Tips for handling mortgage applications involving international borrowers
Let’s say you’re handling a loan application from a potential borrower who lives and works in another country. What kinds of questions should you ask? What do you need to keep in mind? Here are a few best practices:
1. The first step is pleasantly simple: Take the loan application as usual – though you will, of course, have to leave the spot for the borrowers’ Social Security number empty.
You may have heard of another identifier – the Individual Tax Identification Number (ITIN) that foreign nationals can receive through the Internal Revenue Service. That’s a bit beyond the scope of this article, but you can learn more about that program at www.irs.gov. For our business, though, we don’t ask for an ITIN because our transactions don’t involve a tax liability obligation on the buyer’s side.
Otherwise, the application process is not too different from applications that you’ll receive from U.S. citizens. Borrowers will need to list information related to their place of work and their banking institutions, even if the names sound different from what you’re used to seeing. One difference is our company does not ask for an international borrower’s credit history – it’s an incredibly complex process. Instead, we ask for a reference letter from their banker to establish, to a certain extent, the integrity of a borrower’s capital.
2. Be sure to ask borrowers how often they are in the United States: regularly, sometimes or rarely? This will help you understand why the borrowers want to acquire property here — after all, why would anyone choose to buy a house in a country they never set foot in? Secondly, if they happen to be in the United States during the loan process, most lenders would probably like to have a face-to-face meeting with them, too. It’s likely the borrowers want to make the journey anyway. But remember to extend an invitation — most foreigners won’t show up without being asked.
3. It is also important to discover the best methods for communicating with the borrowers — some people may prefer the immediacy of a phone call, but coordinating for time zone difference could be tricky. Fortunately, email makes it possible to connect with just about anyone just about anywhere. Even so, you should always be willing to provide a courtesy call to the borrowers and clarify any questions that might pop up during the application process.
4. How would the borrowers prefer to receive their documents, by email or by certified mail? You may discover it’s best to do both. Send your borrower electronic copies by email, so they can quickly review the documents, but also follow up with print copies delivered by FedEx or UPS. You’ll find that most borrowers prefer to receive all documents in a formal manner — this is very important to them. E-sign won’t cut it, nor will a request to “please print out and sign.”