A Few Ways Loan Officers Can Streamline the Underwriting Procedure 

Summary: A quick, easy, and streamlined loan process is essential for a successful loan officer. Here are a few tips to keep the process fast and successful. 

1. Use Cover Letters on Loans You Submit to Underwriting 

2. Don’t Let the Borrowers Apply for Other Loans or Credit During the Underwriting Process 

3. Keep Updated on Regulations 

4. Only Use Your Client’s Latest & Up-to-Date Information 

5. Provide Good Context for Any Negative Credit Score Items 

6. Stay in Touch With Your Underwriter 

Use Cover Letters on Loans You Submit to Underwriting 

Submitting a cover letter with a job application shares a similar objective to submitting a cover letter with a loan application to the underwriter – it’s a great way to highlight your background or, in this case, your client’s file. The cover letter doesn’t even have to be all that fancy or overly complex. Loan cover letters not only improve the chances of success, but also help you hone your ability to review loan applications and become a more efficient MLO. 

On company letterhead, include your name, employer, and contact information. Add a few quick sentences introducing the loan outline, along with a request for further communication. Then, list information relevant to the loan, such as the file number, type of loan (i.e., refinance, purchase, etc.), borrower name and credit score, and other relevant loan characteristics. And finally, add any of your own comments about the loan, such as weak points in the application or why you feel the loan should be approved. 

Don’t Let the Borrowers Apply for Other Loans or Credit During the Underwriting Process 

One of the biggest duties you have as an MLO is to advise your clients on how to make the loan process go smoothly. A key step to getting through underwriting, for example, is for your clients to  avoid major purchases that may affect their credit score (at least until after they have closed). Make sure to remind your clients that applying for other loans, such as a lease on a new car, can have negative consequences during the underwriting process. You cannot overstate the importance of maintaining the credit profile that your clients initially applied with. Although new lines of credit may not necessarily result in a loan denial, they can cause delays. 

Keep Updated on Regulations 

Given the slew of different loans available to clients, MLOs should always make sure they stay apprised of the most current rules and regulations of each loan type they originate. Although the inclination may be to rely on your prior experience, guidelines could change, and you don’t want to risk doubling back to get additional information or documentation from your client because you weren’t aware that previous regulations changed. Similarly, you want to save your clients the time of gathering documents that aren’t necessary. 

Refer to the AUS (automated underwriting system) reports and re-read loan-specific program guidelines to ensure that your borrower is on the right track with their application.  

Make Sure Your Client’s Information is Up to Date 

Accurate and up-to-date information is extremely important during the mortgage loan process. As the underwriter examine the applicant’s file, all information must not only be correct but also verifiable. For example, if a client has had a change in marital status, that should be updated in their application. You’ll also need to include documentation that buttresses the information (i.e., divorce decree, marriage license, etc.). Even when certain life circumstances seem minor, those changes can greatly impact the future of the loan and should be included in the information that will be passed on to underwriting.  

Provide Good Context for Any Negative Credit Score Items 

Negative reporting on your applicant’s credit file can send red flags to underwriters. If you choose against including a cover letter, make sure to add a statement of explanation for any items that may cause concern. In addition to items that affect their credit score, explain issues such as a lapse in employment, large deposits, and common bills that the applicant may have not had to pay (i.e., a first-time homebuyer who lived rent-free with their parents). Whether the situation seems major or minor, it’s good practice to add context before sending the file to underwriting.  

Stay in Touch With Your Underwriter 

Being diligent is one of the most important things that an MLO can do. While you don’t want to be pushy, you do want to make sure that you regularly check in with the underwriter. Maintaining consistent and courteous communication is a good way to help the process flow more smoothly and can even help to speed it up.