Churchill Mortgage is building the "preunderwriting" process used to give borrowers a stronger sense of preapproval into its workflow in an effort to make financed offers on homes more competitive.

Having a preunderwriting approval through Churchill Mortgage's Certified Homebuyer program is "almost like shopping with cash," said Chief Operating Officer Matt Clarke.

Other lenders have experimented with preunderwriting approvals, but it is more rarely a formalized process.

While lenders commonly provide informal prequalifications based on verbal information, or more formal written preapprovals based on deeper reviews, Churchill is now having its underwriters examine borrower credit before a property is identified using a dedicated underwriting team, said Clarke.

Matt Clarke
Matt Clarke is the chief operating officer at Churchill Mortgage.

"What most companies do at the end of the process we do right up front," he said.

Because the address has not been identified yet, the preunderwriting process does not collect enough borrower information to trigger deadline-driven disclosures under TRID, according to Clarke. Borrowers are told up front that many terms of their loan could change depending on the property they choose and what interest rates are like at the time.

Lenders have long sought to be more of a priority contact for borrowers in the homebuyer process by encouraging them to get financing approvals before shopping for a home, but borrowers historically have tended to seek out properties first.

While this remains true, quiet ad-hoc issuance of preunderwriting letters over the past couple years in housing markets with scarce inventory have made borrowers more receptive to the idea.

"In the last eight months it's really picked up steam," Clarke said.

Churchill formalized the program and made it a priority in workflow not only because borrowers were becoming more open to the idea of getting financing approved first, but also because they were impatient to get out and start looking at homes with rates on the rise.

Homeowners "want to know quickly what they can buy, so we expedited it," Clarke said.

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