The loan processing of your file is the most time consuming aspect of the loan process. This is the preparation of your file for presentation to the FHA investors. All documentation is reviewed to insure there is no discrepancies in presentation and any possible issues are worked on at this stage.
If at your initial application you did not provide all of the original documents needed, this is the stage where they will be requested for again.The processing stage is comprised of gathering all of the following documents.
- FHA Case Number - We will request from FHA a FHA case number. If a condo, PUD or townhome, will need to verify property is an FHA approved complex. If property was previously in escrow, may need to request case number from other lender. Usually 1-2 days.
- Verifications of Employment - Form sent to past and present employers for last two years to verify income and time on the job (some employers have an automated 900 # for employment verification). Unusually takes 1-2 weeks.
- Verifications of Deposit - Form sent to banking institutions to verify average bank account balances for past 3 months (some banks will charge borrower a fee of up to $20 for this verification). Usually takes 1-3 weeks.
- Credit Report - May need to order a full factual credit report which is the three major credit report bureau's blended onto a single report, with all accounts and balances verified. Usually takes 2-5 days.
- Escrow Instructions* - Escrow instructions are drawn up by the escrow company detailing the transaction details. Escrow is an independent third party of the transaction who acts as the accountant. *California, some states use closing attorney's or title companies. Usually takes 2- 7 days.
- Preliminary Title Reports - This comes from the title company who will insure the
title of the home. They research the property and borrower for any legal items, liens, loans that may affect title to the property. Usually takes 1-2 weeks.
- Appraisal - Appraisal will be order from a FHA approved appraiser. The appraiser will go to the property, measure square footage, verify FHA required conditions, check other recent comparable home sales, and determine value of the home. Appraisals usually take 1-4 weeks to complete.
- Purchase Contract, Counter Offers, and Transfer Disclosure statements - This is for purchase transactions only. This are the original contracts regarding the terms of the purchase of the property. We need all of the completed signed (by both parties) forms prior to ordering the appraisal, as appraiser requires a copy of the contract. This will typically be provided by the realtors. Usually takes 2-10 days.
- Letters of Explanation - Letters written and signed by borrower to explain any issues on the credit report, work history, bank account deposits or variances, source of funds, etc. Usually complete after receipt of all other documents.
- Additional supporting documents - Additional paperwork possibly needed on a case by case scenario, such as: 12 months cancelled checks to verify not making payments or receiving income, complete bankruptcy, divorce, child support papers. This will vary by borrowers individual scenario.
- Any Documents missing from initial loan application - Any paperwork missing from original loan application and loan opening such as: 2 months recent paystubs, 3 months complete bank statements, last 2 years tax returns, etc.
Since we are requesting and receiving all of these documents from various companies and individuals, this is most often where there is delays. This portion of the loan process will normally take 1 to 3 weeks.
Once the we have received all requested documents from all parties, you loan can then be submitted .