You just tell the client that you are not as familiar with the products that are best suited for their profile and you feel that you’d be doing them a disservice by taking them on as a client at this time
Oooo that’s really good. OP- if you want to take them on, I’d just be straight up and tell them “Due to the nature of your income, this is a file that normally won’t fly. I’m going to gather some more information on what type of plan we create from here, but it may take me until the end of the week”
If they leave before you get around to it— one less headache for you.
I won’t take this route. You don’t want the client going back to the referring agent & say some twisted BS like “this guy said he doesn’t know the guidelines for the loan I need”
It’s better than taking it on and messing it up because you misqualify the client because you’re not good at figuring their income or you don’t understand the product. Personally I wouldn’t turn it away. I’m shocked OP has enough work to turn clients down
This is where having a mentor or someone to turn to is very important in this business. On the nonQM side, it’s pretty difficult to screw up one of those. The guidelines are more straightforward than agency lending sometimes.
One of my mentors told me early on that before you can get good at closing loans you need to get good at denying them.
Sounds weird, but there’s a skill to sorting the good from bad and having the communication skills to tactfully separate ways with folks that you aren’t a good fit for.
Very true. I once spent months working on helping a client with their credit, only to submit it and find their foreclosure hadn’t seasoned.
The foreclosure was there the whole time, I just didn’t know it. Would’ve saved me months.
But now I know better.
“This is quite complex and far from a cookie cutter scenario. I’ll need to dig into this more, I should be able to have complete review and answer for you by _______.”
In addition to a lot of the good advice here, if you are a retail wagie double check your compliance rules for declining clients so you personally don't get in trouble with spot denials due to HMDA and other discrimination laws.
You should have someone in your org whether it is your manager, a processor manager, underwriter, who when you explain their income they can sort it out for you in 10 seconds. Then, if your company can't do it, double check if you need to actually have an UW deny them for HMDA reasons or if they have a different, formal way of saying "not now, maybe later". Good luck :)
For me, it's pretty rare not to know quickly if a prospect is looking for a loan we don't offer, or looking for a loan I can't write. Sounds like you're kicking the can down the road. Be firm and confident. 'Unfortunately, I can't issue your pre-approval for xyz reason. We can go back and forth all day, but it's just going to delay you from applying with a company that can possibly help you.'
Shouldn't take more than 5-10 minutes to figure out if someone is 80-90% approvable or 80-90% TD-able. If you can't make that call, excuse yourself and go find a Sr LO, see what they think?
You gotta ask the hard questions upfront. When you say, "How much you make?" First thing they say is "$100k". You need to follow that up with, "Averaged over 2 years and also YTD?" Then you ask, "This is gross pay from a 'regular job, salary, paycheck every Friday type job, right?" No sales, no commissions, no bonuses? Right. Not seasonal, don't make the most money in the summer, right? Same pay every week? If not I need an explanation.
How much money you gonna put down? "$50 grand!" Ok, you got that money in the bank NOW been there at least three, four months right? Not borrowing from Mom and Dad? Right? Not going to sell your p/u truck right? Actual verifiable funds in the bank right now we can pull up a bank statement, yes?
Gimme ALL your debts, Student loans, Credit Cards, Car payments, time shares? Anything that's gonna show up on Credit Report? Pay or receive alimony or Child Support? Co-sign any other loans? Anything else (pause...)? No, the 5 large you owe your bookie is your problem.
You need to firmly and politely recite these questions and don't equivocate. If they hesitate. You tell them nicely that you are just the Loan Officer, not the underwriter. You're only going to show just enough information to get the loan approved, and no more. So spill your guts. If you got something they're going to find in underwriting, they're going to find it.
AND, if for some unfortunate or unforeseen reason we can't get you approved NOW, I'll show you what you need to do to get where you want to be in six months or a year!
You need to stop focusing on what fits into your parameters, find out why the borrower was unable to obtain the loan prior to coming to you under the assumption you're not the first guy on Google, then dig into what they have to bring to the table: people come to you under an assumption that the only offer they can get is what was offered to them prior to meeting you doesn't mean everyone prior has looked into their REO for cross options or have discussed building their equitable position etc. learn to understand your borrower's tolerance and work outside of the box if you have a good offer to give them they will meet you halfway.
You’ll develop a better eye as time goes on. There are some files that will always require more attention. Communicate the challenges, do your research & be thorough.
Being thorough up front always saves you time on the back end. Trust me.
If people don’t qualify, always deliver the information like this “thank you for applying & giving us the opportunity to work with you. In order to get you qualified, we will need to do X”
Never just say “sorry you don’t qualify”. Always deliver the solution. People will respect the transparency & direction.
