So the offer has been accepted and the closing date is 27 days away. Seems like amptle time, right?
Depends
If you want that file to close on time there are FIVE KEYS to drill into the borrower that will help regardless of the lender. You see without the FIVE KEYS there is no lender who can be guaranteed to close the best loan on time.
The mortgage broker in most cases will take care of ordering title, ordering insurance, ordering the appraisal, and scheduling the closing but there are certain things a buyer or real estate agent can do to expidite and if they do these things, regardless of who's responsibility it is, the loan can almost be guaranteed to close on time.
1) Get the borrower's RESPA documents and any other required initial documents back to the lender the day after receiving the package. In today's climate most packages are sent to the borrower overnight. My company includes an overnight envelope with our UPS label already affixed so there is no excuse. If the borrower has questions they should FIRST review the package with the LOAN OFFICER. Sorry, as good as the real estate agent may be there will be dozens of answers the borrower can get only from their LOAN OFFICER. This does not mean the agent cannot review the loan with the borrower but just like we don't want loan officers writing offcer letters and buy/sell agreements the agent really does not need to be making changes or comments about the loan documentation. Don't be offended - there is no way you can possibly know all the answers.
2) Do not put the appraiser off. In fact, if the appraiser has not contacted the borrower within twenty-four hours call the lender and see if you can call the appraiser directly. Most appriasers will call immediately to schedule the appraisal so this generally isn't an issue but keep in mind it may be.
3) Gather documents the lender may not have asked for even if you applied for a loan which does not require them. If you are with a manual underwriting lender they may come up with some crazy stuff days or hours before closing. Get copies of all of your income and assets documentation. Find your most current statement from all of your credit cards and loans. Keep ready the last two years of income tax documentation and all pages of the last 12 months of your bank account(s). You may not need these but you should always keep them together and ready anyway.
4) If you have had any judgments or collections against you including a divorce or a deceased spouse which may come into play make sure you have all of your legal documentation at hand should the need arise the morning of the closing. Bankruptcy discharges and all the documentation that go along with what was supposed to have been included in the bankruptcy are very crucial.
5) No matter how hungry you are or how long it has been since you sold a home do not drive the loan officer or processor nuts with phone calls. A once a day conversation is all that should be required to get the information you need. If you are working with a lender like Novation Mortgage you'll probably have a website you can login to for instant updates about the status of the loan. Everytime a loan officer or processor receives a call and they have to answer a question that means they have to stop working on their current task (which may have been yours and someone else called), get back into the mindset of the loan you are calling about and probably do some research to answer your questions. That means your five minute phone call could cost twenty minutes of work time for the processor or loan officer. Multiply that times about 10 calls per day and that's how phone calls clog up the system.
Is this a guarantee that your loan will close on time? Hardly. There are title issues, insurance delays, lender workload (especially near the end of the month or the end of the year), appraisal issues, and even attorney issues. The keys are to remove the five possible delays.
Generally the top causes of loans being delayed in closing are:
1) Borrower not being expedient in returning documents 2) Seller slow (HUD especially) in returning executed agreements/addendums 3) Insurance agents/companies returning incomplete or incorrect insurance policies (you have NO idea how often this happens) 4) Borrower not being able to provide the necessary documentation and thus losing their qualification for the original loan program 5) Appraised value coming in lower than the contract value 6) Changes in borrower's status: marital, employment, income, credit (somebody is GOING to buy a new truck or quit their job or leave their spouse) 7) Government contracted closing agents (argh) who don't (a) care about your closing and (b) have a clue about what they are doing because they worked at Timmy's Ribs and Burgers last week.
I hope this gets your mind thinking about how to get it to the table smoothly and if we all communicate and work together without acting like evil step-sisters we can do it!
Ken Cook - Georgia - FHA, USDA, VA and Conventional Home Loans (678) 439-8683
15 Comments on Five Keys to Quick Closings from the Lender's View
DEC
10
2006
I found that writing a targeted closing date on top of the application when I write the loan gets the back office focused to that point in time. Another great deadline is the rate lock. Keeps them all on board.
You may have a target date to close, but we as agents write contracts with time constraints that buyers and sellers take seriously. When lenders and closers only consider them target dates that can be a beginning of the troubles that hinder a timely closing. No matter how efficient I am at doing my job...showing property and doing all that I can for my client...that clients last memory of the transaction is the closing. If it happens to be one of those from hell then it will reflect on me no matter how hard I do to try to stop a train wreck.
Hi Vicky, as a lender and former loan officer, I can assure you I never waited on me. And, although you may never have felt the sting of a missed closing date from my chair, I can assure you we are shouted upon! Lenders want those files out of the pipe because it can be many days or weeks before we get our commission ... the broker gets theirs within a few days but lenders have to sell the loans to get their commission. Trust me when I say we prefer expedience! Thanks for you comments. You may want to read my post posting about the world bigger than my own. Buyers, on the other hand, very often (and other people involved with the closing) fail to realize the mountainous amount of work required by the Loan Officer, the Loan Processor, the Appraiser, the Underwriting Department, the Quality Control Department (unfortunately because of the massive amount of fraud today) and other people involved in writing the check for the purchase. Again, thank you for your comments! You are not alone when "it happens to be one of those from hell". We are in this together when there is an agent involved.
