I am putting a loan on in Mortgage Banker and get the message "LOAN AMOUNT EXCEEDS MAX/MIN LOAN AMOUNT".

Solution

Field 28 of the 1003 Application is Product Type. This is the most important field on the most important page of the entire application. Unfortunately, it is also the most misunderstood. Product Type refers to loan types your company offers. Your company policies determine the Product Types. Your Product Type determines if a specific loan qualifies for the particular loan type you have entered.

You will notice, before you enter the Product Type in the loan application, the program requires specific information:

Will the property be owner-occupied?
How many units?
The age of the property?
Sales price and/or appraisal to determine the loan-to-value?

The program uses this information to determine if the loan qualifies for the Product Type you have selected. If the specific loan is above the maximum loan amount for the number of units, the minimum loan amount, or the loan-to-value parameters set up for the Product, the program will display the error message "LOAN AMOUNT EXCEEDS MAX/MIN LOAN AMOUNT." MC designed the program with edits so you won't mistakenly process a loan that violates your company policies, e.g., entering a 95% LTV investment loan when your policy is a maximum 70% LTV. In this case, the program would return the cursor to the LOAN AMOUNT field and require an amount acceptable to the Product Type previously set up--according to your company policies.

The most common problem deals with the loan-to-value set up within the Product Type. The program asks for the maximum LTV for owner and non-owner situations. The program also requires that you indicate a dollar amount for the LTV. This would apply to FHA and jumbo loans that have a "tiered" LTV setup. For most conventional loans, this question does not apply, so we teach you to set the dollar limit to two times your largest maximum loan amount. If you leave the dollar field blank, the program will calculate 95% of zero. Ninety-five percent of zero is nothing, and you will be stuck.

If your Products are not set up and you get stuck, press <F6> and key down so you can delete the Product Type. This will eliminate the program's edits so you can correctly set up the Product Type.

Coach's Corner July 1, 1997