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FHA loans closed in 15 days - Say it isn't so.... - A FHA loan Rant

Time is $$ Money $$

Time is Money

How many times have we heard that time is money??? One thing that I keep hearing is how long it takes to close FHA loans. Just the other day, Michelle Gibson wrote : FHA loans approved & closed in 15 days? -

I have been doing mortgages since 1992 and my first FHA loan was in 1993. On average, up until this past year, they could easily be done in 30 days or less. The typical time was 3 weeks. There are too many bad rumors that surround how FHA mortgages work and what they are all about.

The main problem is that it's not rocket science and it never was, but that many loan officers never did FHA loans up until the last 12 months.

On another note, it doesn't matter if it's a FHA loan, a conventional loan, a VA loan, or a USDA loan.... it all starts with the loan officer, period. Here are some things to keep in mind....

The loan officer....

- needs to be on top of today's mortgage related changes on these programs.

- needs to not only educate the borrower, but the realtor about the different types of mortgage programs.

- needs to communicate with all parties involved. That means speaking to the borrower, their agent, and possibly the listing agent and the title company. With the new recent changes regarding time of new disclosures, this alone could and will delay some closing in the future. I wrote about the MDIA changes, the Mortgage Disclosure Improvement Act.

- needs a good processor, reliable underwriting staff, and closing staff. Not every company is equipped at this spot, even some of the larger mortgage companies such as B of A or Wells Fargo. Those companies are more volume driven.

- most importantly, needs to take an very good mortgage application. When it comes to qualifying the borrower, that loan officer needs to ask more than just the basic 3 to 5 questions. Questions that should be asked when qualifying a home buyer.

now...do it now & then wait

Now my biggest issue…..

The whole real estate and mortgage process should be a team effort. It shouldn't matter if your realtor referred you to your loan officer or if you found them on your own. But when things go bad, people want it now, not tomorrow.

Just the other day I had a closing in which I actually won the loan over Weichert Financial. I was referred by another loan officer, because he couldn't do loans in Long Island, NY. Overall, I was able to reduce this borrowers closing costs by $2,100. We ran into an issue with the appraisal, that had comps with above ground pools. We had to reduce the appraisal by $5,000. The realtors were up in arms and the borrowers lawyer was all over my case, telling me that pools cost money. This is a lawyer who does not understand HUD and FHA loans or appraisal requirements.

Secondly, now all parties involved where yelling at me and bothering me every day, wanting this taken care of now, yet nobody offered suggestions. I told them to schedule the closing for next week. They said they wouldn't until the issue was resolved. I said we could run into problems if a date is not set. Nobody wanted to listen to me. And the lawyer questioned the buyer, asking him how he found me, that I was going to delay this closing until the rate expired, and then raise his rate. He put this in an e-mail.

Conclusion : Let me skip to the end..... the borrower calls me after closing, thanking me up and down. The end result was that we had to reduce the sellers concession by $5,000 because of the appraisal issue. I gave a lender's credit of $1,000, that actually cuts into my commissions. But during this whole process, the realtors never offered a solution, let alone a small piece of their commissions. Hey people, I don't believe in giving up commissions in the beginning, but in order to make a deal work, this is a business decision. Besides, do the math. This was a $390,000 purchase price with both sides receiving 3%. Do you really think $500 from each side would have made them sink and swim?

Lastly, more interesting, which it all makes sense now, to why I was thrown under the bus once the appraisal problem occurred. The realtor referred this borrower to the her lawyer. I just found it unprofessional, especially if you read his e-mail to the borrower. Things happen and we all need to work together. The funny part, Weichert's approval? It expired a month ago and never mentioned any appraisal conditions what so ever. hhhhmmmm... The main question... Who had whose main interest at hand? I always have my buyers best interests. Now I have a client for life who has already referred me to another buyer.

REMINDER : FHA loans can be done in 30 days. I closed one a month ago in 12 business days. So it can be closed in 15 days. But each borrower is different and this won't happen all of the time. And you need a loan officer that is on top of their game and not just an order taker or one that makes promises, but who truly understands communication.

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 09/04/2009 11:08 AM

Comments (15)

FHA Loans in the Mortgage / Finance Channel

fha loans, fha mortgages, fha closings, fha settlements, fha loans closed in 30 days, closing problems, time is of the essence, mortgages

Originally posted at: FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware: FHA loans closed in 15 days - Say it isn't so.... - A FHA loan Rant

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15 Comments on FHA loans closed in 15 days - Say it isn't so.... - A FHA loan Rant

SEP

You are right. Unfortunately, too many mortgage brokers rush towards the end of COE instead of doing a good job of pre-qualifying client first.

Jeff, that is SUCH a shame. I am so sorry to hear that the agents would throw you under the bus, when you have NO CONTROL over the appraisal.

Teamwork makes the deal happen much easier. Rather than place blame, we should all work together to come up with solutions, even if it means us losing a bit of $$. In the long run, if the deal didn't close, then NO ONE wins, right?

This is a lawyer who does not understand HUD and FHA loans or appraisal requirements.

Go figure!!

Jeff- Go Team!!. I totally agree about everyone working as a team. However, in my humble opinion, where it all starts is with the Buyer. Without the Buyer none of the challenges, nor the sale, nor the lawyer, nor the agent, nor the lender would have been involved. From there it is a team effort between all the parties to pull it all together for that Buyer. One bad link in the team and all he-- breaks loose.

