Chris Salese

As we move closer to the presidential election of 2016 we’ll be treated to several highly watched and entertaining debates along the way.

When these candidates face off two more times against each other, they’ll be further pressed to address and debate various issues mainly about our country’s security and economy.

What if they were asked to debate why lenders ask for an excessive number of documents these days before they’ll approve you for a home loan?

No matter how they answer, I’m pretty sure the candidates would likely have their “fact checking” teams hard at work to prove their respective points.

Unfortunately, not many consumers understand why there’s a push by their lender to squeeze them for all the latest and greatest documentation prior to approving their loan.

For this reason, oftentimes during the home loan process, you might hear someone ask the common question of why do I need to provide this to you?

The simple answer is because it’s probably required by your lender.

Unless you have an awfully special loan application, you must sign what’s called a “Borrower’s Certification and Authorization” form in order to get your file through your lender’s approval system.

The top part of this form states that all the information you provide to your lender is true and correct. It goes on to confirm that there are no misrepresentations nor omissions of any pertinent information.

However, it’s the bottom half of this form that’s used by your lender to hammer you with documentation overload requests.

This is where you give authorization to release information to your lender.

Specifically, it says your lender may verify information contained in your loan application either before the loan is closed or as part of its quality control program. It’s so important to your lender to have this authorization from you, that it can be found in the acknowledgement section on your initial and final loan application, plus in your official closing loan documents too.

But why?

Your lender must perform a post-close quality control audit on a minimum of 10 percent of all closed loans each month in accordance with Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, the VA and other investor requirements.

This review includes re-verifying information relied upon to make the decision on your loan approval. The re-verification request asks the issuing source to validate the authenticity and accuracy of the documents received, such as verifications of employment, paystubs, W2s, financial statements, bank statements, gift letters, etc.

The request asks only for validation of the document enclosed and not for any updated information.

Typically, your lender employs a third-party vendor to perform these types of post close audits. If the audit fails, your lender might be unable to sell your loan until they can cure the reason for the failure. If the audit fails because of suspected fraud, you’ll get investigated by government authorities and so will your lender.

Therefore, this re-verification process is the main driving force behind all those annoying documentation requests by your lender.

Chris Salese can be reached at chris@delsurmortgage.com or 707-363-4439.

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