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Have you heard our new commercial – “The Escrow”? Confused ? Below is an easier to understand explanation of the process.
Some of this information is designated to forms, used by the government and lending industry, assigned to each particular item. For example, the 1003 is the number on the bottom of the application. So, a borrower’s application, or Form 1003, is submitted to DU or LP. DU is Delegated Underwriting. It’s Fannie Mae’s on-line automated underwriting system. A lender will upload a client’s application and merged credit report, to an online website to have the system tell us if the file is approved, or not. Freddie Mac’s automated Underwriting Engine is called LP, for Loan Prospector. Fannie Mae also has DO, which is for Desk Top Originator, but for the simplicity of the commercial, and keeping it short and affordable; we opted out of mentioning that one. AU, as you may have guessed, is for Automated Underwriting. 1040′s are your tax returns, and your W-2′s are, well, your W-2′s that your employer reports your earnings to for use when submitting your tax returns to the United States Treasury, or IRS. We have to verify that the tax returns that you provide us, are in fact the same tax returns that are submitted to the IRS. You will sign a form, authorizing a lender to do that…it’s called a 4506-T form.
The GFE is your good faith estimate of closing costs, and the TIL is your Truth-in-Lending disclosure. These forms, once received by the borrower, enable an appraisal (or 1004 form) to be ordered through an AMC (Appraisal Management Company). The EMD is your Earnest Money Deposit. You deposit a set amount, to escrow, to show your willingness to buy the home you’re in contract to purchase. So…when you are submitted to underwriting, you submit your application and supporting documentation to underwriting…The underwriter is God, in this situation, as they, ultimately, have the power to approve, or decline, or suspend a file. So, you’d better be nice to your underwriters…:) So, when the appraisal is complete, the AMC uploads it to the Loan Officer (LO). Also, your Loan Approval (LA) gets sent to the LO, as well. After loan approval, PTD’s are Prior To Doc Conditions. Maybe you’re waiting for some gift funds, from family, that haven’t been dispersed to escrow, yet. Once that Prior to Document Condition is met…you THEN may have full loan approval. So…go to Quality Control, to be sure that everything in the file was disclosed properly, documentation makes sense, and is legal, interest rates match your locked in interest rate and fees, etc. That can take 24 H-R-S., or 24 hours. Order Docs, (loan Documents), and when borrower signs their loan documents (their John Hancock-we know…a stretch), we Fund by FAX (FBF). We fax the paperwork to our funding department so that the loan may fund the very next day. Funding means that the bank has wired funds to escrow, for the loan, so that escrow can close the VND…uh, Very Next Day.