I'm only doing loans in California at the time, but I think it's the same...we don't actually NEED the initial documents back at all. We only need to show that we sent them in order to be compliant.
The number one thing I think an agent needs to do is to work with a lender who IS his/her word.
I don't expect the Realtor partners I have to do anything once they've referred a client, with the occasional exception being asking for a little support. Part of being a trusted home loan expert is being able to keep the team moving and make it easy for the Realtor.
Everyone wants things done quickly....it's the American Way! As has already been stated, all parties need to be aware of the time limits on things.
It is essential that the loan officer do his/her job and have the sense of urgency that is needed to close on time. We must communicate that sense to the borrowers.
Ah Joey, 27 days IS a long time! Twenty seven days will be minus eight for weekends is 19 ... it just got shorter while we were chatting. Maybe the loan officer works on weekends but the lender, the title agent, the insurance agent, the closing agent ... nope. No weekends.
It doesn't really matter which state you are in (I'm a lender, not a broker) no docs ... no compliance ... no loan. That's called RESPA (Real Estate Settlement and Procedures Act of 1967) If your borrowers have been thinking they could just hang on to the docs and not send them in or say "Oh, I sent those last week" that could be a problem. Take this as education and not picking on you but I quote you when I say "make it easy for the Realtor". Make it easy for whom? How about the client? See? Your blood pressure just went up and it should not have! I am on your side, remember?
P.S. I feel your pain and I carry it, too. If someone told you that you don't need the SIGNED RESPA documents to CLOSE the loan ... question them. Or maybe you work for a Federally chartered bank?
Great information, Ken (you're bookmarked for future reference!). Helpful to know a bit more about what goes on behind the scenes. I have been fortunate to work with some very good mortgage officers who kept me informed even when there were delays.
The point about the appraiser is good - I have run into several problems where the appraiser was slow, did not respond in a timely manner (or was overworked) and took forever to get the appraisal in to the bank.
But, I do question two points. Don't call me everyday, I try to end every call with information on when the next activity will happen. If you call on Monday and I tell you the client just promised the missing document will be here Friday morning, don't call Tuesday, Wednesday, and Thursday, call at 1:00pm or Friday! If you want to help call the client and make sure he keeps his word.
Unless you're returning her call don't ever call my processors! Work stops on every file when you interrupt the processors. But, if they call you return the call promptly, it's important.
I'll answer my phone at any reasonable hour 7 days a week, but don't get upset if I can't or won't give you details with out being on my computer or having the file in front of me. Personally I refuse to talk about details with out the file, paper or on line, because I work with many clients and while houses may be unique credit applications, and FICO scores, interest rates, APRs and loan doc's are all variations on the same theme,. If I let you push me for the rate we locked a loan at and I say 6.250% but it's 6.375% who are you going to ask to pay the difference? If you demand to know when a lock expires and I say I think it's the 14th and you tell the client it's alright to leave town but the file shows the 12th who's responsible? I might have half a dozen locks expiring on the 14th there all numbers. Don't trust any one who knows specific details off the top of their head, they are either making up a lot or they don't have enough business to be competent. In short, call me anytime for general information, call me at the office for specifics or let me know ahead of time so I can have the details with me.
Excellent post. As a loan officer, nothing gets under my skin more than when Realtors start throwing tantrums about closing quickly, but they have done nothing to ensure we have all the things necessary to complete financing. For instance, if you know you want to close quickly, there are just some basic items that should be ready at the press of a button and not take days to obtain. A few of the ones not mentioned:
1) Buying or selling a condo? Nearly every lender will do a condo questionnaire and will require a copy of the buildings hazard insurance. As a listing agent, you should already have the contact information handy of who the lender needs to call. Better yet, the condo questionnaires all have the same questions for the most part, so have one pre-filled out! Seriously, you know how many units are in the building, how many are rentals, if there are any lawsuits pending, etc. You should also know who the insurance agent is so we can get an updated copy of the insurance certificate.
2) Title? I am finding a lot of seller's attorneys won't do the title search ahead of time. We need it and when we have to wait extra days, it slows everything down. Second, you would think the sellers would want to make sure there is a clear title BEFORE the clock starts ticking on a purchase so they have time to get any issue settled.
3) Get us a copy of a God D*man contract!
4) ALL CHANGES TO THE PURCHASE TERMS NEED TO BE COMMUNICATED TO THE LOAN OFFICER FIRST. Seriously. No you just can't decide to offer a $5000 repair credit at closing without letting the lender know about it. If there are any credits, incentives, offers, or anything that is even remotely out of the ordinary, just let us know!
I get the funny feeling that most Realtors believe that loan officers are just playing golf all day and don't respect deadlines. It has been my expreience that we work hard to meet those deadlines. After all, we don't get paid unless their is a closing.
A little note for seller's attorneys and lisitng agents: the underwriters of large lenders (the conforming A paper lenders) are very careful about fraud and double check EVERY aspect of a loan. Lenders are very careful with their money. This takes time.
Nice detailed list, particularly the items in #3. Borrowers and their buyer's agent need to be organized, and with this list they can anticipate potential last-minute roadblocks and be ready for them.
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So the offer has been accepted and the closing date is 27 days away. Seems like amptle time, right?
Posted by 
I must point 
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I found that writing a targeted closing date on top of the application when I write the loan gets the back office focused to that point in time. Another great deadline is the rate lock. Keeps them all on board.
Excellent post.