Unfortunately many many parties of a transaction do not understand the 'communication' thing. They think that without them and their 'attitude' that the transaction would not be. A challenge to them always has to have a face to blame it to and never is just a 'normal' hiccup (at least nowadays) that can surely be surmounted IF they would stop placing blame and come to the challenge with ideas to work thru it. When communication breaks down because a challenge pops up, when blame becomes the name of the game, when anger and exasperation becomes the 'point of communication' then no one wins. If we all, as a team, would use our 'professional' decorum to see that the Buyer, who is the reason for this transaction in the first place, has a good outcome in spite of the challenges, then and only then does a successful transaction take place.

I certainly can understand your frustration as we all have had a 'bad link' in our team efforts to help a Buyer.

Jeff - Prior to MDIA we have done them regularly in 7-10 days and our fastest was 7 days. Even with MDIA we are averagin 20-23 days. It comes to what you mentioned in having your team working together and my opinion and most importantly control of the client.

JP Lowry--President--Preferred Financial Funding, Inc

Jeff, the underlying theme is that we do have to work together. It's not always fun but it is necessary. I'm glad it worked out for everyone despite themselves!

EDWARD & CELIA.... . isn't that the truth. If we prepared the deals upfront, many problems wouldn't occur. thanks

MARNEY... . being thrown under the bus because of an appraisal that I had no control of... AND, which was actually done by Weichert Financials appraiser... but the part that the realtors, after I left a few hints, to give in a small part of their commissions. I even mentioned this to the lawyer, who laughed at me. Now I know why, since the realtor referred this borrower to this lawyer.

Overall... BINGO... if the deal doesn't close, everyone loses... but the biggest lost in my opinion, the borrower loses the most. thanks

TOM.... . lol... and what was funny yet sad is that the borrower understood all of this. He went onto HUD's web site and reviewed some of these appraisal guidelines about pools and above ground pools.

MARTHA... . sure, you can look at it that way, that it starts with the buyer. But in many of these transactions, the buyer suffers the most when you have these so-called professionals who seem to worry about their pay check the most. And yes, it's obvious to me in some cases. And I soooo hate the blame game.. and yes, "team"... thanks for your feedback.

JP... . gee, I did 1 a year ago in 5 days and 1 in 6 days. But in all honesty, could we do this on a continuous process? I know I couldn't. A 15 day closing, I usually need to stand on my head. And 99% of these closings that I do that happen so quickly, is because I would pick them up after a lender dropped the ball... and this can be harder, because you have to jump into the middle of the deal.

BARB.... . you are 110% correct.. it's not always fun, but it is necessary, especially to make the best of it for the borrower. This poor borrower was in the middle of a bitch session, and that just shouldn't happen. People pointing fingers just to make themselves look better... or feel better. thanks

Well that isnt a good experience. I dont like to part with my commission either, but sometimes it does happen and a decision has to be made. The last time that happened to me (around March) was on a Short Sale. The listing agent knew we would be short and was not going to budge one bit. I told him that this WILL be resolved before my customer gets to the closing table because thats now how you do business. To think he wanted to negotiate the deal at the closing table because he figured the seller would give in and spend more money. Whether thats true or not, its not how you end a deal. This is the part they remember the most... did the numbers add up, did we deliver on time, are they happy they purchased and went with YOU??? all good questions and if something goes wrong, thats what they will remember most. I had to put in a little over $600 and the buyers rep put in $1200.. listing agent... nothing at closing because he felt he paid enough out on the property to prepare it for sale. Ridiculous. Now I just know what to expect if we ever cross paths again.

Jeff,

I agree, if you want to close one quickly, you need co-operation. It isn't going to happen just because the L.O. is working hard. Everyone must participate. BTW, before MDIA, I closed an FHA in 15 days with an out of town signing. I'm not so sure I would get it done now without complete cooperation. At least there is no HVCC to deal with.

SEP

JOHN.... . to me, it's all part of business. It's that old theory, you have to spend money to make money. Thankfully I still made something on this. And the borrower, has already given my name out to several and has sent this blog to several others... and he will never do business with these realtors again or refer them. So they lost even though they paid nothing in this one. If I can triple my losses in the next 6 months to a year, then I am a bigger winner... and if I get a referral from those referrals, it's just a trickling effect... but this doesn't happen over night. But another reason why some of us are still in business. Stay in front of your past clients and those that loved you, will refer you. In this case, his first home and he will always remember me. In most cases, a client for life. That's what I want.. thanks

PATRICK.... . I think it can still be done for out of town closings.... 80% of my business is done out of state. We just need to educate all parties involved from day one... and yes, at least we don't have to deal with the HVCC... but we got smart. HVCC doesn't bother me like many... but I hardly do any conventional deals anyhow..

Jeff, very interesting story. Nice job and a good report for those that 'just don't get the process'.

SEP

People yelling at you? Gee, Jeff! That's so hard to imagine! Glad you got it done.

SEP

Jeff: Sorry to hear about your problem closing. We all have them and it's usually us who get the blame as we didn't get the deal done to everyone's satisfaction. The bottom line is you did. People will remember that. I remember a very difficult FHA loan I did in the Summer of 2008. We were 3 days late due to all kinds of stuff, some of it my fault. But the bottom line is we closed it and everyone got paid. I called the realtor recently and he was all warm and fuzzy. We are in this business to provide exemplary service to all parties. You did that in your case. Good job!

30 days if all goes well, but with mdia, i'm asking for 40 day contracts.

SEP

Jeff you are so right, Most FHA loans close within 30 days and the ones that do not can usually be attributed to inexperienced loan officers.

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