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Today’s Documentation Reality

We all know that the pendulum has swung far to the conservative side of the loan process and has resulted in far more documentation than we experience in the recent past.  Lenders are working diligently to avoid having any loan they make subject to a purchase back from the investor the loan gets sold to.
 

A main area of scrutiny is the source of funds to close.  We need to clearly document the source of all funds and to paper trail the funds movement from the borrower’s account to the final deposit into the escrow.
 

Some funds are easy to document and track, others are more complicated.  Stocks and Bonds that will be liquidated usually require that we clearly establish the source account, document the liquidation and finally track the funds to the final escrow.  Many fund managers utilize statements that appear to be account statements but are actually a summary and an accounting of the management fee due the fund manager.  Many times these billing statements do not include the account number, so there is no way to tie a deposit into escrow from these accounts. These are not acceptable statements for establishing the source account.  
 

In these cases, frustration and stress arise when we need to request further documentation from our already over-documented borrowers.  Most will help me get the proper documents.  However, from time-to-time a borrower will fight me. They don’t provide all pages to the documents or they just won’t provide some of the documents and tell me that: “You don’t need it, I have given you enough”.  First of all, I don’t ask for things I don’t need, second, if they are not going to help me help them, this will cause a serious delay in closing their escrow.
 

Advice You Can Give
The best advice I, and real estate agents, can give clients in preparing to deal with today’s loan process is to tell them to provide all the documentation that I request, completely and quickly.  Yes, it may seem like a lot in some cases and not necessary in other cases, but in the end it will be required.  So, please just do it!   By providing it early it will make the whole process that much smoother.
 

Another problem arises when a borrower suddenly goes on a money transfer binge.  I could write a novel relaying those stories and the documentation nightmare it creates.  Don't move your money without talking to me first!.

All in all - it's a great time to be buying a home, with truly historic low rates and low home prices making it affordable (finally) for so many!  Just buckle your seatbelt, and stick with the process, because having a home of your own will be rewarding in the long run!

If you have questions about these matters, please contact me directly. Let me know how we can be of assistance to you!
Gayle Arrowood, Registered Mortgage Advisor, Opes Advisors, Inc. 707.529.4321 or garrowood@opesadvisors.com