In the overwhelming majority of transactions I participate in, whether as the listing agent or buyer agent, lenders do NOT have full loan commitment by the date specified in the purchase agreement. Moreover, most lenders do not even pro-actively tell their clients or buyer's agent unless they are asked. It is as if this date doesn't even exist in the lender's mind or processes.
I'm not just talking about fly-by-night or lenders with less than stellar reputations, I see this routinely across the board.
I'm not saying that the majority of transactions do not close on time, in fact, they do. But, they often close with the last 72 hours being "firefighting" mode where heroics are the norm.
I can see some loan officers, loan processors and loan underwriting preparing their defensive arsenals already with a myriad list of reasons as to what the reasons are and explaining on how the delay is everyone else's responsibility, such as:
- The buyer didn't produce information as requested on a timely basis
- Underwriters are busy
- The appraisal process took too long
- Underwriters requested more information multiple times
- A new lending (FHA, VA, USDA, Conventional, etc.) guideline rule came out last week necessitating more information
- And the list goes on
As a broker/owner and REALTOR, here is what I see what is missing in this process in order to avoid this issue:
1. Buyers' agents and buyers do not consult with their loan officer to ensure the loan commitment date is realistic.
2. There is precious little or no project management expertise within lending institutions to provide oversight to ensure the process is solid, people are held accountable for dates, staffing is adequate to meet demand, and timely communication exists to keep all parties informed, both from a status perspective as well as from an information requests from the lender to the buyer.
3. Little or no pro-active communication.
4. Accountability: When I ask a loan office or loan processor: Do you know today is the full loan commitment date for 123 Main Street? Silence is usually on the other end.
5. Buyers: Sometimes buyers wait until their contractual last minute to make loan application, thereby delaying the process by X days.
6. Delaying ordering the appraisal until the inspection contingencies are resolved.
7. Inadequate communication between the lending institution and the title and escrow companies.
8. Appraisals taking too long as well as inadequate sometimes, thereby causing questions by the underwriter and also causing delays.
9. Onerous FHA rules that sometimes will focus on minor issues to be resolved. More relevant for more distress properties. Certainly doesn't apply to properties across the board.
Olsen Ziegler Realty -- A $marter Way to buy and sell your Greater Cleveland, Ohio Home
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