The only times I have had contracts not settle on time is when the pre-settlement walk-through shows repairs agreed to by the seller were not completed and hte seller wanted more time without an escrow.

Even that is rare.

I can't recall a settlement not going on time because of a lender failure.  Last minute surprises just don't happen with my buyers. 

I have had agents with last minute problems.  We had one last week, but it settled a day late.  I believe these problems could be avoided if the agents communicated better with the buyers.  Too often the agents leave the financing totally in the hands of the loan officer.  With many mortgage companies that will only speak with the borrower, that is a real problem.  The agent is in the dark.  I can't operate in the dark. I have to know everything about everything.

Yeah, I'm a control freak.

Jeff:

What you described is the loan process in a perfect world.  It makes me feel warm and fuzzy too.  In the wonderful world of sub-prime and alt-A, it is quite different.

You are right. Communication is key. When a loan is delayed for whatever reason, everyone should be notified instead of surprised later.

Jeff,

I agree 100% with you, but lately odd things have happened to me, For instance, i'm sure you remember when a PQ was honored no matter what, well I have had deals all the way through underwriting and then got a call from the Rep, saying we suspended that product so we can't finish the loan, or I had a PQ and right before closing, the Rep came into my office and said that even though my Approval had a certain rate, he needed to revise it for the worse, because something in their end changed, so I almost never have a problem througout my entire loan, except for the lenders changing on me like underwear...

Tom Weiss

Lenn..... that's a great record also and I can see why, because you know what you are doing. Besides, you also know much of the loan process and when you might feel things don't seem right.

And being a control freak?  There is nothing wrong with this. My main point is, as a good loan officer, when something does happen.... he or she should be communicating to all three parties involved.... the buyer, and both real estate agents involved. This is the main problem.  

Thanks for your feedback. 

Unknown....  perfect world or not, it's the end result.  I don't care because things happen with programs in regards to Alt-A or subprime, again, the main point is communication. As I stated, things do happen that aren't under our control. What happens is some of these loan officers use Alt-A and subprime as their excuse, when it was more in likely something else. I have seen it all in 15 years. 

We both agree that no matter what the reason, communication is key.  My point here is that if you get a call less than 48 hours before closing, typically the loan officer knew ahead of time. That's if they stay on top of their pipeline. 

Tom W. ......  Tom, please read my comment to unknown.  My main point is that more loan officers will use the excuse of what has happened in the market as their reason to bail last minute.  Many of these loan officers are just trying to get clients into the door, at all costs.... then worry about the problems.  This is just my opinion.

There is no perfect scenario here.  I think it's ideal utopia and fantasy....HOWEVER, there should be no surprises....you're so right...communication is critical.

Good points Jeff and I agree 100% that communication is key along the entire process, good or bad news everyone involved should know what is going on. I am a very high touch LO, I have to be involved the entire process and keep everyone up to speed on the progress. With that said these are different times, as you know being in the business rules are changing almost daily and we are walking on thin ice with some of the deals on the table so stay on top of each file and see it through so the transaction stays on the right course.

Jeff,

As I see it the crunch time problems arise at step 7. I always thought processors were grossly underpaid and overworked, but a good closer is golden. Thanks,   Fran

Jeff, Great Post as always,

I want to comment on one thing.  In a changing market like ours, this is why it is so important for agents to be very careful who they work with.  I believe if a lender cannot perform what I consider to be the basic service which is get the deal done on time, and they made the promise upfront, then they should not be in our business.  I cannot remember the last time I closed a loan late.  Sure once is a blue moon even a good lender may have a problem to overcome, that could cause a delay but this is not a ongoing issue. 

The only time I don't close on time or have red flags is internet lenders who won't speak to us. Never a problem when they were with the preferred lender list we give them.

There is nothing that frustrates me more than a lender NOT alerting me to potential problems.  As soon as they spot them, I want to know about it!  I'm fairly reasonable and patient when I'm kept in the loop....

Before I continue....  all comments are definitely welcomed. But even though I gave an outline above, my main concern and topic of discussion is Communication. Not explaining that things do happen and even more so right now, as we speak. We all know that. It's communicating with everyone involved when something does go wrong and not contacting people last minute.  thanks.

Larry.....  lol  There isn't a perfect scenario?   As I am mentioning throughout this post and in the comments, communication is the KEY.  Nothing against you, but I am curious why people keep telling me that this business is not perfect, that things happen. I thought I outlined this in the post. 

I do appreciate you commenting and not taking this out on you. But maybe I should have left everything out and just said.... do you communicate when something goes wrong or do you communicate 2 hours before settlement?   This would have been more direct and saved me some writing.... lol  Thanks for stopping by.

Leo.... some people say that loan officers shouldn't be involved all the way. Since we are the initial contact, we should be. But I do let my processor process. But we need to be the ones that if something comes up, that we need to be contacting everyone. I wouldn't want my processor to do this. It's called managing your pipeline. Thanks for your feedback.

