Mortgage Conditions By Underwriters On Conditional Approval

Mortgage Conditions By Underwriters On Conditional Approval

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover mortgage conditions by underwriters on conditional loan approvals. Once the mortgage loan has been processed, it will get submitted to the mortgage company’s underwriting department. It is then assigned to a mortgage underwriter. A mortgage underwriter will carefully look at borrowers’ loan applications. All loan documents submitted will be carefully reviewed and analyzed.

The following documents need to be complete without missing pages and up to date:

  • two years tax returns
  • two year W-2s
  • 30 days paycheck stubs
  • 60 days of bank statements
  • credit report

Other documents that apply to borrowers such as the following:

  • bankruptcy paperwork
  • foreclosure paperwork
  • short sale paperwork
  • divorce decree
  • pension agreements
  • child support paperwork, etc.

How Are Conditional Loan Approvals Issued

Once a mortgage underwriter has reviewed all of the documents provided and feels comfortable borrowers qualify and meet all guidelines, the underwriter will issue a conditional loan approval. Most borrowers feel that they are totally approved once they get conditional mortgage approval. This is true but the keyword here is conditions.

What Is Conditional Mortgage Loan Approval?

Conditional loan approval is when the mortgage underwriter feels comfortable to issue mortgage approval. The underwriter will wait for conditions listed on the conditional loan approval. Once borrowers provide all conditions, the underwriter will carefully review the conditions. Once accepted, the mortgage underwriter will issue a clear to close. A CTC means the underwriter has signed off on the loan and the lender can prep closing docs and fund the loan:

Mortgage conditions can be the following:

  • updated bank statements
  • updated paycheck stubs
  • letters of explanation for derogatory credit
  • appraisal
  • other documents that the mortgage underwriter needs in order for them to issue a clear to close

A clear to close is when the mortgage underwriter is ready to fund the home loan.

Submitting Mortgage Conditions

Submitting Mortgage Conditions

The mortgage processor will request all of the mortgage conditions requested by the mortgage underwriter of the mortgage loan applicant. Mortgage conditions can vary anywhere from a few items to dozens of items. When getting mortgage conditions, the key is to provide everything. Incomplete files are what delay home loan closings. A mortgage processor will not submit it until she has every single mortgage condition. If the mortgage processor submits incomplete mortgage conditions, the file will get re-conditioned for the missing items. This is when delays occur and closing dates get delayed. Once the mortgage processor has accumulated all the mortgage conditions from borrowers, she will submit it to the mortgage underwriter for a clear to close.

Additional Conditions After Submitting Mortgage Conditions

There are many times where underwriters will request additional conditions not requested on the initial conditional mortgage loan approval. This is when many mortgage loan applicants, mortgage processors, and mortgage loan originators get extremely frustrated. A seasoned experienced competent mortgage underwriter should not request additional conditions after she issues an initial condition list. This is normally the case unless the mortgage conditions requested are incomplete or not the condition initially requested. Most experienced mortgage processors will not submit incomplete conditions. It normally takes 24 to 72 hours for a mortgage underwriter to review mortgage conditions. Submitting incomplete mortgage conditions can cause delays in the mortgage application process. I can possibly cause delays in mortgage closing. If additional conditions are requested, everyone has no other choice but to comply with the additional conditions request.

Clear To Close

Once the mortgage underwriter has reviewed all mortgage conditions, she will issue a clear to close. Once a clear to close has been issued, the mortgage docs are prepared by the mortgage lender and sent to the title company. The wire is sent to fund the mortgage loan.

What Is QC?

QC, or Quality Control, is another mortgage underwriting process after a clear to close has been issued by the original mortgage underwriter. A QC underwriter is assigned to overlook the work of the initial mortgage loan underwriting. Quality Control is not implemented by all mortgage companies. Only a certain percentage of mortgage companies have a QC underwriting review process. A QC underwriter can come up with more conditions from the loan applicant. Most QC process takes 24 hours to 48 hours to complete. However, it can take much longer. Borrowers applying for a home loan, find out if the mortgage company the file is being submitted to has a QC process. If they do, try to go to another lender that does not have a QC underwriting process. I have had an extremely bad experience where a whole mortgage file got delayed after the initial clear to close by a mortgage underwriter do to QC underwriting. Why have a mortgage underwriter issue a clear to close if it needs to be re-underwritten.

Related> What is clear to close?

Related> Conditional approval

Related> What is conditional approval?

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