Once upon a time, in the land that banks forgot. . . . . .

By
Mortgage and Lending with V.I.P. Mortgage

Once upon a time, in the land that banks forgot. . . . . .getting approved for a mortgage loan was quite a different and more human process. 

  • Your loan application was completed by hand and every box was filled out
  • Your employment was documented with a written Verification of Employment - no pay stubs and W-2's. . . uh! uh!
  • Your bank accounts were documented with a written Verification of Deposit. . . no bank statements. . .uh! uh!
  • Your credit report took 3 weeks and then you had to write a letter of explanation for every little ding no matter how minor - there was no FICO score! . . .uh! uh!
  • The appraisal took 3 weeks - (they had to wait for the roll of film to be developed!)Fico score - Vbindi at Flickr
  • Faxes were not allowed and e-mail did not exist . . .uh! uh!

BUT the Underwriter was an Underwriter!  The job of the Underwriter was to evaluate risk.  The Underwriter looked at every single piece of paper in the file.  There was no computer model to approve/caution/decline the loan.  Once the file was complete, the Underwriter would present the loan to "LOAN COMMITTEE" with a recommendation for approval or decline.  "LOAN COMMITTEE" was typically a group of Vice Presidents within the bank and they made the ultimate decision on whether the loan was approved or not.  At my bank, they met twice a week - Tuesday and Thursday.

Once upon a time, I was one of those Underwriters.  I got a loan to underwrite one day that, on the surface, looked like a very bad risk.  The credit report was AWFUL!  Late payments everywhere - and lots of them.  By today's standards, the FICO score would have probably been around 400.  But after a review of every single piece of paper in the file I knew this borrower was NOT a bad risk.  Her old credit history was good but the last few years was ugly.  As I read her letter of explanation and reviewed the proof she provided I got a very good look at the character of this lady.

She had married a man who turned out to be a real turkey.  He ran up credit all over town, spent a good deal of money that SHE had saved, got them in thousands of dollars of debt and then left town.  Arizona is a community property state - his debt was her debt.  This lady could have taken the easy way out and filed bankruptcy - and, at that time, would have been free and clear in two years and easily approvable by any lender.  But instead, she worked two full time jobs for three years in order to pay every single debt.  No one lost a dime on this lady!  Her credit report was trash but she honored every one of her obligations.

When I took the loan to "LOAN COMMITTEE" they flat out rejected the loan.  I took that loan back to "LOAN COMMITTEE" twice a week for 6 weeks.  Finally, one of the Vice Presidents said "How many times are you going to bring this loan back here?".  My answer - "Until you approve it".  I won!  "LOAN COMMITTEE" finally approved her loan with the stipulation that I, personally, monitor her payment history for one year.  No problem.  I knew my lady was good and I had evaluated the risk.

Ten months later, I had to take her back to "LOAN COMMITTEE"  because she needed a small second mortgage to put a new roof on her home.  So, I started out with "We can do this the easy way or we can do this the hard way - your call".  Her payment history was perfect - every payment made 7 - 10 days early.  The loan was approved in less than 5 minutes.

My lady never did let me down.  Would she be approved today?  Never.  Are Underwriters allowed to evaluate risk today?  No - a computer model tells us who is a good risk.  Even the underwriters that know how to evaluate risk are required to make the loan fit the box.  Unfortunately for us, mostly they are now Validators and the art of true, human underwriting has gone to. . . .the land that banks forgot.

Posted by

Jane Penttinen, Sr. Loan Officer
NMLS #222178
Sunstreet Mortgage, LLC
520-547-4150

Jane Penttinen (Sunstreet Mortgage, LLC - Sr. Loan Officer): Loan Officer in Tucson, AZ 

If you, your friends or family require the services of a mortgage professional, please don't hesitate to call me.  I am never too busy for any of your referrals.

BK090736      

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Sandy Childs 10/03/2009 08:39 PM
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Show All Comments
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Donne - now you have me ROTFLMAO!  Okay - let's call them Validator/Underwriter wannabe's.  Regardless, they are the people with power - who do whatever they can to brighten up our day. :)

Sometimes I just look at it as an exercise in character building.

September 29, 2009 04:49 PM #68
Rainer
99,376
Dianne Bartlett
Keller Williams - Lakeway, TX

Wow!  This reminds me of a Jimmy Stewart movie.  Wouldn't it be nice if we could all be HUMAN again?  Maybe then every angel would get it's wings.  Sounds like you were a true angel to that woman - good for you.

September 29, 2009 06:18 PM #69
Rainmaker
122,067
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Great post!  It is about the person, not the numbers.  Thank you for the inspiration.

