What time is it? It's COMMITMENT time!! Has your commitment letter been on time?

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

How Long Has This Been Going ON, that I still haven't received my commitment letter. (please click on the link for some satire)

My reasoning for that particular song?  I just received this comment the other day on another blog of mine. - "Just this week I had a mortgage guy tell me that the mortgage companies systems were down for the last 3 days. We should have had the commitment three weeks ago. Since when did, "we are busy" become an excuse that is acceptable?" 

3 Weeks ago?  That is UNACCEPTABLE and usually is a major red flag.  Why is the borrower still with this company?  Should the realtors be intervening and asking for other loan officers to review this?  In my opinion, Yes, very much so.

 

 

As the mortgage business picks up for many lenders, many time deadlines are being extended or missed. One issue that I am finding out as of lately is that the commitment letter is not being received on time.

Agreement of sale for real estate

 

Keep in mind, many companies processing time is a tad longer, but most importantly, their underwriting times have doubled with many lenders. Bank of America and Wells Fargo are now saying that it will take 60 + days to close a loan. I know some smaller lenders that I have friends at who are 10 - 12 days in underwriting. Luckily, at Infinity Home Mortgage, at worse case, we are at 5 - 6 days in underwriting.

Commitment Letter- Form letter from a lender stating willingness to advance funds to a named borrower, repayable at a specified rate and time period. This is a common notice in loans that are real estate secured, such as home equity lines of credit and second mortgages, subject to an escape clause allowing the lender to rescind the agreement in event of materially adverse changes in the borrower's financial condition. (from www.answers .com)

 

 

time is running out

 

As many of us know, time is money and so is your commitment letter being delivered on time. Why do you think it's in the contract? Do you hold contracts to its legal definition?  I am hearing more and more stories that commitment letters aren't being received on the time that is designated on the agreement of sale to purchase that home, let alone that some settlements are being delayed or denied at the very end. I digress, because that is another blog for another time.

Are there lenders that just don't pay attention to the commitment date?  YES ... But can this just be the blame of the loan officer or the lender?  No, not at all. Yes, I will take blame when blame is my fault. But we also need the help of the realtors and even the help of the buyer. Here is why :

 

 

 

helping hand - team work

 

Helping Hands - Team Work: Bridging the gap per se to a successful closing for the buyer. Communication from all parties, good or bad.

 

Realtors, are you setting your sellers expectations too high?  Possibly promising quick settlements just to get the listing? Or possibly writing into the contract a quick commitment date that might not be realistic?

When a buyer has an offer that is accepted, do you get a hold of their lender to see how quickly this can happen?  It takes 5 minutes or less to make this kind of effort, because a pre-qual or pre-approval letter doesn't always tell the full story.

Buyers, do you switch lenders in mid-stream?  I have 3 buyers right now that applied with someone else originally and have switched in the middle for various reasons. I am glad that they chose me and I love the challenge, but it can be very stressful.

 

 

 

CONCLUSION :  How important is that commitment letter?  Very important and more than what many think.  There are actually legal ramifications. Secondly, deal with a loan officer that just doesn't make false promises. Keep in mind, you can interview them as much as they interview you to see if you can qualify.  What is ample time to get a real commitment out without many conditions? If the commitment letter is delayed for a few days, but it seems to be a reasonable excuse, just stay on top of your lender. If it continues as it did with the realtor in my opening statement, run for the hills and seek help from another loan officer. I am not kidding on this one. It's one thing to give someone the benefit of the doubt, it's another to keep hoping and praying.  Or just for the fact that new excuses seem to keep popping up.  Just keep all of this in mind.

 

 

 

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Copyright © 2009 by Jeff Belonger

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Rainmaker
619,944
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Working hand in hand with the bank to have timelines and most importantly expectations for all parties on the same playing field is very important.  A committment letter is a great piece of the puzzle for buyers to have when they are ready to make offers, because the seller knows that they have already gone through much of the underwriting process.