Fran.....  well, crunch time is a word or phrase I don't care for all of the time. Sometimes this can be avoided if the loan officer planned ahead and didn't slam everything last minute. Some processors are definitely underpaid and overworked.  thanks for your input.

Gary....  yes, it's important on who they work with. But you can't always blame a client if the loan officer is a smooth talker and loves to over promise. Sometimes it's hard to know this until the last minute. Thanks for the compliment.

Missy.....  am I an internet lender if clients are reading my blogs and then calling me for advice and or help>  Just curious, because I am on the internet. Or do you mean the tv commercials and other lenders that you go through a company, fill out a quick application, and they tell you that they will have 4 lenders call you.

Case in point in regards to your referral list, your preferred list. There is a reason why you have a list of preferred lenders.  They work well with you and your clients. End of story... you trust them and they have integrity, are honest, and communicate. I am just assuming all of this, from talking to you several times in the past.  thanks 

Sandi....   I totally agree 110%, hence the reason why I wrote this. Awareness. It comes down to communication. When someone sits on a problem, I have a problem with that. 

Jeff - Can you send a memo out to the rest of the Mortgage Industry telling them to "communicate"  If there is a problem... let us know... don't just sweep it under the rug and hope it will go away... sometimes we can help and others we can't ...   but geez give us the heads up... I get more hot air blown at me from B-C lenders telling me they can do something they can't....    THE TRUTH PEOPLE... TELL IT

:::exhale::::  Okay I feel better now... thanks :)

Jeff,

Your absoluetly right, Loan officers and banks both do this, and when they pull them in with leaders, they change everything last minute on them, one of my clients just had this happen, she was told they would give her a No closing costs loan, and when she went to close, her payoff was $270,000 and the new Loan amount was $291,000 and they still continued to try and get her to close, she didn't, and now I am working it for her, at least I won't change anything on her, I only need to make a living, not get rich off of one Borrower...

Take Care Jeff,

Tom Weiss

Hi Jeff - your title says it all and it's so frustrating when that happens.  When I use the lenders I know and trust, this NEVER happens, NEVER.  And yet with some other lenders, it just seems to be routine, and I've yet to figure out why.  Are they just afraid of the simple ways of communicating that there are issues to be resolved?  We'd much rather know that than to be left hanging in the dark, knowing something is wrong and yet not being told about it. 

Ann

I have worked for broker shops where I had to put down a fake earlier closing date to have any hope of hitting the date....

sad

Jeff, This is a pet peeve of mine, especially being on the receiving end several times in my life.  There is nothing more frustrating as a borrower (a Realtor too) to get a phone call the morning of or as your walking out the door to the closing, to tell you that you wont be closing.  At minimum 48 hrs you should know that file isn't going to close.  Communication is key with everyone involved in the transaction!

Jeff-With the closing of doors at American Home Mortgage last week, it REALLY screwed up 2 of the transactions that I had which were about to close.  That is excuseable becasue things like that happen, however, the seller (I am representing the buyer) couldnt understand why it couldnt close on time.  The loan had to be sent over to another institution to fund the loan.  Of course that wasnt easy because the new U/W wanted different docs.  The appraisal could not get released until it was paid for either.  Since I work with one hell of a good LO, this guy actually paid for the appraisal out of his own pocket and will try to recoup his money later. 

Besides those wierd circumstances, there is no excuse to not know far enough in advance when something wont close on time.  The 11th hour is totally unacceptable. 

Thanks for breaking the loan process down into those 7 easy steps.  You LO's sure have it easy with only having to do 7 things.  I thought you had to work harder than that!  :)

Desiree....   I agree, just giving the heads up. And this is where half of the problems occur in the mortgage industry that gives us a black eye, is the lack of communication. The other half is the bait and switch, which sometimes leads to the botched closings.

So....  if you can fund my operation, I can send out the memos...  ;o)  And why are you talking to other lenders?  lol   Thanks for stopping by. 

Tom W. ......  it's not even about changing things last minute, but those that tell people last minute that they can't do the deal. Or, delay if for 10 days or so, but last minute.  thanks for stopping by.

Ann.... it is sad that it does seem like it's routine for some of these loan officers and lenders to just pull the plug last minute. And this has taken place way before the current mortgage meltdown.  And not really sure why they just can't bring it to everyone's attention when something happens. My only thoughts would be because they don't want to get yelled at... lol  Or... maybe the lied in the beginning and they don't people calling their boss's?  who knows...

Tom B. ..... wow....  that's sad.  Thanks for sharing this. I have heard some bad stories on how some operate.

Kim.......  I am sure it's a pet peeve of many of us. Another reason why is because we end up getting questioned from all that are involved and I seem like I have to defend myself now and I didn't do anything wrong as of yet. Talk about being guilty before anything happens.

David K. .......  yes, this can happen. But this is not what I am talking about. David, what's going to be scary is that I would bet more loan officer's will use the mortgage meltdown as an excuse when things don't happen. What I would love to know is if they had over promised, taking a risk, throwing it up against the wall, knowing that they can fall back on this excuse. This is my fear..... and I am seeing some of it now as we speak already, in regards to some of the good faith estimates that I have seen.

