Talk IS CHEAP, KNOW THY LENDER!!!

Knowing the lender that is handling the loan for your clients is becoming more and more a crucial factor in today's real estate market.  With the ever tightening requirements to secure a loan, a small oversight can send you scrambling in search of a rescue ladder to pull your deal out of a fatal fallout.  Typically I suggest to my clients to check with at least three local lenders that I trust to get the job done right.  I have found in many cases that of out of area lenders do not show the loyalty or urgency compared to a local lender. 

I recently had a deal involving an out of state lender that my clients wanted to use because he offered them a great deal on the loan as well as a great rate.  We pended the sale with a 45 day window for closing at the sellers request.  My clients and I were agreeable to this and provided all documentation that the lender asked for within 3 days.  We were ready to close or so we thought.  The lender told me that my clients were pre approved for the loan and it just needed the appraisal.  The appraisal was done and sent to the lender with 31 days left to close and everything seemed to be on track.  I called regularly to check the loan status and after 16 days in underwriting, I wanted to know what was taking so long. He replied that the underwriter was back logged with several loans but assured me everything was in order and it would be done in 5 days.  At this junction I decided it was time to put a back up plan into action because I was losing my faith in the lender.  I told my clients that I didn't want to alarm them but this lender was taking much longer than what is normally needed to process a loan and I wanted an emergency plan in place.  After five days I called back checking to make sure the loan was coming out of underwriting and he told me that It was not back yet but he would check with the underwriter and call me back.  The next morning he called to tell me there was a problem.  In the process of getting documents from my clients they had accepted tax returns that were handwritten on the IRS forms.  For 6 months it had been the bank's policy that tax returns are typed before being submitted to the underwriter.  They now needed official transcripts from the IRS of the tax returns in order to process the loan. This was something that should have been caught and easily corrected when we had a 40 day window.  As you can guess, I have lost all faith in this lender. With a 9 day window, and in need of the transcripts, things were starting to fall apart.  After several phone calls including one to the regional manager for the the lender, I discovered that the underwriters, had only received the loan application and appraisal only 2 days before he called me to tell me the problem.  As you can imagine my clients, myself and the sellers agent were in disbelief.  The loan officer had put my clients on the back burner since he had such a huge window for closing and then lied to me about the status.  My clients immediately were in a panic because they really wanted the house.  I told them we had two options.   Try to extend the closing date and pray the seller would agree and leave it with the same bank or go to the back up plan with the knowledge they probably would not get as low of a mortgage rate.  We optioned to the back up plan with one of my local trusted lenders who was willing to accept the the previous appraisal and all their personal documentation.  He pushed the loan through within 72 hours, got my clients and comparable rate and we still closed on the original date scheduled.

I feel it is a must to have lenders who you know and trust your business to in order to keep control of the transaction.  When you have trusted lenders to work with they work harder to keep earning your return business.  The next time your client wants to use an out of area lender, make sure they know and trust the lender or they could be in similar circumstances.