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Mortgage Lending Process Overview

Mortgage Lending Process Overview

Purchase Process Overview with JVM Lending:

The below timeline is an overview of the course of events necessary to close your home loan after your offer has been accepted and you are officially in contract to purchase your new home.

The “DAYS” set out below are approximations only and are based on a 21 to 30 day escrow period. For our 14 day escrow periods, the timelines are much tighter.

Before you get into contract, JVM will walk you through the “Pre-Approval” process. The Pre-Approval Process is a period that typically lasts from two to five days, depending on your urgency and the complexity of your situation. After you are pre-approved, you can begin your search for properties with our formal pre-approval letter in your hand.

The pre-approval process includes: (1) discussing your goals, desires, parameters and potential issues; (2) sending out our Homebuyer’s Memo, Purchase Process Overview, Tax Benefits Summary, and Payment and Closing Cost scenarios; (3) answering all of your questions; (4) gathering all necessary information and documents; (5) inputting all information into our database; (6) running our automated underwriter to assess qualifications; and (7) emailing you a formal pre-approval letter.

DAYS 1 to 2:

1.  JVM contacts you to discuss interest rates, loan options, and locking in a rate. JVM usually  locks in an interest rate shortly thereafter.

2 . JVM has developed a heavily team-oriented process. The day you go into contract, a Mortgage Analyst will take over your file. A Mortgage Analyst spots issues and ensures the file is complete.  Upon submission to underwriting, your file will be transferred to a processor, who will polish the file to avoid conditions and formally submit it to the underwriter. Both your Mortgage Analyst and your Processor will be here to answer questions throughout your purchase process.

3.  JVM emails your real estate agent to confirm the closing date and terms of the contract, and to request contact-info for your escrow company and the listing agent. We also request info relating to any unique aspects of the property and transaction.

4.  JVM orders your appraisal report as soon as possible to ensure a fast turn-around.

5.  JVM emails the Escrow (Title) Company for a Preliminary Title Report and a copy of Deposit Check and Receipt, among other things.  We also obtain all of the fees associated with your transaction.  Without the exact fees from escrow, we are unable to prepare your “Disclosures” (see #7 below). It is crucial that escrow responds to us quickly if we are to proceed quickly. Note that some people use the terms “Escrow Company” and “Title Company” interchangeably.  We use only the term “Escrow”.

6   JVM requests updated info and documents from you, if necessary.

DAYS 3 to 6:

7.   JVM prepares your Disclosures.  Disclosures are all of the forms, setting out the terms and the cost of your loan, which you need to sign before we can submit your loan. Preparing these forms is a complex process.

8.   JVM emails Disclosures to you. You need to review and return the disclosures as soon as possible; we cannot submit your loan for underwriting until we receive signed disclosures.  This is crucial.

9.   JVM formally submits your loan for underwriting and approval.  It takes 1 to 3 days for the underwriter to review a file and approve a loan.

DAYS 7 to 10:

10. JVM receives and reviews your formal loan approval from the underwriter with a list of “loan conditions” to be met before loan documents can be ordered.

11. JVM emails you (and sometimes Escrow and your Realtor) for necessary conditions. Examples of conditions include: (1) an appraisal (if it is not yet in); (2) explanations for large deposits on bank statements; (3) repairs to a property if an inspection or appraiser calls for them; (4) missing or updated documents; or (5) other explanations regarding a job, an address, a credit event, etc.  NOTE:  Today’s underwriters can be very demanding, so do not be surprised if they request seemingly inane conditions to comply some obscure Fannie Mae of FHA guideline.

12. JVM receives and reviews appraisal.  JVM emails the appraisal to you and your Realtor. We also review it for any repair or value issues. 

DAYS 11 to 15:

13. JVM receives and reviews ALL conditions. Underwriters require that we send in all conditions at once.  This is why we need ALL of your conditions immediately.  It then takes the underwriter 1 to 2 days to review conditions and either “sign off” all conditions or request additional conditions.

14. JVM orders loan documents once ALL “prior to document” (major) conditions are signed off by the underwriter. It takes 1 to 2 days to prepare and draw the loan documents and email them to Escrow.

