Up Front Documentation

 Part of the process of setting up a loan for a client as a Loan Specialist is going through documentation.  At our company, we pre-underwrite files, meaning we basically do our own version of underwriting a file to see what a client qualifies for.  It's like a rough draft of the underwriting process.  And as a part of that process, we request documentation up front so that we can properly pre-underwrite the file.  

For standard W-2 employed borrowers, we request their most recent 30 days of pay stubs, their last two years of W-2's, their last two bank statements from any account they wish to use, and their driver's license (to verify they are who they are).  

For self-employed borrowers, instead of W-2's and pay stubs, we request their most recent two years of tax returns.  During the COVID-19 pandemic, our main lender had an overlay requiring a year-to-date profit and loss statement as well because self-employed businesses were hit hard, but that has since been lifted.  

Some clients require additional documentation.  For clients that already have at least one mortgage, we request a most recent mortgage statement.  For clients that collect rental income, we request tax returns from them to verify the income, or if the property was newly purchased, a lease agreement.  For clients that own a property free and clear, we request their insurance declarations page.  Property taxes generally can be found online.

Of the standard documentation, there are a few things to look for when going through the documents.  Here's what to look for on each:

Pay stub(s) - Borrower's information, employer's information, start and end dates, pay date, pay rate, year-to-date earnings, taxes taken out.  

W-2's - Borrower's name and address, employer's name and address, year, borrower's SSN (or last 4), all necessary boxes shown and filled.

Bank statements - Borrower's name and address, account number, institution's name and address, account balance, list of transactions, all pages included

Tax returns - Borrower's name and SSN, all necessary schedules included, pertinent information entered correctly (rental income, self-employed income).

Mortgage statement - Borrower's name and property address, interest rate, amounts for principal, interest, and escrow (if necessary), next payment due date, next payment amount

Lease agreement - Borrower's name or their property management company's name, date and terms of lease, rent amount, signed by both parties

That's the basics for those, although there are other things we may look for on those documents depending on the borrower's situation.

We do on occasion get documents that don't work.  The most common reasons for documents the clients submit not working are that they are the wrong document (tax transcript instead of a W-2, summary statement instead of an official bank statement, mortgage interest statement instead of a mortgage statement), or that they submitted a document that is missing a page, or that they submitted a document with information not visible or legible (if they took a picture of their document, this is fairly common).

As a Loan Specialist, I basically have to get documentation that will work for the underwriters.  I can't use illegible images or screenshots that the lender would not accept.  I also have to ensure each document we receive is in .PDF format, and if for some reason it comes in as a different format, finding a way to convert it to .PDF.  

Dealing with documentation is one of my favorite parts of the job, as I enjoy dealing with Adobe Acrobat and working with files, moving them around from one place to another.  My least favorite part is when a client is clearly struggling to get us the proper document, whether it be because they're not technologically savvy or because they don't have the means to get the documents to us.  

But all in all, it's towards the easier end of all the tasks and responsiblities I have as a Loan Specialist, and there's rarely a difficult challenge.  Generally it's fairly easy to determine if the lender will accept a certain document or not, especially once you have the experience and you've seen what they've accepted and what they've rejected.