Pre-Closing Interviews and Closing Your Loan
There are only two rules to closing – never close late and never close ugly!
Assumptions for processing our sample loan
 | Originated from Contacts (used round numbers) |
| Your loan was run through an AUS (reran it if good numbers were lower or bad numbers were higher) |
| All conditions were added as Document Tracking log entries |
| Ordered appraisal, title and the VOD and attached the orders to your file |
| Printed your stacking order and organized your file |
| Performed verbal verification of employment (can sometimes substitute for income verification) |
| Printed the Processing Checklist form and staple it to the back of the file |
| Reviewed your findings and created your game plan |
| Reviewed your credit report or credit findings |
| Stacked your file according to lender’s requirements |
| Learned how to Send to Processing (and how important is to do it) |
| Received and reviewed items as they came in |
| Submitted your loan |
There are actually two pre-closing interviews that need to take place: one with your processor (if someone else is processing the loan) or with the underwriter (if you are processing the loan yourself or if you need to get a condition clarified) and one with your borrower. Of course, you want to keep your partners informed as your loan request moves through your processing system so I have omitted any conversation that you would have with your referral partners thinking of those calls more as marketing than as processing.
Clearing Prior to Doc Conditions
Once you receive your initial approval you must carefully review it, You need to update your Document Tracking for any new conditions and clear the ones your had entered from the automated finding that are satisfied. In most cases if you did a reasonably good job of complying with the initial approval you shouldn’t have many prior to doc conditions. Further, as you come to better understand your lender’s requirements you can second guess many of the conditions that arise and satisfy them (or be ready to satisfy them immediately after you get your validation findings. Below is a reproduction of the Document Tracking worksheet:
Submit all conditions at one time and include a cover sheet that summarizes what you are sending in.
Clearing Prior to Funding Conditions
One secret to a good closing is to satisfy as many of the prior to funding conditions at the same time you satisfy the prior to doc conditions. Don’t depend on third, disinterested parties to satisfy your conditions for you. For example, if your lender requires wiring instructions as a closing condition why not include them as part of your submission package? Make sure that your appraisals have a copy of a current license.
It is your responsibility to make sure that any originals of documents are at closing, if required. We recommend that you create your own closing instructions (form in Encompass) and make sure to attach copies of the items when originals are required. If the original items were ones executed by your borrowers that don’t make it to closing, the closing agent can have the borrowers affix their original signatures to the copies.
Ordering Insurance Endorsements
Please visit http://www.amortgagebroker.com/encompassforms.htm for information on how we suggest that you order insurance endorsements. You should become familiar with the Custom Fields and the Additional Requests Info pages. From the second of the Custom Fields pages:
And from the Additional Requests page:
We only use one custom category (the second one) to complete the mortgagee clause information. You will need to update your information if the hazard or flood insurance clause is different than the title insurance clause. Here where the mortgagee clause information goes:
Click here to see a properly completed request.
Click here to see one that is incomplete.
Note: We suggest that you create two rolodex entries if the insurance clauses are different. You can then very easily switch back and forth between the two.
Ready to Close?
Once all conditions have been cleared, your loan is almost ready to close. You should get into the habit of conducting a pre-closing audit of your file. Review your file for accuracy of documents, revising and re-executing any documents that are different than what you need to close. A current and consistent MBA is a must.
As part of your audit we recommend that you print the Compliance Cover Sheet and Case Expense History. Complete both forms as much as possible:
Note: We recommend that you leave your file intact the way it was submitted until it funds. Only then stack the file according to the Compliance Cover Sheet.
The Borrower’s Pre-Closing Interview
We recommend that you converse with every client the day before closing or the morning of closing. The purpose of this call is to verify your borrower’s expectations and to confirm any items that impact the closing. Make sure that your borrower knows where to go and what time to should up. Reinforce any items that must be brought to closing and in what form, such as a cashier’s check for funds to close.
When reviewing the final documents with your borrower make sure that you have your borrower put out their original GFE and compare it to the final HUD-1. Let your borrower know that well over 90% of all closing mishaps occur from misunderstandings based on the HUD-1 settlement statement. Start with the cash to or from the borrower. Then break down the settlement costs based on actual closing costs and pre-paid expenses.
Make sure that your borrower knows when their first payment is due. Clarify the payment of insurance and taxes. Avoid any misunderstandings. Promise to clarify any questions your borrower has and get answers back to them ASAP.
The Closing
Whether or not you attend the closing is a personal decision. Attending or not attending is not the important thing; your intentions are what are important. If you elect not to attend make sure that the borrower knows how to reach you during the closing. Being unavailable is one of the worst things you can do!
Archiving Your Encompass File
Either you or your processor, whoever can write to the file, needs to open the file and change the Current Status to Loan Originated and update the Date to the date docs were signed. Then go to the HMDA Information screen and update the Closed Date with the same date.
Make sure to correct anything in your file that requires fixing to be consistent with the closing. Update the Doc Signing, Funding and Completion milestones as they are finished. Once the file is ready to be moved away from your pipeline, locate the loan in My Pipeline and check it (see image below):
Then click Move at the far right hand side of the image above. This will open the move dialog window:
Make sure to choose the correct folder and then click OK. Your file has been moved away from My Pipeline.
Note: We recommend moving the file only after you have received and deposited all of the funds that you expect to make on a loan. Leaving the loan in My Pipeline provides you with a reminder that something is left to be done on this loan.
Storing Your File
All non-public information must be stored securely. We prohibit you from retaining a copy of your borrower’s file. If you followed our procedures your Encompass file should have anything you might possibly need. Additionally, you may request a TIF image of your file if you need one in the future (we reserve the right to charge you for this service if you abuse it).
Files are due in Tampa by the end of the following month in which the loan closes. Only branch managers should submit loan files to Tampa!
What Your Borrower Sees at the Ellie Mae Loan Center
If you like what you see get Jeremy to turn you on to Online Status Reporting!