May 07, 2009 07:45 AM #9
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Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

I always call the mortgage person before we submit an offer, I like to have my timeline ducks in a row. Each and every client is different. I am not a mortgage person, I am the realtor. I count on precise information from the mortgage person, as they count on precise information from me.

I don't know how many other realtors call their mortgage people prior to submitting an offer to go over dates. Could it be that I am just ... anal retentive on this one?

May 07, 2009 08:47 AM #10
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Roland Woodworth
Q Realty - Clarksville, TN
Q Realty - Power In Real Estate

Jeff: The commitment letter is a important document.. The bad thing is some are not worth the paper they are written on.. This is why one needs a good report with the lender so you know if you are getting a good commitment letter...

Thanks for the reminder.. I just called to remind my lender to send a commitment letter from yesterday :)

May 07, 2009 09:48 AM #11
Rainmaker
591,041
Neal Bloom
eXp Realty - Weston, FL
Realtor CRS-Weston FL Real Estate

Jeff,

It goes back to what our contracts say in FL. You have a time line to be met...if the buyers agent doesn't ask the mortgage broker first if they can get the commitment in that time frame then they mightget burned because in the end we all know you guys will hold no liability because you aren't a party to the contract even if it says it in ours. It's the buyers agents responsibility to make sure their buyer stays within the time lines so I suggest they find out first before writing it in the contract. This way everyone is on the same page. It also says in our contracts that if the commitment date can't be attained in time...the buyers agent must advise the listing agent within a certain period and the seller then has the option of granting an extension or canceling the contract. If it isn't in writing and the time passed then the buyers deposit is jeopardized.

May 07, 2009 10:40 AM #12
Rainmaker
563,647
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Jeff -- Interesting post and very germane.  I have found, literally almost 100% of the time, a lender has NEVER produced a commitment letter on time, and never without prompting.  I know many agents as well.  The last transaction I had, the loan was overdue by almost 3 weeks and the buyers agent never bothered to check, I had to do it all as the listing agent. Argh.

May 07, 2009 10:57 AM #13
Rainer
6,420
Realty Dot Com (Realty.com)
Realty.com - Charlotte, NC

Very unacceptable!

May 07, 2009 11:19 AM #14
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

MORGAN.... . I think many of us commenting would agree with that, that we all need to be on the same page. And yes, the commitment letter, if real  { ;o) }, does let a seller know that it should be a go. I fired a loan officer 4 months ago, because they gave a commitment letter to the buyer 2 days after application, after he received their info. I was like you have to be @$@^!^! ... he said that they did this all the time at the other company. I said.. common sense, the underwriter hasn't even looked at this.  What a big law suit happening... thanks

ANDREA..... wow, that is awesome. Out of every 10 borrowers, I might get one call from the buyers agent asking the same.  I think too many put too much stock into the pre-qual letter or the pre-approval letter.  I even got some weird looks (well, it was over the phone, but I could sense weird looks), when I brought to a realtors attention that I felt that we weren't going to make a commitment date... (for what ever reasons).  But I put myself out there from the get go.  So the same can be said for loan officers also.  thanks  PS>.. I am not perfect, things happen... but communication is essential.

ROLAND......  I will agree 110% about this and have written about this several times. Just as I have said that many good faith estimates aren't worth the paper that they are written on.  Overall, I think we all need this reminder, more than occasionally.  I know it helps me to remember also and keeps me focused on stuff like this.  thanks

NEAL.... you are absolutely correct....  even though if we fail at the task of handing out a commitment letter, all we do is get yelled at, called names, and threatened...  but it won't hurt us when it comes to money... well, we could lose business, but we don't lose the deposit, the buyer could.  Excellent point. Overall, I think most commenting, will state the same as you have said, that the realtor should speak to the loan officer to make sure. I will always call the borrower and then the realtor, if I see something, before I am asked... unless they beat me to it.  But yes, communication... thanks for the feedback & for your input.

