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Loan Approval Process

Application / Documentation
The loan officer meets with the borrower to fill out and sign the application and begins to gather the documentation required to process the loan. Once this accomplished, the file is assigned to a loan processor. The processor then requests a credit report, order and appraisal of the property, verifies employment and bank records and coordinates with the escrow and title companies. Should any issues arise (such as missing pages of bank statements, lender verification, requirements, etc..), Legend Mortgage Corporation requests additional information and documentation as needed. Throughout the process, we keep the applicant and the realtor informed as to the loan’s progress.

Loan Submission
Prior to submitting the loan package to a lender, the loan officer and processor review all the current mortgage programs to ensure the borrower the best product, rate and term. The loan is then packaged for \submission to the chosen lender for approval.

Loan Approval
The lender receives the loan and the loan package the next business day, and the loan begins its underwriting / approval process, This is the process can typically take from 24 to 48 hours, depending on the lender and the market conditions/. The underwriter then issues a conditional loan approval to the broker. This outlines the conditions to be met before the loan can close. Once all conditions are met, the file is sent on the next department for preparation of documents.

Documents Are Drawn
The lender prepares closing documents and sends the package to the escrow company to schedule a closing.

Signing
Documents are received by escrow, and an appointment is schedules with the borrower to sign, and to bring in the funds required for closing. Escrow then sends the documents back to the lender for review and funding.

Funding / Closing
The escrow company and the lender coordinate funding and recording dates. The loan then funds, and typically will record (close) the next day.

Electronic Underwriting

Electronic Underwriting (EU) is more then just E-Loans and the Internet.
It is a change at the core of how lenders view borrowers and risk. Traditionally, lending has been rules based, not risk based. EU utilizes standard risk models to evaluate borrowers, which is actually more appropriate for lending. EU, in all of its forms, allows lenders and brokers to make this very important change.

According to current figures, only about 3% of mortgage brokers nationwide currently offer EU. That figure is even lower for “B” paper sub-prime loans. Which is currently the fastest growing sector of the industry.

The process is quite simple and allows us to provide instant approvals directly from the lenders, which can be faxed to borrowers, real estate agents and sellers. All of this can be done over the phone or information can be entered at our website.

Legend Mortgage Corporation is currently providing approvals for both traditional “A” paper and sub-prime loans from all lenders that offer EU. We have established a department devoted solely to EU, as we believe this is the future of lending.

Legend Mortgage has committed itself to maintain its place as one of the most technologically advanced brokers in the nation. We currently receive credit reports directly through our PC’s, and appraisals and loan documents are available via e-mail.

Please contact our office to find out what you need to get your instant loan approval.

Mortgage Glossary

Adjustable-rate mortgage (ARM): A mortgage with an interest rate and payment that change periodically over the life of the loan based on changes in a specified index.

Callable debt: A debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.

Charge-off: The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

Common stock: A security that represents ownership in a company but gives no legal claim to a definite dividend or to a return of capital.

Conventional mortgage: A mortgage loan that is not insured or guaranteed by the federal government.

Credit enhancement: A method to reduce credit risk by requiring collateral, letters of credit, mortgage insurance, corporate guarantees, or other agreements to provide an entity with some assurance that it will be recompensed to some degree in the event of a financial loss.

Credit loss ratio: The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit-related expenses: The sum of foreclosed property expenses plus the provision for losses.

Credit-related losses: The sum of foreclosed property expenses plus charge-offs.

Credit scoring: A process that uses recorded information about individuals and their loan requests to assess - in a quantifiable, objective, and consistent manner - their future performance regarding debt repayment.

Debt security: A security in which the issuing company generally agrees to repay the principal (typically, the original amount borrowed) and make interest payments according to an agreed schedule.

Default: The failure of a borrower to comply with the terms of a note or the provisions of a mortgage.

Delinquency: A mortgage loan on which a payment has not been made by the due date.

Derivative: A financial instrument which derives its value from an underlying security or notional amount.

Duration: The weighted-average life of the present value of all future cash flows, both principal and interest, of a security. It is used as a measure of the sensitivity of the value of a security to changes in interest rates.

