the month the UW has is also clean. But to answer your question, the bank statement may have had the total for the year and not just that month (that's how BofA sends statements).
@happy0510 wrote:
Azuretech, thank you for chiming in with your perspective. You guys are so mysterious to us and we are quite frankly scared to death of you! I went through UW in 2010 for the first time and it was just an awful experience. At one point my Husband was caught staring at the ceiling. It's like getting naked in front of the world. I am about to do it again and this time I am prepping for a stronger file.

Everything you wrote makes sense. I just have one question.

How were you able to find out the applicant had 4K of ODs in the 1st 6 months of the year? Did they have some showing on the 2 statements you received, then you asked for all year? I can't imagine how someone can rake up that many fees! It seems impossible!

Re: Desktop Underwriter | APPROVED/ELIGIBLE

happy0510 — Thu, 03 Sep 2015 16:19:09 GMT

I just checked my statement (WF) and it also shows the YTD. I have $175 so far this year. I guess that's not too bad right? Dang! I am upset that I didn't know about that! Now I feel like applying for my next mortage in March next year lol but I will be homeless! One less LOE the better. I hate UW!!!

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Thu, 03 Sep 2015 21:41:24 GMT

It can be a rather intimidating process.... Its funny the number of people who object to revealing their financial information.... even silly stuff, like blacking out the account numbers on their bank statements.... I mean, seriously.... They'll have no problem handing a personal check, which has the account number printed right along the bottom, to the clerk at the grocery store, but they'll go and black it out on the bank statements they're giving to the lender they're asking to lend them a quarter of a million dollars. (For the record, we cannot accept any redacted or altered documents). On top of all that, we have to make sure we're compliant with a chaotic maze of government rules, regulations, and federal laws.

But, as much as it is intimidating to you, do keep that in mind.... You're asking the lender to lend you a substantial amount of money..... And the underwriter who approves your loan is signing their name to the document saying "Yes, I evaluated this borrower and they're a good credit risk", so if we get it wrong, and haven't dotted all our i's and crossed all our t's, its our neck on the chopping block..... We're putting our professional reputation on the line, so forgive us if we seem a bit prying.... I assure you we won't ask for anything that we don't absolutely need to meet the agency documentation requirements. (I know it seems like we just come up with stuff that you don't need, but FannieMae and FreddieMac have pretty specific guidelines and specifications as far as how things have to be documented in the file.

Generally speaking, you want to provide paystubs showing at least 30 days of income, 2 yrs W2's, 2 consecutive monthly bank statements (and document the source of any large deposits in excess of 50% of your monthly income, with a complete paper trail.)..... i.e. if you say you cashed money out of your 401k, we can't just take your word for it, we need to see the 401k statement and see the same amount coming out of the 401k as the large deposit to your checking account. You can't just say "I had $5000 cash stuffed in a mattress"... Because there's anti money laundering laws that we're held accountable to.... We need to document you didn't deposit $5000 cash because you sold a pound of cocaine........ As far as your credit, we understand that sometimes bad things happen to good people.... If you've got a few dings on your credit, (minor stuff within the last 2 yrs) be prepared to explain what happened.... for anything more major, be prepared to explain what happened, and possibly provide supporting documentation.... ie if you had a foreclosure 4 years ago because you got in a car wreck and couldn't work for 6 months.... Be prepared to prove you were out of work for 6 months due to a car wreck.... The truth is always the best answer.... Nothing pisses an underwriter off more than being lied to. We're very intelligent people, and its honestly insulting the lies some people tell us, and think we're stupid enough to believe. Had one guy who worked part time 20 hrs a week as a sky cap at the airport, tried to claim he made over $10,000 in tips in one week (to explain a large deposit).... yeah, I don't know about you, but I tip the guy who takes my bags out of the trunk of the cab at the airport a couple bucks at best.... He'd have to pull in $500/hour in tips to make that kind of money... So of course that set off my "bullcrap detector".

The other thing oddly enough that I always run into.... For some reason when people apply for a mortgage, they get itchy to get a new car.... DO NOT do anything to your credit until your mortgage loan closes.... and I mean ANYTHING... Don't apply for a charge card at Kohl's to get 20% off, most definitely don't go new car shopping, don't get furniture or appliances on credit.... There's nothing you need that can't wait until your mortgage CLOSES (Lenders utilize undisclosed debt monitoring now.... If anyone pulls your credit during the loan process, rest assured, we're going to be alerted to it, and will then need you to explain and document any new accounts)... I can't tell you how many times we've had a loan ready to close, and got alerted that the guy went out and bought a new car, or bought new furniture and appliances for his new house, and now a week before he's supposed to close, no longer qualifies.

As for the bank statement thing..... His bank printed year to date overdraft fees on his statements.... So we get the June 2015 statement and it shows "Overdraft Fees YTD: $3,990.00".... game over, thank you for playing.

So, hope that helps you out.... Underwriters are nobody to be terrified of.... We're just ordinary people who have an extraordinarily difficult job to do.

