[Christian]

It's interesting that both National Funding and Quickbridge don't do "double underwrites", but they still get offers out in roughly the same time-frame. Maybe we can all learn from them.

I also never have this issue with Everest.

[J.Celifarco]

I am aware. But sometimes, there is no backup plan leaving us without leverage.

If there is no back up plan and nobody else wants to do the deal Rapid probably made the right decision.. I just wish they would have made it sooner would have save you and the merchant what seems like a huge headache

[Christian]

If there is no back up plan and nobody else wants to do the deal Rapid probably made the right decision.. I just wish they would have made it sooner would have save you and the merchant what seems like a huge headache

My point exactly. I look bad and everyone wastes time and money. They could have seen the reason for the decline in the first ten minutes.

[J.Celifarco]

My point exactly. I look bad and everyone wasted time and money. They could have seen the reason for the decline in the first ten minutes.

I dont disagree with you but thats not how they do business, you need to go in knowing that... Believe me I get it, it sucks and I have been there. I am sure every person on this forum has had this happen to them one time or another. if you know what you are dealing with going in it makes it easier to to keep the merchants expectations in line. Honestly every other bank killed the file and this was your last second Hail Mary play.. It didn't work but you can't be that surprised when apparently nobody else wanted to do the deal

[CreditGuy]

This thread reaffirms my suspicion that most of what people in this industry call underwriting isn't underwriting, and also explains why some people on here consider themselves underwriters when they aren't. That not actually underwriting a file before issuing an approval is considered normal and acceptable seems to point to some wholesale shortcoming with many funders and brokers in this space.

As a lender, the integrity of approvals should be first and foremost. In my experience late stage declines are usually due to something being misrepresented initially, which is then verified to be incorrect in closing. There are always going to be edge cases where something was missed, but if that is a regular occurrence with a lender they need to revisit their process and procedures, or hire better people.

[MCNetwork]

Isn't this exactly how mortgage lenders operate? They have the process down to a science and cash advance companies simply copied it. First you do a preliminary underwriting with general information, issue a pre-approval, and then when you have customer buy-in and signed contracts you drill down into the file and do the full underwriting. This is just a smart way for a funder to best deploy his limited resources. Nothing groundbreaking here. I don't understand why this is such a contentious issue.

As an aside, the only companies that DON'T follow this model are the unprofitable ones (i.e., On Deck) or the ones that already have all the client's relevant info (Paypal, Square, etc.).

[Christian]

This thread reaffirms my suspicion that most of what people in this industry call underwriting isn't underwriting, and also explains why some people on here consider themselves underwriters when they aren't. That not actually underwriting a file before issuing an approval is considered normal and acceptable seems to point to some wholesale shortcoming with many funders and brokers in this space.

As a lender, the integrity of approvals should be first and foremost. In my experience late stage declines are usually due to something being misrepresented initially, which is then verified to be incorrect in closing. There are always going to be edge cases where something was missed, but if that is a regular occurrence with a lender they need to revisit their process and procedures, or hire better people.

/\ This

[Christian]

Isn't this exactly how mortgage lenders operate? They have the process down to a science and cash advance companies simply copied it. First you do a preliminary underwriting with general information, issue a pre-approval, and then when you have customer buy-in and signed contracts you drill down into the file and do the full underwriting. This is just a smart way for a funder to best deploy his limited resources. Nothing groundbreaking here. I don't understand why this is such a contentious issue.

As an aside, the only companies that DON'T follow this model are the unprofitable ones (i.e., On Deck) or the ones that already have all the client's relevant info (Paypal, Square, etc.).

In my experience many mortgage lenders issue a set of required stips, some prior to docs and some prior to funding. Better lenders issues all of these up front so you know what you need to get docs, and what you need to fund those docs all from the beginning. I wish funders did this here.

[FUNd]

Isn't this exactly how mortgage lenders operate? They have the process down to a science and cash advance companies simply copied it. First you do a preliminary underwriting with general information, issue a pre-approval, and then when you have customer buy-in and signed contracts you drill down into the file and do the full underwriting. This is just a smart way for a funder to best deploy his limited resources. Nothing groundbreaking here. I don't understand why this is such a contentious issue.

As an aside, the only companies that DON'T follow this model are the unprofitable ones (i.e., On Deck) or the ones that already have all the client's relevant info (Paypal, Square, etc.).

LOL, is On Deck still not profitable? Probably a question for another thread but what's going on over there that they can't get in the black?

[MCNetwork]

Probably the lack of real underwriting? Over reliance on some type of mystical black box algorithm?

[FUNd]

Probably the lack of real underwriting? Over reliance on some type of mystical black box algorithm?

HaH
Yeah, Google invented the word 'algorithm' as it applies to a successful business model in the late 90's and the world has never been the same. Often imitated, rarely duplicated.

[Christian]

Probably the lack of real underwriting? Over reliance on some type of mystical black box algorithm?

Not underwriting has to save them some money in less salaried employees...

