Why are lenders taking so long to underwrite and fund loans, or even return phone calls? In what used to take two weeks to 30 days tops, depending on appraisal, is now taking 30-60 even 90 days in some cases.
Let's start by adding a declining market, a recession, if you will. Next add corporate layoffs and mortgage industry downsizing to the mix. Stir in a heavy dose of credit guideline changes, almost on a daily bases. Fold in Federal lending rate cuts, dropping mortgage interest rates, and exponentially increasing refinancing (refi boom). Lastly, sprinkle Credit crunch on top with new regulations such as HVCC/HERA and what do you get?
A recipe for the perfect storm of delayed underwriting, increased fees and costs, and frustrated home buyers.
My experience has been pleasant with those refinancing but the home buyers, especially the first timers, have a hard time grasping what is taking so long. The anticipation of the new home seems to get the better of them.
Now, I do have avenues to close the loan quicker but those lenders don't always have all the programs available and their rates tend to be a tad higher.
The best solution I have found is to explain the situation in a way that doesn't add too much to cloud their mind and ensure them they are in good hands. It may take an extra few weeks to close the loan but we have great rates, and a lender that I know isn't going to throw me any wild curve balls. Ultimately the loan will close and the end result will be the same.
As, I finished writing this blog it does seem that most turn times have come back down to reality. Even so, we are just a few interest rate swings away from them going back up again.