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I'm in the process of buying my first home. I made an offer and got accepted and already gave a deposit. I applied for Portfolio Loan due to my reasons. (Please don't advice me to apply for conventional loan). I'm sure some of you are very familiar with portfolio loans.
I got pre-approved very quickly but as all of us know that pre-approval means almost nothing. The property I'm purchasing has been appraised (and it actually costs less than the appraised amount) and my files have been passed to the underwriter.
I'm very nervous at this point. I'm putting 30% down and feel like I might get denied at any point. I'm having stomach pain in the middle of the night till the morning.
My mortgage loan officer, is on the other hand; sounds very comfortable when we talk and I make sure to address my concerns to him.
Is there anyone that can walk me thru the underwriting process for Portfolio Loans?
I've worked for a portfolio lender for most of my mortgage banking career. What that means is we keep the loans we originate. We may also originate loans where interest in the loan is sold to another investment vehicle (Fannie/Freddie/GSE), and while we still collect the payment, we are not the owners of the loan. The latter are not portfolio loans, but frequently those that have portfolio capabilities do originate these loans. Many times they are originating for Fannie and Freddie and those that don't fit in a narrow box are kept for the portfolio.
Portfolio loans are considered conventional loans. Most portfolio loans are still worked up like any other loan. Employment and assets are verified and ratios are run. Some portfolio lenders may even run the file thru their automated system (DU), just to see what Fannie would require. But many will move forward without running DU. If DU is received, that's a bonus. The file is manually underwritten and 100% dependent on human judgment. This is where the applicant's letter(s) of explanation really support the file. Do not under-estmate their value. The underwriter will review all aspects of the file, and either approve it (with conditions), decline the file, or make a counter offer. Currently, expect anywhere from 48 hours to one week sitting and waiting to get your answer.
Portfolio does not = subprime lending, a huge misconception. In many areas, the portfolio lender may be more conservative. But where they do shine is with their underwriting niches that Fannie and Freddie turn their back on. An example would be a portfolio lender may not require the residence turned rental to have any equity in order to count rental income to offset the PITI.
There are way too many out there claiming to be portfolio, but they are really sending the file to a third party.
Thank you SmartMoney! They haven't asked for an explanation letter and all they wanted to was my 12months bank statements. My credit score is very good (720+) and I have no debt. The loan officer says everything will be fine according to him. I'm just too nervous at this point since this is my first experience with a mortgage lender. As far as I understand is that the portfolio lenders don't follow specific guidelines to sell the loan to Fannie and Freddie. They are more flexible. Like I said I'm just too nervous. The loan officer says it'll take the underwriter couple of hours to come to a conclusion once they get to my file. Right now my application is sitting in a line waiting for it's turn.
One thing you could do for yourself to make a quicker closing.
Ask your loan officer to forward a copy of the documents you will be signing at closing. That way you could review your loan before and ask any question before agreeing to anything.
It is the title company the day of closing that forwards closing documents to the bank, attorney, and closing agents. All your loan officer has to do is add your name to the list.
Thank you Modification Specialist for the advice. I am nervous and having nightmares of getting denied. I asked my loan officer if he needed more documentation from me but he said he only needs my 12month statements. I don't know if I should feel ok when he sounds comfortable. I know the loan officers are the ones to deal with and try to sell us the loan but it's the underwriters decision at the end of the day. Like I mentioned this is my first time and I feel extremely nervous.
Ok update.. so this morning I got a call from my loan officer with the good news that I'm conditionally approved by the underwriters. There are 6 - 7 items (conditions) that needs to be cleared like the addresses on file and some bank and account related conditions. My loan officer is very confident that he'll get it done in a week (meeting all the conditions). It's a small victory but I'm still nervous. Hope everything goes fine and I can update you with good news. Thanks for all your support!
That is a typical loan I have done day in and day out.
You should only be nervous when it comes to your income, employment, or liquid assets. But then inspections can you make you nervous too. You should be good to go.
Thank you frankrj. You're dead on right! One of the conditions is about my income and employment. My loan officer told me to get a letter from my accountant and he specifically instructed me what needs to be in that letter. He is very confident and tells me to relax. I'm still nervous! I hope everything works out!
He only wanted to see my 12month bank statements when I submitted my app. The underwriter approved me with conditions under 24hrs. The one condition is about my income. It's a bit complicated. The LOE he wants basically says the monthly incoming wires to my account is from my partner and thats pretty much it. Like I mentioned he is very confident and mentioned after submitting the LOE, we'll pretty much get full approval in a day.
I'm just very nervous no matter what he says It's my fist time going thru this experience. Fingers crossed I'll sign this week otherwise it'll be a huge disappointment
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It's my fist time going thru this experience. Fingers crossed I'll sign this week otherwise it'll be a huge disappointment