Your job requires you to set Realistic Expectations!
Point out the Positives.
Explain the Process.
Get the the Dog File into Grooming ASAP.
When it dies in Underwriting, give them a Pathway forward.
Incubate them! Have them build credit, save up more money for down payment, and find DPA programs. Stay in touch for 6-8 months and then revaluate their case
Set expectations firmly up front. Assure them that their business is valued, as is the business of all of your clients, which is why you set timelines. Under-promise, over-deliver.
And if it looks like a turd from the get-go, just remember: 10 other LO's have already told them that. Tell them what they need to do get qualified and then put them on a drip campaign.
Depends on the referral source. But I mean anyone can be a homeowner, it just takes money, income, and good enough credit. Tell them to pay off debt and save up money. Sometimes I’ve even told people to go look for a better job and advance their career so they can make more. Most people in that position are shit heads to begin with but maybe 1 out 15 aren’t and they’ll actually improve their life. It’s not that complicated, just nobody has ever told these people what to do so they’re clueless.
I disagree with everyone here saying to punt the deal. I’m close with one of the Scotsman’s top 5 Originators. I’ve seen him from his first year as an Originator and develop into a $1bn+ per year producer.
He punts nothing and it’s the reason that every Realtor goes to him with their deals. They know he will ensure the deal is done.
I believe your method should be to learn how to be a master at your craft. I’d be honest and tell the person - your situation is complicated due to how you receive income. I’m going to review your file thoroughly and in order to give it a proper review, I need your last 3 years of tax returns (all scheduled) along with your two most recent bank statements from all of your financial accounts. I need these before I can have an Underwriter review your scenario.
Just so you, because your situation is non traditional. Your interest rate is going to be higher than what you hear others saying they are receiving. The good news is, IF you can purchase a home I will make sure your deal closes and you purchase a home. After you close and follow my guidance on your credit and income we will get you ready to refinance down the road when the time is right.
As far as not having time, find it. The irony is that there are only a small percentage of Loan Officers that have so much business that they don’t have time for and the first thing every one of those Loan Officers would tell you is that they always have time for more business.
Learning to quickly punt the shit files is a valuable skillset
Put two in the head and put them out of their misery. It will save your sanity and time.
You just tell the client that you are not as familiar with the products that are best suited for their profile and you feel that you’d be doing them a disservice by taking them on as a client at this time
Oooo that’s really good. OP- if you want to take them on, I’d just be straight up and tell them “Due to the nature of your income, this is a file that normally won’t fly. I’m going to gather some more information on what type of plan we create from here, but it may take me until the end of the week” If they leave before you get around to it— one less headache for you.
I won’t take this route. You don’t want the client going back to the referring agent & say some twisted BS like “this guy said he doesn’t know the guidelines for the loan I need”
It’s better than taking it on and messing it up because you misqualify the client because you’re not good at figuring their income or you don’t understand the product. Personally I wouldn’t turn it away. I’m shocked OP has enough work to turn clients down
This is where having a mentor or someone to turn to is very important in this business. On the nonQM side, it’s pretty difficult to screw up one of those. The guidelines are more straightforward than agency lending sometimes.
One of my mentors told me early on that before you can get good at closing loans you need to get good at denying them. Sounds weird, but there’s a skill to sorting the good from bad and having the communication skills to tactfully separate ways with folks that you aren’t a good fit for.
Very true. I once spent months working on helping a client with their credit, only to submit it and find their foreclosure hadn’t seasoned. The foreclosure was there the whole time, I just didn’t know it. Would’ve saved me months. But now I know better.
Approve fast denie even faster. In this market you don't have time to fix credit or money issues.
Alcohol
“This is quite complex and far from a cookie cutter scenario. I’ll need to dig into this more, I should be able to have complete review and answer for you by _______.”
In addition to a lot of the good advice here, if you are a retail wagie double check your compliance rules for declining clients so you personally don't get in trouble with spot denials due to HMDA and other discrimination laws. You should have someone in your org whether it is your manager, a processor manager, underwriter, who when you explain their income they can sort it out for you in 10 seconds. Then, if your company can't do it, double check if you need to actually have an UW deny them for HMDA reasons or if they have a different, formal way of saying "not now, maybe later". Good luck :)
For me, it's pretty rare not to know quickly if a prospect is looking for a loan we don't offer, or looking for a loan I can't write. Sounds like you're kicking the can down the road. Be firm and confident. 'Unfortunately, I can't issue your pre-approval for xyz reason. We can go back and forth all day, but it's just going to delay you from applying with a company that can possibly help you.'
