Executive shares insight on how brokers can be confident on securing loan approval
Mortgage brokers who work in the non-QM space are likely accustomed to handling complex loan files. Investor loans can be far more difficult than conventional, primary-residence loans.
Not only can these files be more complicated, but the importance of a smooth, issue-free closing could be the difference between getting an investor’s business going forward and losing out on future business.
While the process can intimidate brokers who haven’t done many non-QM loans, one executive said it can be streamlined by really understanding what you are submitting to underwriting.
Kyle Concannon (pictured top), VP of product and wholesale at Constructive Capital, said one of the biggest challenges he sees for brokers is that with non-QM loans, the files must be complete before uploading them into the system. This means looking over everything before sending it becomes critical.
“They have to build that complete file before they put it in,” Concannon told Mortgage Professional America. “It's really just taking 5 to 10 minutes. Just stop and look at everything you gathered over the last week, because everyone's so excited, like, ‘Hey, I have a complete file. I finally got the appraisal. I finally got the title insurance.’ But did you look at it?”
Check the basics
Concannon said many of the potential issues he sees with files could be prevented by a quick scan by the broker. He encourages brokers to look at the files as if they were underwriting their own loan.
“Put your underwriter cap on for 5 or 10 minutes,” he said. “Think through it. Look at the guidelines as you're doing it. Are you going to meet every basic guideline? If there's stuff that's out of left field, we’re not expecting them to catch that. Just the basics. Do the assets qualify? Does the DSCR qualify? Did you look at the credit report? Are there mortgage lates on the history that you need to be concerned about?
“Look at the appraisal. How do the comps look? How are the distances of the comps? That takes a lot of training. I just wrapped up an hour-long call with a new broker, but that's just the beginning. That teaches them a lot. That's enough to be dangerous, but there's still more that you can learn and get better.”
By understanding the underwriting guidelines for each loan type, brokers can be confident that the files they submit will be approved.
“With our biggest clients, they've really become experts in the underwriting side of it,” Concannon said. “They know, before they put it in, that they have a certain level of confidence that it's going to get approved. We’ve seen those clients grow from a couple of loans a month to hundreds of loans per month without increasing headcount that much. They’ve just become better at the process.”
Becoming a product expert
Concannon said brokers who become experts in the products they offer will provide the highest level of customer service to end customers.
“We spend a lot of time teaching them how to submit a complete file that is clean, that is going to get approved by the underwriter, because that just flows right into the customer service that they can provide,” he said. “That's all borrowers are really looking for. It is not a lot of back and forth. They don't want a new condition every day. But to do that successfully, there is an art to it.”
Part of that customer service is understanding both his role and the broker’s role as consultants in the process. This allows for a smooth process for everyone involved.
“I'm more of a consultant, and the same with our brokers; they're more like consultants,” he said. “What we're doing is providing value every day. What is the underwriter actually going to look for in our market? How do I get this loan approved smoothly? So I'm constantly transferring my knowledge to all my brokers, and they can use it for their individual borrowers.
“If they become the industry expert or the product expert, especially on DSCR and fix-and-flip, the borrowers pick up on that right away. That builds this level of trust, understanding, and faith that they can trust this broker with their deal. That’s where a smaller broker can really compete with the big-name lenders in our space, just by becoming an expert on the subject matter and just driving home the customer experience.”
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