Here’s what happens in the old pre-approval process model: You go to your lender, the loan officer looks at some version of the package, maybe pulls your credit, and issues a pre-approval letter. What’s happening is the loan officer is giving you a pre-approval based on their best guess. The truth is, they’re not an underwriter, so at least 10% to 20% of the time there’s an honest mistake made that doesn’t get identified until much later in the process.
Now, the poor Realtor is out for three weeks, three months, a year, or however long it takes to find a home for the client based on the loan officer’s guess. Finally, once they get into escrow, the lender actually starts to do their job. They order the 4506-T to make sure the IRS transcripts come in and that the tax returns are legitimate. They finally verify the down payment, dig into the bank statements, and check that the wife’s not on maternity leave or someone’s not on disability.
The lender in the old-school model does all the stuff that burns time. Now, 10 to 20 days later, the underwriter, the person who actually has the authority to approve the loan, finally looks at it. They find the mistakes based on the loan officer’s best guess. Now you have 10 days to two months where everything has to be redone because the loan officer made an honest mistake.
In the end, the client is frustrated and leaves with a bad taste in their mouth about the process. No one will be receiving a positive review for their business based on this process.
Fast forward to Movement Mortgage, founded in 2008. We completely re-engineered the process and wanted to do things differently. We still do our pre-approval; we want to be engaged with the client and tell the Realtor, for example, that you’re approved up to $500,000 with 10% down. However, why stop there?
In our system, we want to send the file directly to the underwriters today. That means we’ll get the underwriting back usually within six hours or less, sometimes before the Realtor even meets with the client to start talking about neighborhoods or looking at houses. In that short amount of time, you’ll have a fully underwritten loan. Our processors have what’s called a seven-day process, and receive bonuses for how quickly they can process a file. They are highly motivated to get the job done.
This is a better system, and a better way to service our clients. To see a visual representation of everything discussed here, watch the video above.
If you have any questions about our pre-approval process or mortgages, please reach out to us via phone or email. We would love to help you.