Underwriting 1- Study Prep
What is the home loan toolkit booklet?
"home buying for dummies" 40pg packet on mortgage process to help buyer understand process
Secondary Market
"mortgage e-bay" accounts that are sold in groups or "pools" with similar characteristics (occupancy, FICO score, LTV, DTI, loan amount, program- FHA, VA etc.)
What percentage of LTV for a FHA / USDA note that needs to have MI?
%100 PMI needs to be on the entire life of the loan
What DTI can borrows have up to for a Conventional Loan?
%50
What DTI can borrows have up to for a FHA Loan?
%55
What percentage of the market are Conventional Loans?
%77
What percentage of LTV for a conventional note that needs to have MI?
%80 LTV
What percentage of UWM loans are Conventional Loans?
%81
At what LTV on a Conventional loan is a borrower required to have an escrow account? and why?
%95 LTV; high risk
Retention
***most important*** helps us grow/ maintain business
How many years of employment must be documented?
2 years work history
What is included in your debts?
Child Support, Auto Loan, Credit Cards, Student Loans
What does it mean to be CTC and who contacts who?
Clear to Close- Underwriter II contacts the broker to give them the good news and to move forward, this takes 14 days or less.
What are the 2 "closing teams"? and what do they do?
Closing Team (communicates with 3rd parties-brokers & title companies to ensure the loans closing costs and fees are correct) & Wire Team (sends wires out BEFORE the actual closing of the loan because we want quick/good service for the borrower & seller)
What is the CFPB?
Consumer Financial Protection Bureau; protects the borrowers, sets ethical rules for the mortgage industry and audits everyone.
Mortgage Program Categories
Conventional, Government, Non-Agency
Define Interest
The cost of borrowing money, the amount that is paid in addition to principal; how most lenders make money
Who does the risk fall on with JUMBO loans?
The lender
What is the 1003 and its purpose?
U.R.L.A (Uniform Residential Loan Application) / gets the important information needed for the loan
What is U Connect?
UWM online site that brings business leads to Brokers via email
After the Senior UW verifies the conditions with the broker, who is the loan then assigned to? and what responsibilities do they have?
Underwriter II- reviews the docs to ensure they make sense, and if they do they "clear" them (conditions)
What is not included in your debts?
Utilities, Subscriptions, Phone Bills, Insurance, Groceries, Medical Bills
What is a liability?
a debt owed
What are "Lending Support Teams" at UWM? and how many are there?
a large UMBRELLA team that will be the first team to touch the loan file upon broker submission; There are 7 teams.
Post Closing
teams main role is to prepare our loans for sale on the secondary market. all information needs to be correct and is verified by this department as well.
Define Processing and who does it?
the act of gathering documentation from borrowers; the broker
Who does the Senior Underwriter contact to walk through the conditions of the loan? and why?
the broker to make sure we are on the same page
Define Origination and who does this?
the salesmanship of the loan; brokers or "LO"
Servicing
the two main responsibilities are to split the "principal & interest" and manage escrow
What are "Closing Teams" at UWM? and how many are there?
this UMBRELLA team is made up of two smaller teams that expedite the closing process for our broker and their borrower
Amortization
to pay money that is owed for something by making regular payments over time
Define Insurance (HOI)
Home Owners Insurance; protects lenders investment as well as the buyer/owner. Based upon the "replacement cost" to protect against "acts of god"
Four main parts of the U.R.L.A
I.P.A.C (Income, Property, Assets, Credit)
What is a Broker?
Independent Loan Originators
What are the 3 things the borrower wants to know about their loan?
Interest Rate, Monthly Payment, Closing Costs
What type of loan gets a manual underwrite?
JUMBO- because we make the rules
Non-Agency loan UWM offers?
JUMBO; loan amounts above 548,250
What is Unite?
Keeps borrowers informed on current loan status for possible refi
What does the Underwriting Approval Letter show details of?
LTV, DTI, FICO Score
What is the formula to calculate LTV?
Loam Amount / Home Value (move one decimal over)
What is the LTV Calculation?
Loan Amount / Value of the home
What is the "Life of a Loan" process in order?
Loan Application (broker shops), Intent to Proceed (processing), Lending Support (underwriting), Title Review (clear to close), Closing (instant funding), Post Closing (secondary market), Servicing (retention)
What document needs to be received before charging for the credit report? and why?
Loan Estimate; because the borrower needs to be eligible, 640+ or could rescind "back out".
Define LTV
Loan to Value
What is LTV?
Loan to Value
Define Insurance (MI)
Mortgage Insurance; borrower pays this and it protects the lender in an event of foreclosure
Examples of Debt
Mortgage, Auto Loan, Personal Loan, Boat Loan, Credit Card
What is a Refinance
Paying off an existing loan with a new loan
What is a Liability (debt)?
Payments a borrower is subject to and are found on income verification (paystubs) or on their credit report.
Occupancy Types
Primary, Secondary & Investment Property
What are the 3 occupancy types, their type of risk and max LTV on conventional loans?
Primary- low risk with a Max LTV of %97 Secondary- medium risk with a Max LTV of %90 Investment- highest risk with a Max LTV of %85
What is P.I.T.I?
Principle, Interest, Taxes Insurance
Types of Mortgage Transactions
Purchase, Refinance & Cash Out
Types of Refinances
Rate & Term / Cash Out
What is the difference between wholesale and retail lenders when it comes to processing/origination?