CHRIS.... . wow, 100% of the time?  That is pathetic.  I know someone wrote a comment that if a lender misses a commitment date, just find another lender. I semi disagree, because things happen.  Pointing the finger could drag out any solution that could be obtain.. delaying a solution. What's that, calmer heads prevail?  And yes, 3 weeks is not acceptable... I would love to know their reasons though, because I hate passing judgment, until I know all facts.  thanks for your input and for the polite compliment.

 

May 07, 2009 11:23 AM #15
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Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Communication is Key !

... right out of the gates !

Of course we dont want to hound or badger the loan officer, but communication to see what they still need and remind of the deadlines and any other date changes keeps everyone on the same page.

The commitment letter is crucial, and often underrated.

Great  post ...and great to speak with you today :o)

Cheers mate !

Sheldon

May 07, 2009 02:54 PM #16
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

This is good dude.  Not only on time....but how bout a commtment letter of value.  If you don't have  one with no bullet holes, that's great, but most have too many bullet holes.  Timeliness is the least of my issues. Goodness of the letter is the greatest.

May 07, 2009 03:16 PM #17
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

REALTY DOT COM...... okay, that was short, but sweat.  I think unacceptable is a harsh word if you are saying that 1 day would be unacceptable.  Because I have had realtors put on contracts just 2 weeks or less, and if it's a tough deal, that could delay things right then. Hey, don't get me wrong, I am a stickler for things, but you also have to be flexible, understanding, and never jump to conclusions too quickly.  thanks for stopping by.

 

SHELDON..... yes it is...  ;o)   I don't care if the realtor or the borrower thinks it's hounding me and such. I will not hide and answer my phone. As many of us agree, just being on the same page is key, which is part of communication.

On another note, yes, it was great catching up some today. Hopefully we'll meet sooner or later.

 

LARRY.... .  of value, you mean that it would be accurate and real?  Not just a piece of paper to meet a deadline, when it might not have ever been received by the underwriter at first? And yes, I have seen that were very basic with many holes, that you knew it was going to blow up at settlement. And thanks for the polite compliment.

 

May 07, 2009 04:03 PM #18
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I think advising realtors of turn times could make a big difference so that they know how things are looking from the lending side.

May 07, 2009 04:43 PM #19
Rainer
123,350
Marian Pierre-Louis
Fieldstone Historic Research - Medway, MA
Metrowest Boston

It is essential to work with good mortgage lenders that you know and trust.  It can make or break the deal.

May 08, 2009 02:10 AM #20
Rainmaker
1,431,110
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

The same big banks that are taking for ever on the loans are the same ones that when selling an REO want it to close in 30 days.

May 08, 2009 03:35 AM #21
Rainer
5,343
Ernie Burciaga
Century 21 1st Choice Realty - San Diego, CA

Of course REALTOR should communicate with lender to determine time required.  However, lender's also need to know that this is a competitive market and when we are up against so much CASH and short closing time frames, then our clients suffer.  A bank that requires 60 days to close a purchase loan is not in the market.  Simple as that, no matter how good the reasons are for the time required.

May 08, 2009 06:08 AM #22
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

CHRISTINE......  I would agree 110%... and if I get an agreement of sale that has a commitment date or a closing date that might be in question, that might be cutting it close, I will bring this to everyones attention. But as I mentioned, it should start with the buyer's agent, calling up the loan officer (if they don't know each other), to see if the dates would be okay before they put the dates in the contract.  thanks

MARIAN..... I would agree with that statement, but 97% of my clients, and even some realtors, don't know me.  So trust is important, but most in this business can get you to trust them just by making promises or guarantees.  And by doing this, it makes others feel comfortable.. then the problems happen.  But I agree, many things can make or break a deal.

GENE..... well, that doesn't make sense... but how many REO's that you know settle in 30 days even if the lender is ready to settle. I am finding many have problems at the end, because the bank forgot to do this or forgot to do that. So what happens then is you have people rushing for something that has a great chance of being delayed.  Just my opinion.

 

ERNIE..... yes, many of us agree that the realtor should communicate with the lender also... and vise versa.  But I will somewhat disgree and or stick up for lenders in general, that we should realize it's a competitive market. First off, you as a realtor should express to your sellers that this is the reality of it, that many lenders are in major delays.  But define major...??? Some would say 30 days and some would say 60 days. It should start with the clients expectations, no matter if they are the seller, the buyer, the realtor, or the bank that owns the property. 