[MCNetwork]

In my experience many mortgage lenders issue a set of required stips, some prior to docs and some prior to funding. Better lenders issues all of these up front so you know what you need to get docs, and what you need to fund those docs all from the beginning. I wish funders did this here.

This only works in a perfect world. In many cases, the first set of stips that comes back generates another set of stips that the first set created.

[GMFunding]

Send the deal elsewhere and get someone to match the offer, the amount of lenders in this space who have underwriters willing to listen are more then my toes and fingers combined.

[jbhags]

This smells like you ran into a tax lien issue. Classic rookie blunder...

[Christian]

This smells like you ran into a tax lien issue. Classic rookie blunder...

Rookie here. It was a tax lien. A tax lien that they had all paperwork for on day one and one that they claimed was acceptable. In short, they lied. I guess the rookie blunder (I've been doing this for years) was believing I was dealing with a professional.

[Chambo]

Rookie here. It was a tax lien. A tax lien that they had all paperwork for on day one and one that they claimed was acceptable. In short, they lied.

Tax liens are acceptable, depending on the offer. Plus, it depends on the size of the tax lien.

They probably ran a Tax Guard and more than what was originally disclosed came up

[Christian]

Tax liens are acceptable, depending on the offer. Plus, it depends on the size of the tax lien.

They probably ran a Tax Guard and more than what was originally disclosed
came up

Nope. They told me exactly the amount that I had submitted paperwork on from day one.

[MCNetwork]

Unfortunately these things happen. You have to expect some breakage of deals at the one yard line for a variety of reasons, some justified and some not. It sucks big time but you have to make sure you have a decent pipeline to offset the losses and move on. This business can break your heart if you dwell on the deals that didn't fund.

[ridextreme]

you can't be that surprised when apparently nobody else wanted to do the deal

This business can break your heart if you dwell on the deals that didn't fund.

Unfortunately these things happen. You have to expect some breakage of deals at the one yard line for a variety of reasons, some justified and some not. It sucks big time but you have to make sure you have a decent pipeline to offset the losses and move on. This business can break your heart if you dwell on the deals that didn't fund.

These are all very good points. We can never count our eggs before they hatch and the deal funds. Never spend your money Christian until the money is in your account or this industry will make you sick and crazy. You just need to move on to the next one. There is really nothing new here at all.

[CLucas]

When this industry starts to get regulated look no further than companies that perputrate this unprofessional practice. For ever merchant who has been given false hope of money approved and last minute denial, you have created a hatred for our industry, the problem is there is power in numbers, piss off enough people and our unique space will slowly extinct.

[jotucker1983]

When this industry starts to get regulated look no further than companies that perputrate this unprofessional practice. For ever merchant who has been given false hope of money approved and last minute denial, you have created a hatred for our industry, the problem is there is power in numbers, piss off enough people and our unique space will slowly extinct.

But what would be the merchant's claim? That the lender declined them? So would the merchant claim "damages" or "misconduct" because he submitted an application but didn't get funded?

The deal isn't done until he's funded, the money hits his bank account and the payback process starts. If the merchant foolishly (which I have had merchants tell me prior) made business arrangements ahead of time in anticipation of the funds, before the Underwriting process was complete, but ended up being declined and thus no funding, then that's not my fault nor the lender's fault.

[ridextreme]

When this industry starts to get regulated look no further than companies that perputrate this unprofessional practice. For ever merchant who has been given false hope of money approved and last minute denial, you have created a hatred for our industry, the problem is there is power in numbers, piss off enough people and our unique space will slowly extinct.

Really? You are blaming the last minute declines on the funders only?

In all of my experience, whenever a deal gets killed at the last minute, it is hardly ever the funder who all of a sudden changed their mind. I can't think of one deal where everything was clean but hey took the approval away the day of funding. It is always the merchant who either lied on their application about liens or judgement, or underwriting found out about additional owners who were in a BK, or they went to verify their rent and the LL said they are 6 months behind, or the financials they sent in showed too much risk, or they found out about a previous default on another MCA company, etc.

That is why when an approval is emailed from a funder it says "Pending final underwriting approval".

[Christian]

But what would be the merchant's claim? That the lender declined them? So would the merchant claim "damages" or "misconduct" because he submitted an application but didn't get funded?

The deal isn't done until he's funded, the money hits his bank account and the payback process starts. If the merchant foolishly (which I have had merchants tell me prior) made business arrangements ahead of time in anticipation of the funds, before the Underwriting process was complete, but ended up being declined and thus no funding, then that's not my fault nor the lender's fault.

"Here are your loan docs Mr. Merchant. Remember, this is a contract that's only binding for you, not the lender, so be sure you keep shopping me with all of my competitors, right up until the money hits your account since it may, or may not work, and I'm not professional enough to know the difference yet."

[FUNd]

The last minute declines are frustrating, but when this happens, stay all over your client and make sure you're not getting backdoored by your funder. We've all seen too many times where a file is 'declined' and the next day a call comes from the lender's direct sales division offering to complete the transaction.

We have caught 2 lenders now red-handed, one using a faux ISO name to hide their identity, and no, I can't mention their name here, just watch your ass in these situations.