A recent report from the Federal Financial Institutions Examination Council revealed that big banks have a very high cancellation rate for home loan applicants.
In 2012, according to this data, Chase declined almost a third of their mortgage applicants with Bank of America denying 25.6% and Wells Fargo rejecting 21% of their mortgage applicants. Quicken Loans and U.S. Bank turned down 17% of their mortgage applicants.
This graph is from Market Watch.
What should you do if you’ve been turned down by a bank for a mortgage loan? Try a “non-bank” lender.
Loan Officers/Mortgage Originators who work for banks are not required to be licensed per the SAFE Act. They are only required to be registered (which currently has lower requirements than a licensed loan officer).
It’s not uncommon for mortgage loan originators who work at banks (or other non-licensed required institutions, like credit unions), to have less experience than a licensed loan originator. Why? Banks and credit unions tend to pay their loan officers less income – and rightly so, in my opinion, if they’re being “gravy fed” by bank leads.
Borrowers may find better odds getting their loan approved by working with an experienced mortgage loan originator. There is more to taking a loan application than just filling in the blanks. A complete loan package needs to be prepared for underwriters to review for loan approval. Throwing spaghetti on the wall to see if it sticks does not work in this mortgage industry. Experience counts.
In addition, large banks often have large detached processing and underwriting departments that are located across the country. Where at correspondent lender, like Mortgage Master Service Corporation, our processors and underwriters are under “one roof” at our King County location.
Banks loan officers/mortgage originators are often limited to their products and guidelines. Correspondent lenders often work with several banks and wholesale lenders and have access to their rates and programs. This provides more options for home buyers and home owners wanting to refinance. Credit unions may have their own programs and guidelines.
I recommend checking out a Correspondent Lender (if your home is located anywhere in Washington state, I’m happy to help you!) or you may want to even try a credit union. If you do opt for a credit union, I recommend trying to find a loan officer who is licensed and not merely registered (some loan officers do confuse being registered as being licensed – you may need to verify their license).