Tips For A Fast Underwriting

How long does underwriting take? Underwriting—the process in which mortgage lenders verify your assets to get a home loan—can last a little as two to three days, but typically takes over a week to finish.

Underwriting happens right before you close on a house, so timing can be crucial, particularly if you want to move in by a certain date. But make no mistake: Underwriting is unavoidable. All loans go through an underwriting process before the lender can promise you the funds for a purchase.

Learn from Russ O’Donnell, CEO of Call The Underwriter, how to speed up the underwriting process. He’ll take you through the steps in just over 4 minutes.

CFPB Changes its Mission Statement

CFPB Acting Director Mick Mulvaney has officially changed the Bureau’s mission statement.

The mission statement had previously read: “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”

But the new statement, according to a report by, reads (with italics added to the new wording): “The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.”

Mulvaney has indicated he aligns with President Trump’s mission to remove unnecessary or burdensome regulations, and while the recent Dodd Frank rollback did little to help private lenders and investors, it was certainly a step in the right direction.
Prior to Mulvaney’s appointment to the CFPB, the bureau made a name for itself by assessing mega-fines to mortgage lenders and real estate brokerages topping 5 billion dollars. Recent pushback from CFPB defendants has resulted in 2 federal judges ruling that the

CFPB’s structure is unconstitutional. Perhaps Mulvaney is on our side.
If Mulvaney hold true to his words, perhaps this could be the start of something big. And not just for big business.


How to Play Nice with Dodd Frank

As with all legislation, there is the issue of interpretation. In this entry, we will drill down, quickly, what the Dodd Frank Act did, why it did it, and how to comply with it as an investor or private lender.

Dodd Frank’s 849 page lending overhaul, as we’ve all seen, made it mostly impossible for smaller lending entities to stay in business. This is because it transferred the responsibility of the buyer onto you, the lender. If the buyer defaults on a mortgage loan, and it can be determined that the lender didn’t make sure the buyer had the “ability to repay” at the time of loan origination, the lender could lose their right to foreclose. This was done to try and protect the consumer against a crooked mortgage loan officer. As a result, many private lenders and investors abandoned residential, seller-financing all-together, and have long awaited repeal or new legislation to reopen the door. Trump’s recent lift did quite a bit for smaller banks and credit unions, but still requires them to service those loans and ensure their borrowers still qualify.

So how do I get back in the seller-finance, or note-buying game and stay compliant? 2 answers.

1. SAFE Act – This is the law that says you need a Mortgage Loan Officer (MLO) to originate the loan between you and your buyer. Note that if you are doing no more than 3 per year, there is an exemption to this requirement. You can find an MLO in any state by simply accessing their registrar of loan officers, or by using an entity that originates in all 50 states.
2. Ability to Repay – Dodd Frank states the lender is responsible for making sure the buyer can repay their loan. While it doesn’t tell you what interest rate to charge, or how high of a debt ratio is too high, it does recommend a few things. In fact, the CFPB issued a 59 page guide to help summarize the ACT’s requirements and how to comply. We keep a free copy of that guide on our website here, and use it regularly during our Compliance reviews. Dodd’s biggest question, during an audit, is going to be, “What underwriting methods did you use to ensure the buyer had the ability to repay your loan?” That’s it. Short and sweet. If you can’t answer that, or don’t want to become a mortgage underwriter, then simply hire one familiar with Dodd Frank.

Lastly, don’t confuse using an MLO to underwrite the transaction or to ensure your buyer has the ‘ability to repay’. That’s the underwriter’s job. MLO’s originate for food, commission, clams, Benjamins, and greenbacks. They are not underwriters and aren’t typically familiar with guidelines. They are salespeople. MLO’s help you to comply with the SAFE Act, underwriters help you to comply with the Ability to Repay. You need both.


Dodd Frank Gets a Trimming

The amendment to Dodd Frank in April brought a well-needed lift to small banks and credit unions by alleviating certain ability-to-repay requirements.  Assumedly, private lenders and investors could fall into this category of creditor, however, would still be held to the original points and fees thresholds, retain servicing, and required to verify debt, income and financial resources of the borrower.   While some say it’s not much of a lift, hopefully this will be the first of many more adjustments to come.  To view the new legislation, click here.