Retail originates & processes, wholesale does not
What are the 4 property types and level of difficulty for lenders?
SFR (single family residence) "typical homes" and are the least difficult PUD (planned unit development) "cookie cutter homes" have association dues / weird rules and have medium difficulty Condo (attached- dont own much other than belongings & detached "sight condos" )- 1073 appraisal required and are the most difficult Mobile/Manufactured- UWM does not lend for these because they are too risky "flight risk"
Conventional Loans are backed by who?
Fannie Mae & Freddie Mac ( mom & dad )
Freddie Mac (FHLMC)
Federal Home Loan Moratgage Corporation
Fannie Mae (FNMA)
Federal National Mortgage Association
Amortization Types
Fixed Rate Mortgages, Adjustable Rate Mortgage
Both FNMA & FHLMC are known as?
GSE (government sponsored enterprises)
In most cases, do lenders use gross or net income to qualify borrowers?
Gross
What income type does UWM calculate with?
Gross
What are the two types of income?
Gross & Net
What is an AE and what do they do with UWM?
Account Executive; wears may hats and speaks directly with brokers to bring in business. They are the first line of defense and should "vet" loans
Who discusses the LE with the borrower?
Account Executives
What are the types of Government Loans?
FHA (federal housing commission), VA (veterans administration), USDA (united states department of agriculture)
Max % of loan you can get from the appraised value on a home?
97% LTV
What do liabilities show up on?
A credit report
What are the two types of income? and what are examples?
Active (W2 "wage earners" 1099 "self employed") & Passive (SSA, SSI, Rental, Stocks, IRA, K, Pensions, Royalties, Child Support)
Define Principal
Actual amount of money that goes towards the loan
What does it take to become a Broker?
20 Hour S.A.F.E , State Licensing, Net Worth Requirements
Fixed Rate Mortgage
30 years (max term) 8 years (min term) ; interest rate will never change
Minimum FICO score UWM will take?
640
How many days does it take to prepare our loans for sale and "pool" prior to placing them on the secondary market?
7 days
Adjustable Rate Mortgage (ARM)
All are 30 years ; rate will adjust when market does
What is an escrow account?
An account used to hold & pay taxes and insurance
What are the three decisions that a Senior Underwriter can make when initially reviewing a submitted loan?
Approved with Conditions: stipulation or a document we need Rejected: does not meet proper qualifications Suspended: have to make a Y or N decision & waiting on proper docs/verification
What is AUS?
Automated Underwriting System "digital rule book"
Declarations
Bankruptcy, Foreclosure, Citizenship
What are the two types of AUS? and who uses them?
DU: "desktop underwriter" - fannie mae LPA: "loan product advisor- freddie mac
What is the DTI Equation?
Debt / Income
What is the formula used to calculate DTI?
Debt / Income
Define DTI
Debt to Income Ratio
What is DTI?
Debt to Income Ratio
What are the 7 "lending support teams"? and what do they do?
Doc Indexing ("Librarians" organizes documents in loan packages, avg. loan file is 120 pages), Set-Up ("gatekeepers" makes sure there are correct and completed documents), Processor Assist (collects HOI, Payoff & Title docs on the brokers behalf, helps speed up process for both us and the broker), Verbal Verification of Employment (V.V.O.E) (calls borrowers employer to verify they are still employed, helps to detect fraud and are good for 10 days), Disclosures (ensures proper disclosures required by each state are in the loan file and filled out correctly), Vendor Assist (orders the 4506-T or tax transcripts and reviews real estate agents licensing info for fraud as well as proper appraisal docs), Underwriting (assess risk)
UCLOSE (E.A.S.E)
Easiest Application System Ever- Allows brokers to schedule closing, balance fee's and generate the closing package. Enables borrower to be at the closing table in as little as 3 hours.
What type of borrower would we qualify off net income? and why?
Self-Employed; because of deductions / write off's change what they actually make
Two different types of underwriters at UWM and their responsibilities?
Senior Underwriter (gets the loan 1st and reviews income, occupancy & credit) & Underwriter II (reviews everything else)
What does a Broker do?
Shops for the best deal for the Borrower
What is important info on the 1003?
Social Security Number, Marital Status, Date of Birth
Does the lender use "appraised value" or "purchase price" when determining how much to lend? and why?
Whichever is less, because the lender cannot lend past the appraised value. If foreclosure happens, money could be lost.
Do homeowners with a mortgage on their home have to have HOI?
Yes
What are eligible assets?
money in an account (checking / savings) investments, stocks/bonds
Define Taxes
money you pay to the government for the services that everyone uses... roads, school, parks, etc (property taxes differ from state to state & city to city.)
Instant Funding and its benefits
brokers have the borrowers sign all proper docs and once title agent is satisfied the title company disburses the funds. this quick process makes the broker look good. this is also a quick & easy customer service for the borrower. Realtors also benefit from the broker by taking credit for this in some cases
What is a Loan Estimate (LE)?
outline of estimated fee's, closing costs, inspection, appraisal.
What is an asset used for?
closing costs & down payment
What is the "intent to proceed"?
electronic delivery consent; borrowers have to sign this before brokers can move forward with the loan
What does the broker do when originating?
gathers the 1003, pulls credit and discusses options with the borrower