Earnings per share (EPS): The net earnings of a corporation divided by the average number of shares of its common stock outstanding during a period. A common method of expressing a corporation's profitability.

Fixed-rate mortgage: A mortgage loan in which the interest rate does not change during the entire term of the loan.

Forbearance: The lender's postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.

Foreclosure: The legal process by which property that is mortgaged as security for a loan may be sold to pay a defaulting borrower's loan.

Global Debt Facility: A debt issuance facility through which U.S. dollar and foreign currency debt securities may be offered to investors worldwide with the feature of clearing and settlement through a variety of clearing systems.

Guaranty fee: Compensation paid by a lender to Fannie Mae for the guarantee of timely payments of principal and interest to MBS security holders.

Interest rate swap: A transaction between two parties in which each agrees to exchange payments tied to different interest rates or indices for a specified period of time, generally based on a notional principal amount.

Intermediate-term mortgage: A mortgage loan with a contractual maturity at time of purchase equal to or less than 20 years.

Lender option commitments: An agreement giving a lender the option to deliver loans or securities by a certain date at agreed-upon terms.

Loan servicing: The tasks a lender performs to protect a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies.

Loan-to-value (LTV) ratio: The relationship between the dollar amount of a borrower's mortgage loan and the value of the property.

Loss mitigation: Activities designed to reduce either the likelihood of the corporation suffering financial losses on a loan or the final dollar value of those losses in the event of a borrower default.

Mandatory delivery commitment: An agreement that a lender will deliver loans or securities by a certain date at agreed-upon terms.

Medium-term notes: Unsecured general obligations of Fannie Mae with maturities of one day or more and with principal and interest payable in U.S. dollars.

Modification: Any change to the original terms of a mortgage.

Mortgage: A legal document that pledges property to a lender as security for the repayment of the loan. The term also is used to refer to the loan itself.

Mortgage-Backed Security (MBS): A Fannie Mae security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS holders.

Multifamily housing: A building with more than four residential rental units.

Nonperforming asset: An asset such as a mortgage that is not currently accruing interest or on which interest is not being paid.

Notional principal amount: The hypothetical amount on which interest rate swap payments are based. The notional principal amount in an interest rate swap generally is not paid or received by either party.

Preferred stock: Stock that takes priority over common stock with regard to dividends and liquidation rights. Preferred stockholders typically have no voting rights.

Preforeclosure sale: A procedure in which the borrower is allowed to sell his or her property for an amount less than what is owed on it to avoid a foreclosure. This sale fully satisfies the borrower's debt.

Real Estate Mortgage Investment Conduit (REMIC): A security that represents a beneficial interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash flows structured differently from the payments on the underlying mortgages.

Repayment plan: An agreement between a lender and a borrower who is delinquent on his or her mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.

Return on average common equity: Net income available to common stockholders, as a percentage of average common stockholders' equity.

Reverse mortgage: A financial tool which provides seniors with funds from the equity in their homes. Generally, no payments are made on a reverse mortgage until the borrower moves or the property is sold. The final repayment obligation is designed to not exceed the proceeds from the sale of the home.

Risk-based capital: The amount of capital necessary to absorb losses throughout a hypothetical ten-year period marked by severely adverse circumstances.

Secondary mortgage market: The market in which residential mortgages or mortgage securities are bought and sold.

Security: A financial instrument showing ownership of equity (such as common stock), indebtedness (such as a debt security), a group of mortgages (such as MBS), or potential ownership (such as an option).

Serious delinquency: A single-family mortgage that is 90 days or more past due, or a multifamily mortgage that is two months or more past due.

Stockholders' equity: The sum of proceeds from the issuance of stock and retained earnings less amounts paid to repurchase common shares.

Stripped MBS (SMBS): Securities created by "stripping" or separating the principal and interest payments from the underlying pool of mortgages into two classes of securities, with each receiving a different proportion of the principal and interest payments.

Transfer agent: A bank or trust company charged with keeping a record of a company's stockholders and canceling and issuing certificates as shares are bought and sold.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's ability and willingness to repay the debt and the value of the property.