We understand that you’d like to have a clear to close commitment the very first time you submit your file… Well, crossing your T’s and dotting your I’s doesn’t have to be daunting during the underwriting process, although it can certainly feel that way! You can easily receive a “First Pass Approval” by following some simple tips.
Our Regional Underwriters are here to help you stay proactive and work meticulously! Having the tools and information you need to succeed are the first steps to get you through the underwriting process.
Here is a range of tips and tricks that will help you achieve a “First Pass Approval”:
Overview of URLA & AUS:
- Review the AUS findings closely and provide all documents for the conditions
- Obtain our MI rate quote for the final DTI, LTV, loan amount and coverage and reflect that MI premium on your final URLA and AUS
- Only provide the final AUS and corresponding URLA as the initial AUS and URLA are not needed
- If the loan has an Adjustable Rate, provide the corresponding ARM disclosure
- If the file is not AUS approved, be sure to review our Standard Guidelines for minimum borrower contribution and reserve requirements and document accordingly
- Provide the HFA documentation for grants and subordinate liens that match the AUS and URLA
- When a borrower has a Non-Permanent residency status, be sure to provide the valid unexpired VISA or Employment Authorization Document (EAD) issued by the United States Citizenship and Immigration Services (USCIS)
- When a borrower has a Permanent residency status, be sure to provide the valid unexpired “green card” or Alien Registration Receipt Card (Form I-551) issued by USCIS. If the borrower has not received the hard copy of the permanent green card, a valid unexpired foreign passport evidencing Temporary Lawful Admission for Permanent Residency may be used.
- If the URLA has discrepancies on the borrower’s date of hire, confirm and correct the URLA
- Confirm that the borrower’s employer’s name matches the pay stubs, W2s and URLA
- If the borrower has changed employment in the current year, document all previous YTD income with pay stubs or written VOEs
- If schooling is being used in lieu of 2 years of employment, provide the school transcripts for that time frame
- If non-taxable income is “grossed up,” be sure to provide evidence that the income is non-taxable
- When a borrower is self-employed, provide the income calculation worksheet(s) and any pertinent notes for the MI underwriter
- When a borrower has a New Employment Contract, provide a fully executed New Employment Contract/Offer Letter with salary and start date within 90 days of closing
- When the borrower is relocating to another state, be sure to provide a letter from the employer stating that the relocation will not affect the borrowers current level of pay
Checking Child Support:
- Provide documentation for any child support liability and check the pay stubs as this is often where you will find the child support amount and confirm that it matches the child support order
- Provide documentation for child support income and evidence that it will continue for the next 3 years
Credit, Appraisal, Property Tax, and Second Mortgage Considerations:
- When using non-traditional credit, follow our standard guidelines and GSE guidelines for credit documentation
- Manufactured Home appraisals that reflect that the HUD Data Plates and/or HUD Certification Label are not present, a letter from the Institute for Building Technology and Safety (IBTS) will be required
- Confirm the subject property taxes and if a different amount is being used other than what is reflected on the appraisal, provide the corresponding documentation to support that amount
- For Rate and Term Refinance/Limited Refinance/No Cash Out Refinance that are paying off a first and second mortgage, provide evidence that the second mortgage was taken out at the same time as the first (purchase money second) or that the second mortgage was used to finance energy-related improvements (PACE loan)
For more in-depth tips and best practices for submitting quality loan originations, download our Quality Assurance Tips.
Want even more information?
Enact’s Risk Quality Assurance team publishes a quarterly MI Decision Tips report to help underwriters and/or processors submit quality originations. Each quarter, you can use this report to discover the most frequently made MI decision errors and learn how to avoid them. You’ll find excerpts from the associated underwriting guidelines along with corrective actions for each, including relevant examples.
Important note: Loans requiring an exception to Enact’s published guidelines must be submitted for an Enact underwrite.
Source: Natalie Stokes is a Regional Underwriting Manager for Enact, with over 22 years of underwriting experience.
Next time, we go into even more details about best QA practices, some top underwriting reminders, and what to watch out for with common error trends. Keep a look out for this next post!
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