September 29, 2009 09:29 PM #70
Rainmaker
128,113
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Man that way is old school.  I'm still not sure which way is better.  They both have their pros and cons.  The way banks are doing it today is they are trying to make it all cons.  There doing a pretty good job at it to.

September 30, 2009 12:17 AM #71
Rainmaker
197,630
Mark Velasco
Realty Source, Inc (Luxury Homes Division) - Whittier, CA
Friendly Hills Homes for Sale - Whittier, Ca. Real Estate - Listings

Great job Jane. It is not often that an underwriter would risk their job reputation on a "risky" buyer.

September 30, 2009 12:27 AM #72
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Dianne - maybe a little more like Norma Rae than Jimmy Stewart.  :)

Jim - I believe it should always be about the person, don't you?

Mike - there were some very good things about the "old school".  Progress is good but often leaves the good stuff behind.

Mark - I guess it would depend on what you define as "risky" - someone who files bankruptcy to wipe out all debt/obligations - or someone who does everything humanly possible to repay what they owe.

September 30, 2009 09:18 AM #73
Rainmaker
598,840
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jane - the scariest part about the whole "validator" scenario is that these entry level clerks are probably actual underwriters in training or assistant underwriters.  AAARRRGGGHHH!!!

September 30, 2009 12:27 PM #74
Rainer
227,568
Diane Rice
Diane Rice, Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - South Holland, IL
SFR, SRES, CNC

Jane, i went to your blog to read your post because you had left a comment on mine.  I read with intensity and absorbed an understanding and came back with a much higher respect for those who like you who had to undergo the training from "old school" methods.  As i continued to read, my thoughts were.... this needs to be featured!  Lo and behold, when the conclusion came, there you were.... GOLD STAR AND ALL!!!  A well-deserved feature Jane!  Thank you for telling us like it IS and WAS!  (and thanks for commenting on my post)

Diane 

October 01, 2009 01:59 PM #75
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Diane - Thank YOU and you're welcome!

October 01, 2009 02:07 PM #76
Rainer
156,739
Sandy Childs
Keller Williams Realty - Spartanburg, SC
Realtor - Spartanburg, SC

Jane: Sometimes I wish that we could rewind the clock for about 3 years ago! Enjoyed your post.

October 03, 2009 08:38 PM #77
Ambassador
1,532,033
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Jane, I like your thought of a human vs. a machine world. It is much more soft and fuzzy.

October 05, 2009 08:32 PM #78
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Sandy - thank you!

Gary -  I think human is always better

October 06, 2009 10:52 AM #79
Rainmaker
616,865
Sandy Shores Broker, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County FL Real Estate

Hi Jane, Well YOU GO GIRL!  Great job in going above and beyond the call of duty for you customer!  Boy, things truly have changed today, haven't they?

October 06, 2009 12:32 PM #80
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Sandy - things really have changed today.  Some changes are good - others not so.  But, we live in the world we're in.  Thanks for commenting!

October 06, 2009 02:38 PM #81
Rainmaker
883,377
Jane Peters
Power Brokers Int'l - Los Angeles, CA
Connecting you to the L.A. real estate scene

Fabulous post, Jane, and congratulations to you too on your feature.  The Janes are rocking.  This story is the subect for a fairy tale.  And can you imagine that poor woman trying to get a loan today. 

October 07, 2009 12:07 PM #82
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Jane - Thank you!  I guess we'll never be known as Plain Janes, will we?  Over 30 years there have been several clients who really touched my heart.  This lady was definitely one of them.

October 07, 2009 01:43 PM #83
Rainmaker
261,430
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Great post Jane. Persistence does pay off. So does a "woman with a mission".

October 27, 2009 10:52 PM #84
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Thank you Wayne.  It definitely pays to be persistentn - and I almost always have a mission!  :)

October 28, 2009 12:18 PM #85
Rainer
122,502
Julie Martin
Port City Realty - Gulf Shores, AL
Realtor, Broker - Gulf Coast Real Estate

Sounds slow, but sounds great! There are many that can go through the computer system, because everything is great. But you pointed out the problem. We really need underwriters that no how to assess risk. I hate FICO scores. I really think they are the problem. We aren't numbers we are people. I know some people that have had a bankruptcy & a foreclosure that have a higher FICO score than I do and I've never not paid a bill I owe.

November 06, 2009 09:37 AM #86
Rainer
40,537
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Hi Julie!  FICO scores are a mystery and I really don't like that they are a "line in the sand".  Underwriters are told not to cross the line even if it makes good sense.

November 06, 2009 09:41 AM #87
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