Clearing Underwriters Conditions To Submit For Clear To Close

This BLOG On Clearing Underwriters Conditions To Submit For Clear To Close Was UPDATED On July 13, 2017

Whether mortgage loan applicants are trying to get a home purchase mortgage loan or a refinance mortgage loan, the mortgage approval process is the same. The thing that can delay a mortgage loan closing is not submitting complete underwriting conditions to get a clear to close.

  • When mortgage loan applicants are issued a pre-approval, the pre-approval is based on the information that applicants have provided on mortgage application.
  • Information asked on mortgage application, which is commonly referred to as the 1003, are income, debts, and assets.
  • Other information asked are disclosures such as has the borrower filed bankruptcy, foreclosure, short sale, deed in lieu of foreclosure, had prior judgments, tax liens, etc.
  • Loan officers will review credit report and credit scores. 
  • Most loan officers will submit mortgage application to Fannie Mae’s Automated Underwriting System which renders automated findings.
  • An approve eligible per AUS Findings is what we need.
  • With an approve eligible, borrowers are pretty much approved for a mortgage loan contingent that they can satisfy conditions.
  • Verification is required of all information borrowers stated on mortgage application.

Mortgage Processing

Once borrowers have submitted completed signed mortgage application and provided supporting documents such as two years tax returns, W-2’s, two months bank statements, and other documents requested by loan processor and/or mortgage loan originator, mortgage application goes through the mortgage processing step of the loan process.

  • A mortgage processor makes sure that every item is cross checked on mortgage application. 
  • They make sure that all pages of documents are complete such tax returns, bank statements, copies of drivers license and social security card.
  • Mortgage Process makes sure that all documents are current. 
  • A processor’s job is to make sure that mortgage file is as complete as possible so it does not get kicked back by the underwriter.
  • Incomplete files and missing documents causes delay in mortgage process.
  • The processor’s main goal is to have the least underwriters conditions as possible.

Conditional Mortgage Approval

Once the processor has prepared and submitted mortgage loan application file and documents to underwriting, the mortgage file gets assigned to a mortgage underwriter.

  • Mortgage loan package is assigned to an underwriter who is responsible to either approve the mortgage loan or deny the mortgage loan. 
  • The mortgage underwriter will scrutinize mortgage loan application package to make sure that every information is correct and verified such as tax returns, W-2’s, bank statements, debts, and other assets. 
  • The underwriter will want to know explanations on late payments, bankruptcy, foreclosure, charge offs, judgments, tax liens, and overdrafts.
  • Income, debt, assets will be verified.
  • Mortgage Underwriter will determine if borrowers meet mortgage guidelines.

Mortgage Underwriting Process

The mortgage underwriter will review the appraisal and determine the risk level of the mortgage loan applicant as well as its co-borrowers.

The mortgage underwriter will then issue a conditional mortgage approval but will almost always have underwriters conditions in order to issue a clear to close.

What Are Underwriters Conditions

Once borrowers have been issued a conditional mortgage approval by an underwriter, there will most likely be the underwriters conditions.

  • Some examples of underwriters conditions include letters of explanations of irregular activities in bank account. 
  • The underwriter might want to know explanations the reason of deposits of withdrawals of funds over $200.  
  • Other underwriters conditions might be that if divorced, they might want to see divorce decree. 
  • Borrowers who have filed bankruptcy, the mortgage underwriter might want to see bankruptcy papers or a letter explaining for filing bankruptcy. 
  • Borrowers with late payments, the underwriter might want to see a letter of explanation on why they were late.

Other Underwriter’s Conditions

  • Other underwriters conditions can be tedious and sometimes may not make sense. 
  • However, there is no way of bypassing an underwriters conditions request.
  • Borrowers and everyone in the mortgage team need to cooperate with underwriters conditions in order to have a clear to close on the mortgage loan. 
  • Once satisfied with all underwrites conditions, borrower will be then issued a clear to close.
  • Clear To Close is when the lender is ready to prep docs and fund the mortgage loan.

Related> What Is A Conditional Approval?

Related> Conditional Approval

Related> What Is A Conditional Mortgage Approval?

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