Actually, I find it ironic.
All those rants from real estate agents about preapproval letters. You told me you thought they were about as worthless as a wet cocktail napkin. That caused me to upgrade my own preapprovals to be AIRTIGHT.
But now the tables have turned. Now I feel your pain. Why? Because the PROPERTIES are being so heavily scrutinized by the lenders that we need preapprovals on properties just like we need preapprovals on people.
And sometimes the information that comes through on the property is about as worthless as (you guessed it) a wet cocktail napkin.
I am going to be honest: lack of information and lack of correct information about properties is slowing down the loan approval process.
No mortgage person wants an e-mail like this one I received yesterday:
Delivery of report will be delayed due to difficulty getting HOA information. Listing and selling agents both provided incorrect HOA numbers-I was directed to a third one this morning and have emailed them my request for information.
Here are some items that have reared their ugly heads as surprises this week:
- Property had been flipped.
- Property had been lived in 2 years by builder but did not pass the final inspection.
- Property had been gutted.
- Property has incorrect Zip Code (Did you know some lenders will not allow buyer to own 2 properties in the same zip code?)
- Property had a prior FHA appraisal done on a loan that fell through (this is now the only appraisal FHA will use for 6 months)
- Condo complex not 51% owner occupied
- Property not a condo, it is a PUD
- Condo complex no longer FHA approved, although listing said it was
- Wrong homeowner's association dues appear on the listing.
- Litigation pending on the condo complex
No, all of these issues did not appear on one loan (Laughing.....) But I have done more condos this year than ever before because of the surge in first time buyers. Same thing with flipped and stripped properties.
Now I take the time at the very beginning to interview the listing agent about the property.
Why? Because listing information is not airtight.
To the listing agent: Please forgive me if I grill you. Somewhere along the line, someone, somewhere, is going to need to provide AIRTIGHT information about the property to the lender.
The sooner the better.
Because surprises about the property can change, delay, or blow up the loan.
And because nobody wants a wet napkin with their cocktail.
Written by Janet Guilbault, Mortgage Banker and Direct Lender Based Out of the San Francisco Bay Area.