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Credit reports expire in 60 days!! Realtors Be(a)ware

By
Mortgage and Lending with First Meridian Mortgage

So  now credit reports expire after 60 days.  it really just isn't enough time!! let us say we pre-qualify a client and they have a home in mind and they just need to know if the numbers work.  All is cool.  it takes let us say 3  days to get an offer accepted and a home inspection scheduled.  Contracts are signed by the buyer and seller within another week. we are now 1 1/2 weeks into the transaction.  the client applies for a mortgage.  Because of the new disclosure rules we can't spend the clients money for 3 days, so there is a 3 day delay on the ordering of  the appraisal, and it takes another week to come back.  We are now 3 to 4 weeks from the credit report. Now we can submit the file for underwriting. Unless the closing is too take place right away and there are absolutely NO issues with the title, seller moving out, client needing more documentation... your client most probably is closing in another 3 to 5 weeks. more than 60 days! As a mortgage professional I educate all my clients not to use their credit cards, make any large purchases or allow someone to check their credit. The problem is that even if my clients follow my instructions to the letter, what if something happens beyond their control,or what if they made a mistake, a poor error in judgment? and trust me I have tons of stories like this. I have one this week in my office, the clients score went down 75 points because he  forgot to mail in his car payment and he had a 30 day late.  we had to get this file closed in 7 days (closing is tomorrow).

In my office we are running credit at the 45 day point. This way if there is a problem we can do a rush closing or be able to fix the problem.  i can just imagine what the Realtors would say if a closing was canceled because the credit tanked within a few days of closing, and I wonder if the client would be entitled to his down payment back if he had already provided a mortgage commitment to the seller.

There is legislation just waiting to pass which will require a credit report to be run within 3 days of a closing to insure that no new credit was initiated. I just can't wait to see how many deals die and how many rate locks will be blown because of changed credit circumstances!!

Comments (4)

Lori Liveston
Virtual Homes, Real Estate - Waltham, MA

Wow!  I knew that credit reports were only good for 60 days but having to re-run credit that close to closing is ridiculous!  I understand the reasoning behind it, but it's one of those initiatives that looks good on paper to those who don't have to deal with the implementation. 

Mar 18, 2010 02:53 PM
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY

Hi Ann~  Nothing surprises me anymore!  It's funny how often the rules keep changing!  It is so hard to even try to keep up!

Mar 18, 2010 03:00 PM
Ann Zeilingold
First Meridian Mortgage - Spring Valley, NY

You are right, but 2 years ago all credit, income, asset documents and the appraisal was good for 120 days.  sometime last year it was reduced to 90 days, and now it is 60 days.  you don't know how fast 60 days goes and clients get so upset that you are asking for more stuff and most realtors just expect me to be a miracle worker and I have to deal with that too!!

Mar 18, 2010 03:00 PM
Kevin Dunlap
Trident Investments Group - Las Vegas, NV

I have always thought you ran credit close to closings.  This is why Realtors have said for years not to make a major purchase until after you close, as that new purchase could hurt your loan and your DTI Ratio.  Haven't they been doing this for decades?

Mar 18, 2010 03:42 PM