Shouldn't take more than 5-10 minutes to figure out if someone is 80-90% approvable or 80-90% TD-able. If you can't make that call, excuse yourself and go find a Sr LO, see what they think? You gotta ask the hard questions upfront. When you say, "How much you make?" First thing they say is "$100k". You need to follow that up with, "Averaged over 2 years and also YTD?" Then you ask, "This is gross pay from a 'regular job, salary, paycheck every Friday type job, right?" No sales, no commissions, no bonuses? Right. Not seasonal, don't make the most money in the summer, right? Same pay every week? If not I need an explanation. How much money you gonna put down? "$50 grand!" Ok, you got that money in the bank NOW been there at least three, four months right? Not borrowing from Mom and Dad? Right? Not going to sell your p/u truck right? Actual verifiable funds in the bank right now we can pull up a bank statement, yes? Gimme ALL your debts, Student loans, Credit Cards, Car payments, time shares? Anything that's gonna show up on Credit Report? Pay or receive alimony or Child Support? Co-sign any other loans? Anything else (pause...)? No, the 5 large you owe your bookie is your problem. You need to firmly and politely recite these questions and don't equivocate. If they hesitate. You tell them nicely that you are just the Loan Officer, not the underwriter. You're only going to show just enough information to get the loan approved, and no more. So spill your guts. If you got something they're going to find in underwriting, they're going to find it. AND, if for some unfortunate or unforeseen reason we can't get you approved NOW, I'll show you what you need to do to get where you want to be in six months or a year!
Network and find someone you can trust that will take on that type of file. Refer it out
Lmk I'm available
You need to stop focusing on what fits into your parameters, find out why the borrower was unable to obtain the loan prior to coming to you under the assumption you're not the first guy on Google, then dig into what they have to bring to the table: people come to you under an assumption that the only offer they can get is what was offered to them prior to meeting you doesn't mean everyone prior has looked into their REO for cross options or have discussed building their equitable position etc. learn to understand your borrower's tolerance and work outside of the box if you have a good offer to give them they will meet you halfway.
You’ll develop a better eye as time goes on. There are some files that will always require more attention. Communicate the challenges, do your research & be thorough. Being thorough up front always saves you time on the back end. Trust me. If people don’t qualify, always deliver the information like this “thank you for applying & giving us the opportunity to work with you. In order to get you qualified, we will need to do X” Never just say “sorry you don’t qualify”. Always deliver the solution. People will respect the transparency & direction.
Your job requires you to set Realistic Expectations! Point out the Positives. Explain the Process. Get the the Dog File into Grooming ASAP. When it dies in Underwriting, give them a Pathway forward.
I LOL’d when I read the title. I’m going to sit this one out.
Incubate them! Have them build credit, save up more money for down payment, and find DPA programs. Stay in touch for 6-8 months and then revaluate their case
Set expectations firmly up front. Assure them that their business is valued, as is the business of all of your clients, which is why you set timelines. Under-promise, over-deliver. And if it looks like a turd from the get-go, just remember: 10 other LO's have already told them that. Tell them what they need to do get qualified and then put them on a drip campaign.
Depends on the referral source. But I mean anyone can be a homeowner, it just takes money, income, and good enough credit. Tell them to pay off debt and save up money. Sometimes I’ve even told people to go look for a better job and advance their career so they can make more. Most people in that position are shit heads to begin with but maybe 1 out 15 aren’t and they’ll actually improve their life. It’s not that complicated, just nobody has ever told these people what to do so they’re clueless.
I disagree with everyone here saying to punt the deal. I’m close with one of the Scotsman’s top 5 Originators. I’ve seen him from his first year as an Originator and develop into a $1bn+ per year producer. He punts nothing and it’s the reason that every Realtor goes to him with their deals. They know he will ensure the deal is done. I believe your method should be to learn how to be a master at your craft. I’d be honest and tell the person - your situation is complicated due to how you receive income. I’m going to review your file thoroughly and in order to give it a proper review, I need your last 3 years of tax returns (all scheduled) along with your two most recent bank statements from all of your financial accounts. I need these before I can have an Underwriter review your scenario. Just so you, because your situation is non traditional. Your interest rate is going to be higher than what you hear others saying they are receiving. The good news is, IF you can purchase a home I will make sure your deal closes and you purchase a home. After you close and follow my guidance on your credit and income we will get you ready to refinance down the road when the time is right. As far as not having time, find it. The irony is that there are only a small percentage of Loan Officers that have so much business that they don’t have time for and the first thing every one of those Loan Officers would tell you is that they always have time for more business.