Want your mortgage approved? Try SunTrust

Sensitive to rejection? Here are the big lenders who approve the most mortgage applications and those that are toughest.

By MSN Money Partner Dec 2, 2013 2:47PM

This post comes from Marilyn Lewis at partner site Money Talks News.


Money Talks News on MSN MoneyOne of the mysteries of life is why one lender blesses your application for a mortgage and another boots you to the curb. Who's back there behind the curtain pulling the strings, and what's their motive?


Real estate agent giving keys to couple in new home© Mark Scott/Photodisc/Getty ImagesIf you're sensitive to rejection, it may help to know that JPMorgan Chase rejected a third (33.6 percent) of the mortgage applications it received in 2012. That makes Chase the toughest of the 10 largest U.S. mortgage lenders, according to this MarketWatch report.


MarketWatch used 2012 data, the latest available, from the Federal Financial Institutions Examination Council and Inside Mortgage Finance, an industry publication.


The other top 10 lenders most likely to reject borrowers were:

  • Bank of America, 25.6 percent rejected.
  • Wells Fargo, 21.2 percent.
  • Quicken Loans, 17.3 percent.
  • U.S. Bank, 17.2 percent.

But here's the thing: These numbers aren't entirely apples to apples. The rates for Wells, BofA, Quicken Loans and U.S. Bank (but not Chase) include loan preapproval applications, or prescreenings. That can skew the numbers. Without preapprovals, Wells' rejection is just 12%, MarketWatch says.


Also, take heart: These numbers aren't as bad as they look. Nearly 9 percent of the "rejections" were for applications whose borrowers just gave up and walked away.


The easiest lenders

The easiest lender in the bunch was SunTrust Mortgage. It rejected only 11 percent.


The other top 10 lenders more likely to approve an application:

  • PHH Mortgage, 11.5 percent rejected.
  • Flagstar Bank, 13.2 percent.
  • Citibank, 14.3 percent.
  • Branch Banking and Trust Co., 15.6 percent.

Among this group, only Citi's rate includes preapproval applications.


It's (slightly) easier to get a mortgage

With the economy improving, it's getting a bit easier to get a mortgage, for the moment, anyway. FHA recently relaxed some of its rules, although mortgage insurance requirements are making FHA loans more expensive.


Starting next year, getting a mortgage may get harder as new federal rules kick in. Right now, though, some lenders are competing by loosening requirements a bit. But only for borrowers with the best credit scores. "Options for those with smaller down payments and lower scores are still limited," says CNBC.


And yet, compared with the worst years of the crash, mortgage lenders have definitely eased up. In 2009, "rejection rates among most of the lenders on this list ranged from 13 percent to 70 percent," MarketWatch says.


Across the industry, lenders in 2012 rejected 18.5 percent of applications for first-lien mortgages on owner-occupied home purchases and refinances, according to the Mortgage Bankers Association.


Why the big difference?

Lenders all play by the same rules, including debt-to-income requirements, credit scores and down payments required of borrowers. These rules are imposed by government-backed agencies like Fannie Mae and Freddie Mac, which buy mortgages from lenders. So why the big differences?


One major reason: Lenders can, and do, add their own requirements (called "overlays"). 

They often do this out of fear they'll be required to buy back mortgages when homeowners default, at a cost of billions of dollars.


Experience taught lenders that sloppy screening of mortgage buyers costs dearly. Fannie Mae and Freddie Mac forced lenders to buy back $120.29 billion worth of defaulted mortgages between 2009 and September this year, according to Inside Mortgage Finance, an industry publication.


Also, there may be differences among banks' customers. Writes MarketWatch:

Chase and Bank of America, which had the highest rejection rates in 2012, have subprime borrowers that they acquired when they bought Washington Mutual and Countrywide, respectively. If those borrowers tried to buy another home, it's likely that they turned to these banks since they already had a relationship with them and were denied because of their poor credit, says Feldstein. A spokesman for Bank of America says the bank's denial rates have been consistent over several years, ranging from 20% to 25%, including prior to the Countrywide merger. Chase did not respond by press time.

Quicken Loans' customers happiest

There's more to finding happiness with a lender than just approval rates. If you've got a strong application your biggest worry may be finding great customer service.


This year, Quicken Loans topped J.D. Power's 2013 U.S. Primary Mortgage Origination Satisfaction Study for the fourth year in a row. No. 2 was BB&T (Branch Banking & Trust Co.) and U.S. Bank ranked third.


Satisfaction among borrowers was higher this year than at any time in the past seven years. Borrowers who refinanced were a bit happier than home purchasers, especially first-timers, possibly because, having borrowed before, they knew what to expect.


Were you rejected or accepted for a mortgage recently? Tell us what you think made the difference in the comments below.


More on Money Talks News:

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.