Home : Blogs : Marc Brinitzer : Marc's Blog

6 Reasons Your Next Loan May Take Longer Than It Should

Delays1 The way the real estate market has slowed, you would think lenders would be just waiting to pounce on and approve next loan that comes through. You’d think our “turn times” would be faster for underwriting, drawing loan docs, funding and recording. You’d think loans should virtually fly through the approval process. You’d think all that, and yet you’d be wrong.

So just exactly why are loans taking longer than they should right now? Here are 6 reasons that come to mind:

Reason #1: Layoffs

Like any business, when things slow down the mortgage industry lays people off. This slowdown started in late 2005. Companies have had plenty of time to wake up and smell the coffee. Wholesale lenders have laid off underwriters, doc drawers, and funders and attempted to restructure their processing centers. Most are now under-staffed and service is suffering.

Reason #2: Seasonal Factors

Thanksgiving, Christmas, New Years, and Presidents Day all punch holes in the work week. People leverage time off by combining vacation days and holidays, causing further staffing shortfalls during these times. As I cough and hack my way through the last few days, I am reminded of the toll that colds and flu can take on the remaining workforce.

Read the rest of this post »

Posted by Marc Brinitzer on 02/21/2007 02:34 AM

Comments (17)

mortgage, lending, refinance, sacramento real estate

17 Comments on 6 Reasons Your Next Loan May Take Longer Than It Should

FEB

2007

Marc

Like sands through the hour glass, so are the days of escrow....

This is sooo true..

Simple things that normally take a few weeks are now taking longer than a month. Sure there are layoffs, mergers, consolidations, but I think the biggest speed bump is the scrutiny under which every file is being underwritten.

If its not Full doc with an LTV less than 80%.. you better plan to take a number and wait.

Thanks
Martin

:-)

So your telling me not to hammer to hard on my mortgage partner concerning time!

MAny lenders and servicers are also concerned about portfolio risk and are placing tougher fraud controls and are looking at each deal a little harder.

Since my husband is an appraiser, I am seeing firsthand, the problems with appraisal values this year. It is really getting tough to find the comparable sales statistics. Guess we'll all remember 2006.

Excuses. How do you fix the process? The client does not care about President's day per se.

In my opinion what I have seen from our lenders here in SE Georgia is that the underwirters are really putting deals under the ole magnifying glass. I can understand it since Georgia is in the top 5 of states in foreclosures but I also know that the reason for that is due to some of the creative loans that have been structured. But yet things on the financial end are taking longer....

It looks like the mortgage industry is undergoing a correction as well. I have been reading a lot of articles about the subprime lenders going out of business! It think 2007 is going to be a year of correction in many segments of the real estate market in the US.

DANNY

Hammer away... soon Mortgage Partners are going to be hammering Realtors to get more leads in!

I'm experiencing these exact delays on a few of my contracts. Luckily the sellers are willing to wait in the current market.

At least now I have more information to explain the delays to the LA and seller.

More field reviews, desk reviews, fear of buybacks for lenders. There are a lot of reasons the process can take a bit onger.

I'm with Rob Robinson on this one - these are only EXCUSES.

If one of my Lenders tried these stories, it would be the last time I used their services.

Do problems arise - sure, all I want to know is: if you're aware of it, what are you doing to fix it?

Luckily here in California lenders stil have excellent turnaround times on underwriting. Subprime lenders are looking at the deals a little more closley now but you cant blame them.

Eddy

I agree with Rob & Marc.... excuses. And on top of Eddy's comment, he is still having success in California.

Overall.... loan officers.... I don't have problems. Not to sound conceited, but a lot of it is how you put the loan together. I just turned two loans in. Both sub prime. One extremely hard.... from start to funding, 12 days. A sub prime purchase, 5 buisness days until closing. Both again, sub prime. One in NJ and the other in NC.

Not pointing fingers, but close to complete packages, no matter how the market is, will get done with reasonable times. May it be A paper, sub prime, FHA, etc etc. What would hold mine up? Title, slow appraisal, or my processor dying. Again, getting back to what Marc and Rob had mentioned, excuses. And if that lender is slow, go find another one. Just my .02.

True, there is no excuse for not turning in a full package and letting the borrower know exactly what docs are needed.

The things outside an LO's locus of control are the need for field reviews to satisfy value requirements, additional comps being requested in a particular development, and other value issues. Many lenders are requiring Dssco reports or Hansen Reviews with files and if a value is not validated, a field or desk review is required.

Thanks to each and every one of you for taking time to comment. I didn't expect this post to generate so much response. It sounds like many of you are experiencing these types of problems.

I fully expect that we will see more of this as the subprime shakeout worsens and cracks begin to show in the conventional loan portfolios. There is a huge movement to correlate data on borrowers, loan officer, processors, and agents in the effort to spot fraud trends before they manifest themselves as defaults. Data mining companies like Corelogic, ChoicePoint (MARI), BasePoint Analytics, and DataVerify are enhancing risk management products geared to the mortgage industry's need to crack down on abuse.

Rob, Marc, and Jeff, certainly, bad lenders will use these and other creative ideas as excuses for not performing. But that's my point: "work with a knowledgeable, experienced lender. This is no time to hand your loan over to your nephew who just got into the business."

Perhaps even more important is this. Our clients satisfaction can be measured in the gap between what they expected and what we delivered. The wonderful thing is that we have control over both. So if we think the road may get a little bumpy, wouldn't it be smart to let them know?

Defaults ---- # 1 reason loans are taking longer - all the players are closing up shop because of huge loses...... LP

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?