In my honest opinion, in today's market, putting a commitment date on the contracts that are less than 3 weeks, maybe closer to 4 weeks, is just adding pressure to all... and possibly more mistakes. You have to take in account on how quickly an appraisal can be done and given back to the lender.  You have to account for the time when the actual application is taken or if the buyers delay this... and account for weekends. If I took an application right now, on Friday at 2 pm...  and then turned it in, you already just lost 2 1/2 days.  I might not get it back from underwriting now until May 27th or so... keep in mind, Monday the 25th is a holiday.  These are things that need to be recognized by everyone involved. So I have a slight problem with your comment that banks should know that it's a competitive market. To me, that's common sense. I think the listing agent needs to make all of this clear to the seller. But here is my thought process.  I bet you more than 50% of all realtors don't really talk about this... because they are afraid to give bad or negative news, which means that they are afraid to potentially lose that deal. Just like 50% or more of the loan officers don't really pay attention to the commitment date.

I will say this, I will agree that 60 days is rediculous.  But to have a normal closing, that time period should be set at 35 days, possibly to 40 days. Me?  Sure I can do them in 25 to 30 days, but it also depends on the deal, if it's a mess or not from the borrower's side of things.  And someone wants a 8 to 12 day closing, it can be done, but there is a small price and I will have to get people to drop what they are doing, which can delay other closings.  See the pattern and what can happen?  It all comes back to setting everyone's expectations to a certain level.  Thanks for your feedback.

 

May 08, 2009 06:30 AM #23
Rainmaker
225,538
Mark Watterson
Salt Lake City, UT
Utah Real Estate

Interesting and though provoking. 

The process is differently out of whack and communication between all the team members is required.  Realtors, loan officers, inspectors and title. 

When I find great team member I treat them like gold.  On the other hand I don't hand onto anything that smells.

May 08, 2009 09:05 AM #24
Rainmaker
1,466,318
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

I think that people (buyer,realtor,LO) are just saying what the other party wants to hear.  3 weeks no problem, when in fact they know at inception that it can't be done.  Just wondered since when is a 4 week closing a problem with someone that's preapproved?  I guess NOW.  Lately, all LO's are saying it's taking longer because of re'fi's.  Personally, I don't care - can you get it done or not?  In the dead of winter I had a LO tell me she couldn't close in 2 weeks because they were too busy.  Well, how about we make you 'unbusy' and take the loan to someone that wants business.

May 08, 2009 02:48 PM #25
Rainer
17,228
Kellie Fitzgerald
Kellie Fitzgerald - Chiricahua Real Estate - Pearce, AZ

In the past I have worked with one or two very good mortgage people...both of which has been "downsized" during the current "crisis."   Recently during a transaction my buyers were having trouble getting a straight answer from the mortgage "professional" they were working with.  Ultimately we had to delay closing because the lender could not provide necessary documentation in a timely fashion.  After the second delay I advised my buyers to speak with a different lender I had been referred to.  What a difference!   This new lender did in 3 days what the previous lender could not do in over five weeks.   Sometimes going with a smaller lender is exactly what you need.

Thanks for your post, good information.

May 08, 2009 03:00 PM #26
Rainer
55,401
Kelsey Barklow
Evans & Evans Real Estate - Johnson City, TN
423/948-9154, Marne Drinnon 423/202-2277

Very good information on this post. It's horrific to think that major lenders are taking 60+ days to close.

May 18, 2009 02:38 PM #27
Anonymous
Jose Troche

Mortgage co. told me two closing dates, we summited all the paper work, they said everything looking good, the seller (bank, house was on foreclosure) gave the mortgage co. an extension, mortgage co. too slow on the commiment letter, remember our credit very good, put money down but seller put house on market again, somebody came with a higher offer and after 4 months I lost the deal, what happened?

Jun 01, 2011 01:37 AM #28
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