I am currently working on a deal. The deal’s origination date was June 18. Settlement deadline WAS Monday. That is 7 weeks.
We, the buyers, did not make our Settlement Deadline because the underwriters didn’t get their review of the conditions done in time.
I’ve seen this happen on occasion in my almost 10 years in the industry but it is the exception, not the rule. When the economy took a turn for the worse and the real estate market “crashed” (as some call it), it seemed to happen a little more often because mortgage lenders grew quite skiddish about taking on any new potentially bad loans and wanted more time to make sure every “t” was crossed…
But, we agents adjusted and started allowing extra time in our contracts for this.
Now, the market seems to be getting back to a more normal pace and all this year, lenders have been promising me that they can do a loan now in just 2 weeks. I am still contractually giving my buying clients at least 6 weeks which seems to be a safe time frame but, over the last few months, the loans on my deals have been coming in sooner than the time allowed and we have been closing early. (Closing means funded and recorded with the county records)
I guess I am writing this because of my frustration. We had to extend our Settlement Deadline because, while they had plenty of time, the underwriters just didn’t get to us and potentially caused my clients to default on their contract. Luckily for us, the sellers agreed to the extension.
Wednesday, 5 days before our deadline, they promised to have it in 48 hours. Friday, they promised to get to it over the weekend. Monday, the day of our deadline, we had to extend becaue they promised to have it the next day. Tuesday, 1 day into the extension, they wouldn’t even answer their phone. The loan officer and title company were both trying to call to get a status update. No way!
Now, we extended a whole week because we just don’t know what to do or when it will be finalized and the sellers are saying it better go by then because they will not extend again.
I called the loan officer working with the company that will be servicing the loan, and while he is frustrated also, I grew increasingly displeased with the words coming out of his mouth. Ha ha~ kind of.
I was asking him if he ever mentioned to them that they were making their client default on their contract. I believe he started to sound a little huffy as he said he hadn’t mentioned that because,
“they don’t care about that. We are asking them to give us their money so we are at their mercy. We want their money
so we have to just jump through their hoops because they don’t have to give us their money.” (I am paraphrasing because, maybe,
I was listening more to his tone and getting frustrated with the gist of his words possibly more than his actual words, (–in his defense).
Ok, here is my problem with this. Yes, it is their money and yes, they don’t have to give it to us, —they have the right to examine and consider their risk. But, we didn’t come up to some random person in the street and start begging for him to give us some money.
The second they put the sign in the window, “Money to Lend” they became a solicitor/servicer. They aren’t deciding to give us money for this mortgage out of the goodness of their hearts. This is a business transaction and they will make a profit on the transaction. Buyers are the consumers and because of that, lenders automatically put themselves in a position to owe their clients some fidiciary responsibility! They have compromised my —thier client‘s position which could potentially cause these people to lose, not only their dream home, but their Earnest Money, inspection costs, AND loan origination fees– yes, they actually paid to be subjected to this type of treatment.
These particular clients are more than a good risk. Great, stable income, excellent credit scores, 20% down payment, and a substantial savings account balance. This loan is a no-brainer and there is no reason for hesitation on this decison.
I recently closed a client that was a marginal risk. His/her (to protect the identity) credit score was barely in the acceptable bracket, no down payment, salary barely able to qualify for the house payment. He/she applied for the loan and we were sitting at settlement in 9 days!!!!
I’m frustrated. I feel bad for my clients. I know mortgage lending is tricky right now as all the lending institutions are sitting on too many foreclosures and dealing with too many short sales. I understand there needs to be a higher level of care taken when deciding who to lend money to.
But, this is a “TIME IS OF THE ESSENSE” industry. That’s all I’m trying to say in spite of my rant.
Everyone– REALTORS®, inspectors, title companies, etc., AND lenders, need to work together to make sure the consumer does not have their position weakened or compromised. Lenders should not have the right to disregard the contractual obligations of their consumer/client.
Please pay attention to the deadlines in the contract!