As far a bank overdrafts.... Again, we're not unreasonable.... We understand that sometimes you mess up and overdraw your bank account.... So long as its not excessive, its not typically an issue.... Heck, I'm guilty of it myself.... I tend to be very busy, and I forget to write stuff down in my register all the time.... So I draw $20 at the ATM or forget to write down the groceries... and next thing you know, I've overdrawn my account.... I honestly came to the realization that I have no business having a checking account, because I forget to write things down... For that reason, I have a prepaid debit card that my paycheck is direct deposited to.... It offers an online bill pay feature, I don't have to write anything down and I can never overdraw the account.... I keep a checking account with a minimal balance in it, and if I have a situation that I NEED to write a check, I draw the cash off my prepaid debit card and deposit just enough to cover the check I need to write.... Its been a tremendous financial management tool for me..... Paycheck goes in, my bills are on auto pay and come out right on payday, and whatever's left is my spending money.... I can't overspend, I can't overdraw, I'm never late with my bills, I never carry cash, and I've got a record of everything I spend.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Sat, 12 Sep 2015 23:05:09 GMT

Thanks for your response Azuretech and for sheding light on the process. I just went through the DU and was Refer to UW, flag was BK. However, discharge was more than three years ago so th LO isnt sure for the Refer... Now i'm playing the waiting game to see if we can proceed and put down a deposit.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Sun, 13 Sep 2015 01:30:39 GMT

I'll be quite honest that the whole mortgage process terrifies me. I was a renter when I lived in town, but I've lived in a paid for mobile on paid for family land for seven years now. However, I have to buy something in the next year or two. Or rent again. The mobile isn't getting younger. It will eventually be unreasonable to repair something. And I'm terrified of the whole mortgage process. I've never done it.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Fri, 20 Jan 2017 00:19:24 GMT

Yes, it can be intimidating.... I truly sympathize with you.... Even in my line of work, when I bought my first house and had to be on the other side.... It was the most stressful thing I'd ever done.... Even as I was in the attorney's office signing the papers.... I didn't relax until the documents were recorded at the registry of deeds. But in fairness, its not because we want to stress you out... Its to your benefit believe it or not... you see, I don't ever want the lender to have to foreclose.... If after reviewing a loan, I determine its too high of a risk, I'd much rather decline the loan than to approve it and you end up in a house you cannot afford only to end up in foreclosure a few years down the road. Nobody ever goes into this sort of thing with the INTENTION of defaulting on their loan, but the reality is, sometimes bad things happen to good people... or sometimes people aren't really as credit worthy as they'd like to think they are.... By the same token, a FICO score doesn't tell the whole story either, a 620 score borrower who carries little debt, has a stable job, a nest egg for emergencies, buying a modest house that he can easily afford is a much better risk than a 780 score borrower, who is self employed, carries a lot of debt, has little to no savings, buying a big house that he can just barely afford.... yeah he has good credit now, but if his business loses its best customer, he's going to default on everything in about 2 months.

Regarding the $4000 in overdraft fees I saw when underwriting a loan.... The borrower's bank printed a year to date fees summary on his bank statements.... so even with only 2 months statements, it was there for me to see the year to date total overdraft fees.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Fri, 20 Jan 2017 00:31:23 GMT

Yes, a Bankruptcy within 3 years will send up some red flags.... It depends on what type of Bankruptcy too.... Chapter 13 or Chapter 7

Chapter 13 discharged in the last 24 months, dismissed within the last 48 months, or filed but neither discharged nor dismissed within the last 48 months are ineligible.

Non-chapter 13 (Chapter 7) bankruptcies that were filed, discharged or dismissed within the last 48 months are ineligible.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Fri, 20 Jan 2017 18:23:07 GMT

@Anonymous wrote:

Chapter 13 discharged in the last 24 months, dismissed within the last 48 months, or filed but neither discharged nor dismissed within the last 48 months are ineligible.

Not true. Discharged within 2 years is eligible for FHA.

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Sat, 21 Jan 2017 04:54:24 GMT

Well the thread was talking about Desktop Underwriter so I was keeping my answers confined to Fannie Mae conventional loan products. Yes FHA guidelines are different... As are Freddie Mac, VA, and USDA....

Re: Desktop Underwriter | APPROVED/ELIGIBLE

Anonymous — Sun, 22 Jan 2017 23:33:34 GMT

@Anonymous wrote:
Well the thread was talking about Desktop Underwriter so I was keeping my answers confined to Fannie Mae conventional loan products. Yes FHA guidelines are different... As are Freddie Mac, VA, and USDA....

I read all your responses, they were very enlightening but you have to agree that some of the process is redundant and SLOW! One major area I have issues with, not everyone with cash sold cocaine to lay their hands on the cash! Some people gamble, some people have families abroad who could wire or send considerable high amounts of money. You can also swipe your credit card to buy things for family members and they give you cash in return, these kinds of cash are hard to explain.

Personally, I believe if one's income can be verified, and they are good on the DTI angle, a loan should be processed and approved. When I say processed, this should be done fairly quickly too, underwriting shouldn't take as long as it currently takes, this thing isn't rocket science. Underwriters should be able to go through 10-14 bank statements in hours. I know this because I go through about 6-8 credit card statements of mine within an hour or two at the most. Going through a credit report shouldn't take that long either as you know what you're looking for.