Rate Sheets and Investor Guidelines: Better Together?

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Traditionally, the mortgage industry has viewed daily product rate sheets and investor guidelines as two different animals that belong in separate cages. Rate sheets were the province of the front office, while detailed investor guidelines found their love in the back office.

But as product and pricing engines have evolved over time to adapt to new lender demands and mortgage industry dynamics, investor guidelines have increasingly been incorporated into the technology that is used by loan officers and brokers to obtain daily interest rate and loan product information.

Compliance pressure and increasing regulatory oversight have also made it more important that loan officers have eligibility guidelines at their fingertips so they aren’t accused of steering consumers to more expensive loans than necessary or making mistakes that could result in loan buyback requests from investors.

And with low rates heating up the origination pipeline, loan officers can ill afford to spend time nursing along mortgage applicants who don’t meet today’s stricter underwriting guidelines. Moving the loan eligibility rules closer to the consumer helps lenders serve customers who want to begin the loan application process on their own as well, behind the perceived anonymity of an Internet interface.

AllRegs recently inked a deal with Lincoln, Neb.-based Mortech to exclusively include its investor guidelines through Mortech’s product and pricing engine, known as Marksman. In the past, AllRegs has offered its investor guidelines through a number of PPEs.

Jeff Hoerster, president and chief operating officer of Eagan, Minn.-based AllRegs, said while guidelines and rate sheets are inextricably linked, not all loan officers want to manage investor guidelines with their product and pricing data at the beginning of the origination process. Some lenders want simple rate sheets with basic eligibility criteria for their loan officers or brokers. At those shops, the guidelines are more the concern of underwriters who pick up the loan application later in the food chain.

Nonetheless, AllRegs has also been working to help lenders that want to move the guidelines up closer to the point of origination do just that. “We are looking for technology that will provide a correspondent lender an ability to easily customize and upstream a lender’s guidelines,” Hoerster said.

That customization would be useful for a mortgage company or community bank with a limited geographic scope and doesn’t need, for instance, Wells Fargo’s guidelines for all 50 states.

But when it comes to rate sheets and guidelines, Hoerster still thinks there is some awareness of guidelines is necessary at the product and pricing level. The loan officer needs to know what the guidelines say about credit score and LTV eligibility, but then they want to move on to the next loan file—with a more critical, guideline-intensive review happening later in the process.

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