DAYS 16 to 30:

15. Escrow receives the Loan Documents and prepares them for signing by you. This is a very involved process that requires Escrow to prepare all necessary documents, and to calculate interest, property taxes, hazard insurance, all fees, commissions, remaining down payment funds, etc.

16. Escrow contacts you to set up a time to sign loan documents when they have prepared everything. You will probably sign at the Escrow Company. If going to the Escrow Company is too inconvenient, Escrow can arrange to have a mobile notary go to you, but this often delays the closing date. Signing loan documents can often take over an hour because there are so many forms to sign in today’s lending environment.

17. You wire necessary remaining funds to Escrow. Escrow will typically have you wire your remaining funds to their office after you sign. The Escrow Officer will give you the exact amount of remaining funds, or “cash to close,” that needs to be wired from your bank, along with Wire Instructions.

18. Escrow prepares funding package to send back to our funding department.  After you sign all of your loan documents, the Escrow Officer will prepare a “Funding Package” to overnight back to our funding department.

19. Our funding department reviews funding package and funds loan. When our funders receive the Funding Package, they will thoroughly review it to ensure ALL of their “funding conditions” are met. They may request additional conditions, but they are usually “minor” and they often involve parties other than you, like Escrow or the appraiser. This can take 1 to 2 days. Once a funder agrees to “Fund a Loan”, they wire all loan proceeds to Escrow.

20. Escrow usually records the day after the loan funds. In some counties, Escrow can record the same day the loan funds. When Escrow receives the wired funds, they “release” the deed of trust (the mortgage) and the grant deed (putting  your name on title) to record at the County Recorder’s Office. “Recording” means that you are on public record as the “owner of the house.”  You get your keys once Escrow gets confirmation that the recording is done. This is usually about mid-day.

WHAT TO EXPECT IN “RUSH SITUATIONS”: Rushing the process is common, as underwriters get backed up and buyers and realtors want to close on time, so timing often becomes critical. In these situations, you will sometimes be asked to drop everything and sign or provide documents with relatively little notice. This is because our document drawers often cannot tell us exactly when loan documents will be emailed to Escrow. Please be assured that we will alert you immediately upon notice that your documents were sent.

The key in these situations is to try to sign the loan documents early enough in the day to allow Escrow to have time to get the Funding Package into a Fed Ex or overnight drop-off before the cut-off time. This often means signing no later than 4 PM or so.

Refinance Process Overview with JVM Lending:

JVM sends out the below outline to borrowers who are refinancing. The “DAYS” set out below are approximations only. The outline provides an excellent overview of the overall process.

DAY 1:

1. A JVM “Team” takes over your file. JVM has 3 to 4 teams consisting of front-end “Loan Analysts” and back-end “Processors”. Loan Analysts send out initial emails, spot issues and ensure the file is complete. Processors polish the file to avoid conditions and formally submit it to the lender. You will interact with a Loan Analyst at first and a Processor later on (from File Submission through Close). You may also hear from our Front Desk Manager (Eunice Kwon), as she manages our appraisal process among other things.

2. JVM requests updated and/or additional documents necessary to complete your file.

3. JVM “opens Escrow”; we request a Preliminary Title Report as well as the exact title and escrow fees associated with your refinance. Without the exact fees from escrow, we are unable to prepare your “Disclosures”. (see #5 below). It is crucial that escrow respond to us quickly if we are to proceed quickly. Note that some people use the terms “Escrow Company” and “Title Company” interchangeably. We use “Escrow” only.

DAYS 2 to 3:

4. JVM orders your appraisal.

5. JVM prepares your “Disclosures”. Disclosures are all of the forms, setting out the terms and the cost of your loan, that you need to sign before we can submit your loan. Preparing these forms is a complex process.

6. JVM emails Disclosures to you. You need to review and return the disclosures as soon as possible; we cannot submit your loan for underwriting until we receive signed disclosures. This is absolutely crucial if we are to close before your lock expires. Again, we need your disclosures back ASAP or we will lose your rate lock.

