[J.Celifarco]

Is this the first time you have worked with this bank??? If its not then you should know how they handle their underwriting. If you dont like how they do it find a bank that is a better fit. Unfortunately the only power we as ISO's have is where we decide to send our business if you want things to change at a bank stop sending deals when they ask you why explain the issues and try to get them worked out

[Christian]

Is this the first time you have worked with this bank??? If its not then you should know how they handle their underwriting. If you dont like how they do it find a bank that is a better fit. Unfortunately the only power we as ISO's have is where we decide to send our business if you want things to change at a bank stop sending deals when they ask you why explain the issues and try to get them worked out

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

[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]

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.

[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.

[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?

[J.Celifarco]

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?

NO

[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

[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...

[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.

[J.Celifarco]

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.

how big was the tax lien compared to the deal size?
are they in a payment plan?
if they are in a payment plan is there proof of payments being made?

[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.

[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.

[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."