If you’ve ever bought a home before then I’m sure you can relate with the poor, helpless automobile owner in the old 3 Best Guys Pep Boys commercial (see below). He drops his car off at the fix-it shop and each time he checks in on it the mechanic gives him the impression they’re ‘working on it’. At one point he goes as far as dismissively saying he has his three best processors…er, I mean underwriters…..eh hum….I mean guys on it, only to show that his three best loan officers….I mean guys, are merely sitting on the car.
Have you ever wondered what your loan officer is really saying when he says ‘its in underwriting’? What does that even mean? Is that just a stalling tactic? How can your home loan file realistically be IN processing or IN underwriting for 24-48 hours? If you’re like most would-be home buyers you’re probably thinking, “I gave you the last document you asked for an hour ago, now where’s my loan approval!?”, right?
In an attempt to help my clients (and me!) better understand the “it’s in underwriting” response, I sat down with a group of processors and underwriters to get to the bottom of the home loan mystery. They were tasked with tracking the amount of time invested and steps taken on a loan over the next several home loans. They were asked to track phone calls, emails, scanning, ordering of services, uploading of documents, reviewing of documents, verifications, and the list goes on…and on….and on. Let me tell you, I was BLOWN away with their results!
Why does the processing and underwriting of a home loan take so long?
- 565 = average number of documents scanned and reviewed by a processor
- 348 = average number of documents reviewed by an underwriter (after processor purges the duplicates and unnecessary)
- 155 = average number of emails read pertaining to the processing of a loan
- 2.5 = avg number of hours spent reading/responding to 155 emails
- 1.5 = avg number of hours spent on phone calls to process a single loan
- 1.0 = avg number of hours spent scanning & uploading documents
- 0.5 = avg number of hours spent ordering services (I’ll explain below)
- 3.0 = avg number of hours spent on initial review & submission of file to processing
- 2.0 = avg number of hours processor spends preparing file to submit to underwriting
- 1.5 = avg number of hours processor spends resubmitting file back to underwriter after conditions received
- Tax Transcripts
- Social Security verifications
- Flood Certificates
- USPS verification of your home’s address
- Title History
- Title Commitment
- Employment verifications
- LDPs & GSAs (limited denial of participation & general services administration)
Your processor spends an average of 12 hours reviewing 565 documents on ONE home loan!!
And that’s JUST the processor – we haven’t even crossed over the bridge to the land of underwriting yet.
The next time you hear your loan officer giving you the seemingly dismissive “it’s still in underwriting” reply you’ll have a better understanding of the ‘why’ behind it.
I’m curious, what’s the longest time your home loan file has ‘been in underwriting’?? Send me your answer to email@example.com – I’d love to hear from you!