I’ve worked as a mortgage banker in Manhattan since before the real estate boom.
Since the credit crunch a couple of years ago, as everyone knows, things are different when it comes to getting a mortgage or refinancing. Today we are completely and totally in a full-doc world.
Fannie Mae has stricter guidelines that have to be followed, but what people sometimes don't know is that as a bank, we mitigate our risk even more, layering on our own guidelines.
It’s gotten to where I sound like a drill sergeant new clients come in. I let them know I’m going to make their life hell. I’m going to ask for income, assets, tax returns, business tax returns—everything. And once their file goes in for review I can’t promise we’re not going to ask for more things. And due to not having enough people on hand to process all this stuff, things may get bottlenecked at the 11th hour.
I understand why the banks are doing this but I think we’ve gone overboard—I think the banks are overreacting. We actually have more requirements than a co-op board does now.
For example, the co-op board isn’t asking for letters of explanation relating to every address change over the past 20 years. They’re not going to want to see your cleared checks that prove you paid the rent ontime.
(One thing we don’t do is ask for personal letters of recommendation. They’re too easy to forge.)
As far as what the bank’s underwriter asks for over and above Fannie Mae guidelines, one thing we have to do is document and show a paper trail relating to any large deposit over $2,000 that’s not a paycheck. Fannie Mae only requires this for deposits over $5,000.
Even if the money is transferred from your own savings account, we have to show the account the money came from.
And even if you have good credit and pay your bills on time, we ask for proof that you paid your rent on time for the past year. Our underwriters sometimes even want proof that a client passed the board—which is ridiculous because we won’t need the loan if the client wasn’t approved.
In the old days it used to take 48 hours to a week for approval by the underwriters once the docs were in. Now it takes about three weeks to a month.
Clients seem prepared for the hassle but they get very angry when we drop the ball, and it’s frustrating because each bank's extra requirements can vary a lot.
For example, our underwriters wouldn’t allow one of my clients to count some of his bonus as income because he couldn’t show it was likely to continue for three years. So he went to a competitor.
Even when things work out, my job is not only a lot less financially lucrative, it's also less rewarding as far as feeling appreciated.
Clients used to call me up and thank me after the closing. They used to be so excited. Now they’re just glad it’s over.