I'm posting this to let the community know that the mortgage industry as a whole, not one or two specific companies, have a huge "thumb-up-their-***-and-brain-is-incapable-of-applying-logic" problem. Most of the horror stories stem from the underwriting departments of these companies.
Let me start by saying we already obtained our COE, and we already had 2 preapproval offers. Those two items already being out of the way prevented some delays or problems.
Then we find the perfect house, enter a brief 1-day bidding war, and our offer is accepted. Copy of signed contract emailed and snail-mailed immediately because closing is in 30 days. Please note that this mortgage is NOT being obtained through USAA.
Initially, the first two weeks, things went smoothly. And then... The loan processor disappeared for a few days -- I say disappeared because when you don't answer your phone, return calls or emails, I say you're gone.
VA appraisor uses incorrect construction year on report -- Takes two friggin weeks to get corrected report.
Little errors crept into the paperwork and the underwriters pounced on it -- But no one brings it to the applicant's attention until said applicant has been hounding the bank for several days straight.
"Explain your absence from the work force."
What absence? My last day was on a Wednesday and my first day at current employer was on a Thursday. A mini-vacation would have been awesome!
Oh, your processor messed up the year of employment and put in a one-year gap that didn't exist.... And your underwriters weren't smart enough to look at the friggin W-2s! IF I left company A in 2013, why is there a Company A W-2 for 2014? Duh?
"Prove the source of the large deposit that occurred three months before your application"
Oh, you mean that large deposit where I was ensuring I would have adequate funds for closing and any immediate house needs? Here ya go -- 1099-R and check stub.
"Provide a statement of the retirement account you cashed out."
Seriously? You want a statement that shows a $0 balance? The 1099-R that is good enough for the IRS isn't good enough for the underwriters?
What exactly are you underwriters needing proved? The source of the funds -- see the 1099-R and check stub. The legality of the funds -- see the friggin 1099-R. But like a good little loan applicant, I'll contact that plan administrator and get you the most recent statement, which is a year old! (statements are mailed annually and statement showing a $0 balance wouldn't be released yet). I'm still not sure what additional information they gleaned from that statement that wasn't already on the 1099-R.
"I know you gave us bank statements when you got preapproved, but another month has passed, so we need more recent statements. But we're not going to ask for them until the last week, cause we're not capable of thinking ahead."
Truthfully, I had been expecting this and didn't send until they asked, because they just would have lost it.
Since you got preapproved over the phone, the bank mails you a loan application with "dummy" details -- address to be determined, sale price estimate etc. We chose our house and got our offer approved so quickly, I never filed that stupid dummy application. And besides, why would I fill out 15 pages of paperwork when I had my preapproval letter in my possession?
The underwriters are reviewing my actual loan application (this contains the real data -- property address, sale price, etc.). And yet, 4 days before closing, the underwriters wanted me to complete the paperwork for that dummy application.
Smart or stupid, I pushed back. I am not filing papers with knowingly false data. I refuse to complete an application for Address to be Determined so that you can put it in the file with my application for the actual house I am buying!
I fought the underwriters and I won. And luckily, we closed on time.