So, you don't think we work as hard now because I only have some easy steps?  lol  Gee, I was hoping to find a job that had just 3 easy steps....  ;o) 

Great post. I agree communication is the key in the Real Estate  business  where time is of the essence.I asked a mortgage company for the mortgage commitment the other day, and he asks "What is that? Is it a preapproval?." I almost died.

Gita.... no, he didn't.  Ouch. I hope he was less than a week old in the business. If not, very, very sad...  Commitment date and settlement date..  both are very important.  thanks for sharing this.

Gita & Jeff,

If there are these types of people holding themselves out as professionals in our own industry, just think how scary it must be for the consumer. Thanks,   Fran

A big part of this problem is most Realtors and LO's don't front load the process. It typically starts with a Realtor driving a prospect around and finding a house without getting that prospect fully pre-qualified. Then when their prospect finds a house, they refer the prospect over to their preferred lenders/brokers and tell them they need to qualify for X amount of a mortgage with Y amount down. Then, you have an LO that is scared NOT to qualify Realtors referral (because Realtor will threaten to take business elsewhere) takes an incomplete application and keeps tweaking the decision engine until they get an approval/accept back from LP or DU. Then at the very end both Realtor and LO are screaming that they have a customer service issue at the end when they cannot document what the original approval was based on.

Crazy!!!

Of course this is not every Realtor and LO...the good ones don't operate that way. However, enough do and it hurts the industry.

Fran....  I totally agree and I always think about this. It is beyond scary. I am so glad that I am on this side of the fence because I have educated so many friends and family on what to look for and not just tell them so I can make a quick buck.

This is the other pet peeve that I have. How much can we blame on the consumer when they don't know any better. They are relying on the so-called professional to lead them down the right path. thanks for sharing this...

Tony.... I agree with this statement. Hence why I love blogging, just for the chance in getting to the consumer first, so they can be educated before they jump into this process. You hit the nail on the head when some of these loan officers try to get the client what the realtor had suggested. I just had this happen to me. The realtor recommended her client to her preferred loan officer. She qualified this client on a $200,000 house. But told the client that she needed a 680 to do 100% financing. So the realtor called me to see if I could help FHA. What's funny is within 10 minutes of the conversation and asking the right questions, this client didn't want to put her boyfriend on the mortgage and didn't want a payment more than $1,000 a month. I asked the right questions to determine this. I can only get her a $102,500 house. But this other loan officer could get her a 200k house if she had higher scores. Gee, think something is missing here?   It sounds like the other loan officer never asked the right questions. Or....  just didn't listen to the borrowers needs.

And yes, this is not every loan officer or realtor. But it does make you wonder and yes, it does hurt this industry. 

I agree, communication is definitly key in the mortgage business.  I have had quite a few loans that were delayed, mainly because the loan was pushed to the very edge as far as requirements...I call these the holy conditions loans....however, I have been thanked by clients and realtors alike, regardless of the delay in closing, for my communication.  While these deals were tough and stressful, I was the only one able to create the right "formula" to get the borrower qualified and into their new home.  I truly believe that it is the best way to be successful in this business. Not only were these realtors and clients pleased, but I have received more business from them than any of my other clients, sometimes easy two week to close loans, sometimes difficult ones that take a month.    

You know - when the market was CRAZY hot - if the "11th hour" issue was found - we just said - well the lenders are Soooo busy - they didn't see it until now.

But now that few can say they are SWAMPED processing Loans there is NO EXCUSE.  This is a GREAT time to separate the good loan officers from the crappy ones.  Period.  There should be NO excuses for the Last Minute "Ooops!"

Great Post Jeff, I agree that communication is the key to all relationships. We as mortgage professionals owe it to our clients and agents to stay on top of our pipeline's and deliver any news good or bad in a timely manor. On in house products there is no reason a loan should go bad in the 11th hour; but we all know when the loan is brokered as soon as the file leaves your office, so does the control.

Thank you for posting this information. I have been scouring the internet for information on delayed closings but everything I find is caused by the buyer. No one talks about what to do when the lender causes the delay. 

I am a first time homebuyer and experiencing this lack of culpability and communication as we speak. My loan went crazy the day we were supposed to close. That was 6 days ago. Closing is scheduled for today but we went all yesterday with no communication from the lender and no closing documents sent to the title company.

 My realtor and broker drove down to Dallas from OKC on Monday to try to sort things out but it doesn't seemed to have helped. They started asking for things on the original closing date that they should've known about weeks ago. The underwriter suddenly had a problem with something on the termite report but that was solved on Monday and yet, we still may not close today. I have done absolutely everything that I was asked to do in a more than timely manner. Yet, no one is willing to accept responsibility and my broker even tried to blame it on me!!

I am at my wits end and as a consumer, I am appalled. I don't even really know what recourse I have with these faceless people. If I treated my customers this way, I wouldn't have a job.