I keep hearing these bad stories about FHA closings, but really, FHA shouldn't be that hard. It sounds like the lender ordered loan doc's without getting all prior to doc conditions taken care of. Or they are so backed up that by the time they reviewed the signed docs items in the file were outdated. Even so, the loan officer should be aware of what items may be expiring (paystubs and bank staements) and make sure the buyers are forwarding the updated items as they receive them. I work for Crestline Funding, which is a Direct FHA lender in Irvine. I've closed FHA loans in 15 days (deals that had fallen out and I stepped in) to 30 days. The only deals that are taking longer are only because the banks selling the properties are causing the delay. Those deals seem to be a "hurry up and then wait" scenarios. But still, I'd rather be waiting for the seller than waiting for the buyers lender.

Regarding the lead paint issue, that is something that most likely was addressed in the appraisal. The loan officer or processor should have reviewed the appraisal to make sure there were no appraisal conditions. (when it first came in, which should have been in the first 7 days of escrow.)When this doesn't happen, the underwriter will eventually catch it, but only when the underwriter finally receives the full package. The reinspection shouldn't take 14 days. The appraisers I use can typically reinspect for any appraisal conditions in 24 hours.

FHA is a great program because of the relative flexibility in credit (FICO's down to 620) and low down payment of only 3.5%. 30 day escrows are easy.

I just had to come back for another comment after reading the comments from the frustrated buyers above. I'm hearing stories like this everyday but still think it is a matter of how thorough the loan officer is upfront. If the loan officer just requests all the documentation and then hands it off to the loan processor who evenyually  hands it off to an underwriter, who then finally reviews the file, then issues are bound to arise. A few years ago it didn't take much to originate and close a loan. DU (Desktop Underwriter from Fannie Mae) was great for "underwriting" on the fly. DU is still used, but lenders will ask for more information than the automated approval is asking for. Plus, bank statements need to be reviewed for unusual deposits, and credit issues need to be explained. The loan officer needs to act like an underwriter on day 1 of the transaction, and even "over document" the file in order to lower the chances of a "surprise" coming he day for the scheduled close date.

It is definitely challenging right now to close a loan. But I'm still closing FHA loan in 30 days or less. When issues have come up we are far enough ahead of the time line to resolve them without going past the scheduled close date. When shopping for a loan, don't automatically think that going with a big bank is going to make your transaction go smoothly. As a matter of fact, you probably shouldn't think that at all based on the stories I keep hearing. A smaller mortgage bank, Direct lender, can underwrite and fund loans very quickly. Check around and ask lots of questions before choosing which lender to handle your deal.