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Monday, June 24, 2013

We don’t make this stuff up – crazy underwriter demands…

Being in the real estate business sometimes means having to try to explain some totally insane things that go on when someone is trying to buy a house. The process of evaluating the credit worthiness of would-be borrowers and assessing the risks involved in making the loan to them falls to a largely invisible group of jokesters called underwriters. You know that these people are hired for the weird sense of humor when you read about some of the totally idiotic things they ask of the would-be borrowers.

A recent article in the Chicago Tribune documents quite a few absolutely absurd requests from underwriters. I often advise buyers not to spend any big money or make any unusual credit purchases between the time that they apply for the mortgage and the closing. The underwrite will see that and it may throw off the debt to earnings ratio upon which an initial approval was based. I’ve seen people fall out of the range that they needed to get their mortgage because they went out and bought some furniture for the new home. That actually makes sense and is the reason that I advise them to wait until after closing to buy anything big, like furniture or appliances. The instances in the Chicago Tribune article just don’t make sense. They are examples of a really broken system that is letting a few people from behind the scenes run amok.

Asking someone to explain in a letter why they changed their name when they got married is insane. Asking someone who makes $40-50,000 a year to explain a $6 deposit to their account is crazy. And asking a widow to explain why her monthly Social Security payments went down after she has supplied a death certificate for her late husband is just pathetic. Yet these and many more are documented in the Tribune article. I just wish they had been able to name the companies and the bozo underwriters who thought that these were necessary things to require of the borrowers.

There is enough complexity and stress in the home buying process for most buyers already, without being subjected to ridiculous requests such as those documented in the Tribune article. This is really an indication of a system gone haywire; of big mortgage companies without the ability to manage their employees or the process. Were it not for the fact that most borrowers don’t have the time to start over with another company, I’d certainly recommend that the borrowers switch companies, rather than deal with the incompetence that these examples demonstrate. You can rest assured that this is just an indicator that you’re dealing with a bad company.

Now, I’m reasonably sure that most underwriters are good, hard-working and honest people who are just trying to do their jobs (as they see it). The issue is; why these people can’t apply a little common sense before making ridiculous demands? Are they under some Machiavellian orders from headquarters to create chaos? Are they judged and maybe even awarded bonuses on how hard they can make the process? Do they work for companies that really don’t want to be in the mortgage business? There must be some explanation other than, “I thought it was the right thing to do”, because that just doesn’t’ make any sense. Then again, let’s revisit the theory that these are truly sick people who enjoy causing havoc in people’s lives. Naw! That can’t be. Can it? Maybe they are all Zombies and this is a way to get into our brains.

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