Aritas Mortgage Solutions

Why Wholesale Lenders Should Invest in Pre-Underwriting


Aritas Mortgage Solutions

November 23, 2023
Mortgage lenders verifying documents for pre underwriting


Mortgage lenders verifying documents for pre underwriting

The US Federal Reserve has recently stated that it will maintain the key federal funds rate between 5.25% and 5.5%. This stability, following a series of 11 rate hikes, is certainly good news for the housing market. However, when we talk about the mortgage loan origination process, an important factor besides economic fluctuations is underwriting. Efficient underwriting enables a borrower to get closer to their dream of buying a home and get a clear picture of the funds needed to turn the dream into a reality.

If you’re a wholesale lender, consider investing in a pre-underwriting process to carefully assess a borrower’s finances to know if your investment is safe. It will also help you get all the documents in place which will ultimately minimize delays in loan approvals and allow you to efficiently tackle any issues during underwriting. The result? Your profit margins increase and your turnaround time reduces.

In an industry where time is money, any process-related hiccup can lead to missed opportunities and financial losses. As the Federal Reserve’s decisions sway the market, streamlining operations is vital and pre-underwriting is the key.

How Wholesale Lenders Can Benefit From Pre-Underwriting

As wholesale lenders, you are empowered by two things—one you have readily available funds. Two, you also possess the authority to distribute these funds as you see fit. Pre-underwriting occurs early in the loan origination process. When done right, it could give you an added advantage to maximize profits and efficiency.

But first, let’s understand what pre-underwriting is. Pre-underwriting is the initial validating process a mortgage application undergoes, allowing wholesale lenders to perform critical functional due diligence even before the initial contract is signed.

Why is it important for wholesale lenders? We’ve listed out some of the top reasons:

  1. Comprehensive View of Borrower’s Credit History: Through pre-underwriting, wholesale lenders gain a deep understanding of a borrower’s credit history. This insight enables lenders to assess risk more accurately and make informed decisions. For example, if a borrower has a consistent history of on-time payments and a healthy credit score, pre-underwriting can help identify them as a low-risk candidate for a mortgage
  2. Detecting Potential Issues and Risks Early: Pre-underwriting is like a magnifying glass that can reveal potential issues or risks in the early stages of a loan application. For instance, if a borrower’s credit report shows inconsistencies or recent financial troubles, pre-underwriting can flag these concerns before they snowball into major roadblocks during the later underwriting stages
  3. Improved Chances of Closing Deals and Increasing Profitability: By addressing potential issues upfront, wholesale lenders increase their chances of closing deals successfully. This means fewer loan application rejections or delays, resulting in a more profitable lending portfolio. Imagine a competitive real estate market where buyers are vying for the same property. Pre-underwriting will ensure that you can provide faster, more reliable financing, giving homebuyers a competitive edge, even against cash buyers
  4. Increased Efficiency and Output of Underwriting Teams: Pre-underwriting streamlines the underwriting process by weeding out problematic applications early. This efficiency not only saves time but also optimizes the workload of underwriting teams. They can focus on the applications with the highest probability of approval, ensuring quicker turnarounds and higher productivity
  5. Improved Borrower Experience Leading to Better Reputation and More Business: The borrower’s experience matters in the lending world. Pre-underwriting allows for a smoother, less stressful application process. When borrowers experience a transparent and faster lending journey, they are more likely to recommend the lender to others and return for future transactions, fostering a better reputation and driving more business

Grow Your Lending Business with Pre-Underwriting Outsourcing Services

For wholesale lenders with ample funds at their disposal, growing your business and optimizing operations can be a reality. However, establishing a smooth pre-underwriting system that ensures consistency and efficiency can be a challenge. This is where we come in. Outsourcing pre-underwriting services to a trusted third-party mortgage processing company like Aritas, can help you reduce turnaround times and increase profits.

Here are a few ways in which you can benefit from a partnership with us:

Borrower Document Examination

Our pre-underwriting services begin with a meticulous examination of borrower documents. This step involves scrutinizing financial statements, tax returns, credit reports and other critical documents to ensure they are complete, accurate and meet underwriting standards. This not only saves time but also minimizes the risk of errors in later stages

Pre-Underwriting System Matching

Matching borrower information with underwriting guidelines and lender-specific criteria is our top priority. This matching process helps identify any discrepancies or issues early in the application, preventing unnecessary delays or rejections

Performing Thorough Fraud Analysis

Aritas takes fraud prevention seriously. Through a combination of the latest tools and manual analysis, a comprehensive fraud analysis is conducted to detect any red flags or irregularities in the borrower’s information. This protects you from potential financial losses due to fraudulent applications

Initiate VOE, VOD, & VOM Verification

Verification of Employment (VOE), Verification of Deposit (VOD) and Verification of Mortgage (VOM) are critical components of the underwriting process. Aritas initiates these verifications, ensuring that borrower information is accurate and up to date. This step minimizes the risk of lending to applicants with misrepresented financial information

Appraisal, Title, Insurance Ordering & Review

You can trust us with essential tasks related to property evaluation, title checks and insurance ordering. We ensure that appraisals align with property values, titles are clear of any encumbrances, and insurance is in place to protect both lenders and borrowers. This comprehensive approach reduces the risk of lending against properties with issues that may impact the loan’s performance

Why You Should Choose Aritas for Pre-Underwriting Processes

When you partner with us, you access a powerful combination of over 15 years of industry experience and a dedicated team of skilled professionals. We have a proven track record of empowering wholesale lenders to streamline their lending processes, increase operational efficiency and reduce the chances of errors and delays.

Find out whether outsourcing is an effective solution for your pre-underwriting requirements by availing our services at no cost for a month. Check out our free trial offer.

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