DAYS 4 to 5:

7. JVM formally submits your loan for underwriting and approval. It takes from 2 to 5 days for a lender to review a file and approve a loan.

8. The lender emails their OWN version of disclosures to you. Some lenders require you to acknowledge them as soon as you get them. You do NOT need to sign them; you merely need to reply to the email. Watch for this lender email.

DAYS 7 to 10:

9. JVM receives and reviews formal loan approval from lender with list of “loan conditions” to be met before loan documents can be ordered.

10. JVM emails you (and sometimes Escrow) for necessary conditions. Examples of conditions include: (1) an appraisal if it is not yet in; (2) explanations for large deposits on bank statements; (3) missing or updated documents; or (4) other explanations regarding a job, an address, a credit event, etc. NOTE: Today’s underwriters can be very demanding, so do not be surprised if they request seemingly inane conditions to comply with some obscure Fannie Mae of FHA guideline.

11. JVM receives and reviews appraisal. JVM emails appraisal to you, and we review it for any issues. The lender gets the appraisal automatically when we do.

DAYS 11 to 15:

12. JVM receives and reviews ALL conditions. Lenders require that we send in all conditions at once. This is why we need ALL of your conditions immediately. It then takes lenders from 2 to 5 days to review conditions. Underwriters then either “sign off” all conditions or request additional conditions.

13. JVM orders loan documents from the lender once ALL “prior to document” (major) conditions are signed off by the underwriter. It takes the lender 2 to 3 days to prepare and draw the loan documents and email them to Escrow.

DAYS 16 to 30:

14. Escrow receives the Loan Documents and prepares them for signing by you. This is a very involved process that requires Escrow to prepare all necessary documents, and to figure out pay-off amounts, interest, property taxes, hazard insurance, fees, credits, etc.

15. Escrow contacts you to set up a time to sign loan documents when they have prepared everything. You will probably sign at the Escrow Company. If going to the Escrow Company is too inconvenient, Escrow can arrange to have a mobile notary go to you. Signing loan documents can often take over an hour because there are so many forms to sign in today’s lending environment.

16. You bring a cashier’s check (or wire funds) to Escrow, for remaining funds to close. When you sign, you will be apprised of the funds necessary to close your transaction. Most borrowers obtain a cashier’s check and bring it to escrow after signing. You have a day or two to do this.

17. Escrow prepares funding package to send back to lender. After you sign all of your loan documents, the Escrow officer will prepare a “Funding Package” to overnight back to the lender.

18. Lender reviews funding package and funds loan. When the lender receives the Funding Package, they will thoroughly review it to ensure ALL of their “funding conditions” are met. The lender can request additional conditions, but they are usually “minor” and they often involve parties other than you, like Escrow or the appraiser. This can take from 1 to 3 days depending on how backed up the lender is. Once a lender agrees to “Fund a Loan”, they wire all loan proceeds to Escrow. Rescission Period: for owner-occupied refi’s, lenders are prohibited from funding until 3 business days after the signing date.

19. Escrow usually “records” the day after a lender funds. In some counties, Escrow can record the same day the lender funds. When Escrow receives the wired funds, they “release” the deed of trust (the mortgage) and the updated deed to record at the County Recorder’s Office. “Recording” means that the new lender and loan amounts are on public record, and your refi is effectively “closed”.

20. WHAT TO EXPECT IN “RUSH SITUATIONS”: Rushing the closing process is sometimes necessary, as lenders get backed up and we need to close before a lock expires, so timing often becomes critical. In these situations, you may be to sign loan documents with less notice than you would like. This is b/c lenders often cannot tell us exactly when loan documents will be emailed to Escrow, and we are not able to contact you until the documents are actually emailed. We try to avoid “Rush Situations” and usually do, but please be prepared if necessary.

21. JVM closes out your file and sends you a refund check if one is owed. We often owe refunds of fees with many of our refi’s. If so, our bookkeeper will mail you a check the first Tuesday after your transaction records. If you do not receive your refund or feel as if anything seems incorrect, please let us know.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646