OK - this is a funny way to begin a blog - but I'm exhausted! Just plain out and out drained. Normally this state of tiredness would have me beating a path to a doctor. But I don't need a doctor, I just need a lender who can close a loan in a timely manner. You see, in addition to everything else that I do to complete transactions, I am being confronted with host of escrow issues that I've never seen before. I find myself on the phone constantly trying to prod the banks to close loans that I've had commitments and appraisals on since the beginning of the last century. And if this is stressing me out - some of my clients must be ready to jump off the Tappan Zee Bridge.
The problems with lenders has been fodder for several recent blogs. Although I have a host of war stories that would be funny if they weren't such a threat to each transaction, I won't bore the public with the gruesome details - YET. But what truly amazes me is the arrogance of the banks. After one disastrous situation where a closing was postponed FIVE TIMES and over one month, I ended up speaking with some of the powers that be at our friendly neighborhood national bank. (Yes, I know that is an oxymoron and the sarcasm is deliberate!) Their attitude was atrocious. I was informed that "this is the new normal. You now need to count on 90-120 day escrows. If buyers and sellers are prepared for it -it shouldn't be a problem."
Right - not a problem. Sure! Tell that to families that have their furniture in storage, their pets in kennels and themselves bottled up in hotels for two to three weeks. Tell that to the person who must lease a temporary rental for a couple of months to bridge the gap. Tell that to the seller who is dumping their savings into the mortgage and maintenance on an empty home. I won't even go into the convenience issues and the fact that lives are on "hold" for what seems like an eternity. What about the expense? In a time where credit is almost non-existant and most people have no money to spare, this is a BIG problem. The expense is not "going away" just because we are told to expect it. While I am at it - I should mention that prolonged delays have the potential cost buyers their deposit. When all parties are acting in good faith - this is a non-issue - but one can not count on that type of good will in each and every case.
What the larger banks are really saying is "You don't have a choice - just deal with it." Perhaps they don't care because they don't think they have to. If I hear one more major player in these banks tell me about how "well capitalized" they are - I think I'll throw up.
Hey banks! I don't CARE how well capitalized you are. I really don't. If transactions are falling apart or are delayed endlessly it has a snowball effect - and that giant snowball could smother me and my clients. Your capitalization means nothing if you aren't LENDING in a reasonable and timely way. From a purely selfish standpoint - if I don't get closings, I don't get commissions. No commissions, no money, no money, no money, no food on the table and no mortgage payment. For my clients the scenario is similar. Seller's who have moved on are paying for two residences. The deal gets delayed - that's bad enough. The deal falls apart, they are back on the market with months of payments and another looooooong escrow period looming. How long can they float on their savings before they too start to default on payments?
The large banks had better start caring. They may think they are "too big to accountable" but there are consequences. There is one large bank with which I have four escrows all of which have had serious closing issues. At this point - I will no longer accept a pre-approval letter from this bank. If a buyer comes to one of my listings with a pre-approval from said bank - they will be required to find another lender. By doing this I am fulfilling my fiduciary obligation to the seller - protecting the against an endless and dicey escrow. This bank is 100% off my list for buyers. If a buyer wants to use a loan officer from this bank - they MUST get a back-up pre-approval or I'm referring them to a more masochistic colleague.
Now - what good is that going to do? If you think that any large bank is afraid of little me - you are smoking something you shouldn't. However, more and more agents in my brokerage are doing the same thing - shunning the large and stodgy and embracing the small and nimble. The latter is more motivated to get the job done and customer service is not an afterthought with them. Our agents are sharing information about loan officers and mortgage brokers that we have used with success. You know, the "small fry" the big banks thought they were going to squash with their pinky finger. Ironically these were the banks that were NOT too big to fail and took no TARP money.
Instead of cleaning up - the large banks may find themselves being cleared out. Agents and brokers are slowly building relationships that navigate around these large cumbersome Goliath's of banking.
© 2009 Ruthmarie G. Hicks - http://thewestchesterview.com. All rights reserved.
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Ruthmarie.
Your outrage is palpable, and rightly so.
Fact is, when anyone enters into a transaction today we can give neither the buyers nor the sellers any assurance that it will ever close.
Sad but true.
The banking industry is killing the real estate industry, what's left of it. They'va almost killed the housing industry.