What mortgage loan originators should know about verification of deposit

Navigating the NMLS: What Happens When a Borrower Has No Funds?

Hey there, future mortgage pros! Let’s talk about a scenario you might encounter as an aspiring Mortgage Loan Originator (MLO) when working with borrowers. Imagine you’re reviewing a file where a verification of deposit (VOD) is required, but here’s the kicker—your borrower has no cash at the moment. What now?

This situation can feel a bit sticky, but I promise, it’s not the end of the road. Instead, let’s break down how to handle this situation effectively and compassionately. You know what they say, “What goes around comes around,” and helping borrowers navigate their financial quandaries might just create positive ripple effects in your career.

The VOD Dilemma: What to Do?

First, let’s clarify what a VOD is all about. It’s essentially a document that shows how much money someone has in their bank account. When you need a VOD but your borrower’s bank balance is looking pretty bare, don’t panic! You have options, and one of the most appropriate steps is to simply request that the VOD is done after the borrower has deposited funds.

Why This Approach Works

By allowing the borrower time to secure those funds, you’re practicing due diligence while also giving them a chance to meet the necessary requirements. After all, wouldn’t you want that same flexibility for yourself if the tables were turned? This approach reflects an understanding that life happens, and financial situations can shift. You’re not just a lender; you’re a partner in their financial journey.

But hang on a second—let’s explore why the other options presented might not be the best course of action.

The No-Go Options: What You Should Avoid

Here’s the thing: some approaches simply don’t play well with ethics and compliance. For instance, lending the borrower money to bridge the gap until they can verify their funds? Not the best idea. You could run into compliance issues and potential ethical concerns that might come back to haunt you—or worse, damage your reputation.

And what about suggesting your borrower take out a payday advance loan? Yikes! Those kinds of loans can be traps with their sky-high interest rates. It’s like offering a life jacket that’s actually made of bricks—helpful in theory, but it won’t do them any good once they’re underwater.

Then there’s the option of outright rejecting the loan application simply because the borrower doesn’t have funds verified at that moment. Talk about harsh. Wouldn’t you rather show some understanding and work with the borrower to find a solution? After all, everyone hits a rough patch now and then.

Flexibility is Key

In the world of mortgages, flexibility isn’t just a buzzword; it’s an essential quality that can set you apart. By allowing a grace period for fund verification, you’re demonstrating both professionalism and empathy. It reflects positively not only on your judgment but also on your client relations.

You know what? Let’s take a step back and consider the broader picture here. This isn’t just about getting a loan approved. It’s about building trust and rapport with your borrowers. When you show kindness and understanding, chances are they will remember you positively when it’s time for their next significant financial decision.

Taking it a Step Further

Engaging with borrowers on a deeper level can bolster your reputation. Got any tips for helping borrowers improve their finances? Share those too! Perhaps you can educate them on budgeting or connect them with resources for financial planning. Those small gestures can lead to monumental shifts in your relationships with clients.

Now, before we wrap things up, let’s revisit the importance of maintaining clear communication. Keeping the channels open fosters an environment of trust. When borrowers feel like they can rely on you for guidance, they’re more likely to not only continue working with you but also recommend you to others.

Final Thoughts

So to sum it all up, when a borrower is short on cash, the best course of action for any MLO is to request the verification of deposit after they’ve had a chance to secure the necessary funds. This thoughtful approach keeps your integrity intact while providing borrowers a fair shot at achieving their dreams of homeownership.

By combining professionalism with a genuine understanding of your clients’ circumstances, you’ll not only be on the right side of ethical lending practices but you’ll also set yourself up for long-term success in the industry. Remember, it’s not just about closing deals; it’s about creating lasting relationships.

So, as you move forward in your journey as an MLO, consider how you can implement this mindset in your daily practice. Your empathy today can lead to a thriving career tomorrow. Are you ready to make that impact?