Talent aside, we all know that the ability to excel as an originator is greatly enhanced by having strong technology, training and support. In the world of Financial Assessment (FA), these resources are more vital than ever.
One of the most important secrets for success under FA is to look at the entire loan scenario and analyze all of the compensating factors that could be utilized. The FHA provides a number of compensating factors you can apply to loans for customers who at first don’t appear to qualify and pass the initial residual income cash-flow analysis. With a thorough understanding of all the compensating factor tools that the FHA provides in the FA section of its manual, you can get more loans to qualify.
That can be a daunting task. But if you take advantage of opportunities to leverage technology, training and support, you and your business can become better, stronger and faster. Here’s what has worked well for us and our originators.
Technology
To expedite the process, at Reverse Mortgage Funding (RMF) we developed a feature in our proprietary loan origination system, Tango 2.0, that automates compensating factors—including asset dissipation and hypothetical debt payoff. This has greatly streamlined our workflows. What previously took the officer, the processor and the underwriter up to 30 or 45 minutes each to calculate manually is now calculated instantly. Richard Thorpe, the national sales leader of RMF’s distributed retail team, says, “This makes it possible for a rep to be able to meet with a borrower, plug in the info and get answers right away.” Needless to say, this technology is embraced by our retail loan officers. It will also be rolled out to our brokers this fall.
Training & Support
When it comes to knowing how to qualify borrowers, “training is hugely important,” underscores Eric Ellsworth, RMF’s national sales leader for the consumer direct channel. “The biggest lift for my team has been from training and our technology enhancements.”
It starts with a strong foundation of basic training, but it doesn’t stop there. It requires continuing education, because every borrower’s situation is unique and real-life scenarios can reveal new challenges and solutions. So it’s important to use the trainings available to you.
Also, good communication between origination and operations is a great complement to formal training. “We regularly receive notifications from the heads of underwriting and operations,” Ellsworth says, “letting us know where we got hung up on a file—this is what we can and can’t do, this is what we learned in the process. So we on the sales side are constantly learning and honing our mastery of Financial Assessment.”
You are not alone—be sure to look for the resources and support that are available to you, and use them. For example, many lenders offer:
-Pre-flight process: This involves a walk-through of all the details in the case file to help loan officers present the best possible solution to their client. Explains Vanessa White, RMF’s regional sales leader for distributed retail, “When a loan officer has a scenario from a potential borrower and needs guidance on what to get or ask the borrower for so the loan will qualify, prior to submitting the application the loan officer and I collaborate on a ‘pre-flight’ check to figure out how to present the loan so it works. RMF uses a combination of technology, knowledge of the guidelines, and the loan officer’s familiarity with the customer’s situation, making sure all sources of income are considered. Sometimes the process reveals another source of income that hasn’t been factored in.”
-Credit help desk: Similarly, RMF encourages our loan officers and wholesale clients to send scenarios they are concerned about to our credit help desk prior to the loan being disclosed. Explains Mark O’Neil, national sales leader for RMF’s third-party origination channel, “A dedicated underwriter is there to review and give feedback on scenarios before the originator even goes out and writes the loan, so they know what to be looking for and how it will be viewed once it hits underwriting.”
-Second look team: If a retail application initially fails Financial Assessment, it’s not automatically denied; it’s given a second look. After an operations team review, the underwriter, processor, lead underwriter and loan officer get on the phone together to discuss the file and see if there’s a way to make it work. The loan officers really appreciate this process because it gives them a voice and helps them be part of the solution.
RMF has a similar process for our brokers and principal agents for cases where a file’s not already qualified when it comes into our system. Each client is assigned an account team, including a dedicated account manager who really understands the product and who’s there to help them get their files through the process.
-Purchase pre-approvals: FA is typically not as big of an issue with HECM for Purchase loans as it is on refinances, because Purchase borrowers usually have a substantial pool of funds from the sale of the home they are leaving. However, having a process for pre-approving purchase customers prior to taking an application, covering all the FA qualification points, is key. Loan officers are then able to provide real estate agents or builders with a formal loan pre-approval, giving them satisfaction that the borrower has met the program requirements. Our “Purchase Express” program serves as a form of due diligence that raises any red flags upfront on what is truly a life-changing transaction. And once the complete application has been submitted, it allows us to fast-track the loan through the system.
No matter what type of originator you are, there are resources that can help you make sure you don’t turn away borrowers who could be qualified using compensating factors. Take advantage!
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