THE APPLICATION INTERVIEW
Whether you consult with your applicants in person, by email or by telephone, here are a few helpful points to consider.
Before you put pen to paper -or fingers to keyboard - remember you cannot ask applicants to sign and date the 1003 until all blanks have been filled in! It’s usually a good idea to make your own pre-interview checklist and provide it to the applicants so they can gather together all the necessary papers and information before they fax, email or meet with you in person. Many of the required items have multiple purposes (like VOE, VOD, pay off demands) and will be handy later in the loan process. The basic items you should ask for (where applicable) are:
- Picture identification (This must be very good quality photocopy, front and back. A notary will have to see the original before docs are signed.)
- Former complete addresses if residing at current address less than two years
- Complete name and physical address of employer, and mailing address if different. (When using the 1003 Continuation Sheet, it’s a good idea to also obtain the correct addresses of the employer’s main office, especially if the HR dept. is in a different location. Get the name and phone for a specific person who will perform the VOE if possible.)
- Income tax returns for the past two most recent years filed, with schedules if applicable
- Paystubs for the most recent thirty days of employment
- Most recent statement(s) for all bank, savings, credit union and any type of investment and life insurance accounts (or as many as six months of statements depending on circumstances)
- Any divorce, alimony and child support paperwork which the borrower wishes to have included as part of their income
- Any court ordered divorce, alimony and child support obligation paperwork that must be included as a liability
- Most recent mortgage statement(s) for each mortgage and each property owned
- A copy of the original Note for each mortgage loan (have them bring the entire original escrow company packet and let you locate the Note)
- All financial papers, tax returns and prepared statements for any businesses owned
- Year, make and model of any automobiles, boats, RVs, cycles, airplanes, etc. and the current (conservative) value of each item
- Most recent statement for each credit account, credit card, automobile loan or other loan of any type (these are invaluable to the MLO to compare with the commercial credit report)
There is no reason that you have to fill out the 1003 in order while you are interviewing the applicant. You can guide your fact-finding process conversationally, having one topic lead to another as they sort through their shoebox of papers on your desk. Perhaps start by talking about their goals, their home, or what they do for a living. Give them a chance to get to know you as you gain their trust.
Do not begin by asking for sensitive information. You need their social security number to run a credit check, but before asking for it, put your clients at ease and find out if you and the client think you can help them. When the time comes, be positive you have the applicants’ permission to run their credit and that they are ready to apply for a loan at this time.
Be aware that some applicants will bring you a “consumer” credit report which they may have paid for online. You can use that report as a rough estimate of what they may qualify for in a loan, but don’t be surprised if the credit scores it shows are inflated, and may be scored differently than you’ll see on your “commercial” credit report. This type of report is not usable for a loan application or pre-approval letter.
Be prepared to explain that the report they may have accessed online is abbreviated, and in many cases is not up to date. Remember, you (on behalf of the lender) must generate your own credit report to see applicants’ whole credit history in detail, not just their scores.