Can we get a 1 week extension please? I continue to hear that escrows are not closing on time.(not my deals of couurse:) I have come here today to offer my opinion on this subject matter. As we all know the times have changed. Many of the sellers in today's market go by the names Countrywide, Washington Mutual, and Aurora Loan Services not Bob aand Suzie Smith. The sellers are motivated to sell but at their pace and on their terms. Not only do they ask the buyer to get pre-approved through their bank to retain more money but they also take their time in opening the escrow.
Why does all of that matter? Changes in the underwriting standards and programs re-emerging are causing the files to get thicker. In the day of low doc, no doc, stated income, and stated life the meat of the file was the appraisal, preliminary title report, purchase contract and the credit/job history. The market was appreciating so rapidly that there was little problem with the appraisal, the credit is a 10 minute skim and the prelim is obvious. The only item of contention was the purchase contract. Fast Forward to now and the file contains all of the same items as well as income documentation, tax returns, bank statements, appraisals in a declining market, DD-214 for VA, Caivrs clearance for FHA, pest inspection reports, non occupant co-borrowers, Title issues because the bank took over etc. The file was an inch thick and is now 5 inches thick. Would you rather read a magazine with photos or a novel in fine print? That is the difference for the underwriters.
All of those pieces are very important for the file. So back to the bank taking their merry time to open escrow. When the bank delays the opening of the escrow a loan officer cannot obtain the prelim. Until the loan officer has the prelim they cannot send the file to underwriting. This can take a week to two weeks on a 30 day close with a five inch file, how could we close? The average business month is twenty business days. If ten are gone we leave ten to have the file underwritten, provide additional documentation, clear pest, get docs out, sign, fund and record each being 48-72 hour process. The math does not work. Standard FHA takes 45 days, add the prelim issue and again how would it ever be done.
I hate extensions as much as the next person but everyone looking to get financing is facing the same dilemna. We have to work as a cooperative unit to get the deal done. The finger pointing just gives the buyer a sour taste in their mouth. Buyers and sellers are indecisive, worried and nervous. It is our job as a team to state that these are the times and offer the information above to put it into perspective.
Does anyone know of a good doctor that does not have a great nursing staff? The Escrow Officer, Loan Officer, Realtor and Appraiser have to be the Doctor/ Nurse team to get things done. Working together to make the patient as comfortable as possible. I will be the nurse if that make others feel better. Effective communication and no finger pointing will lead to faster closings and more decisive decisions in this market. Edify the person that you are working with even if you cannot stand them. We as a country and professionals need the inventory to move. It is our job to ease the fears of the buyer and make it a smooth transaction. So the next time that an extension is needed smile to your seller, buyer, Realtor and Loan Officer, and remember the words above. Assure them that all is well and even workman's compensation gets the paperwork done at some point.
As Always thank you for reading...........Until Next time.
Matt Freeman
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