Home > Blogs > Jeff Belonger > Mortgage Knowledge at its BEST!!!! (Jeff Belonger)

The Mortgage Commitment Date - Can realtors hurt the commitment date? Yes....

By Jeff Belonger

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

April 10, 2010 03:01 AM

Are mortgage commitment dates important? YES…

mortgage commitment dates are important

Mortgage Commitment dates are very important for several reasons. I wrote about this below... please read -

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

The problem that I am seeing now more and more? I am seeing unreasonable commitment dates in the agreement of sale. I am not the only one that has noticed this because I have asked a few loan officers that I respect and they have agreed.

realtors get upset when commitment dates are missed

We all know that realtors, buyers, sellers, and lawyers get upset when commitment dates are missed. Just recently, I had 2 different transactions that had unrealistic commitment dates in my opinion.

Here are two examples of what I think are unrealistic commitment dates.

Buyer # 1

Contract signed 3/31/10 - Mortgage Commitment date 4/16/10 - Closing date 4/28/10

Buyer # 2

Contract started and signed by buyers on March 11^th- seller’s signed March 17^th - When the contract was drawn up, the commitment date was set for 4/2/10 with a settlement date 4/30/10. Because of the delay with the seller accepting the agreement of sale, the commitment date was never extended.

So, why were these commitment dates unrealistic?

It's called a time line. There are certain things that need to take place in order to give a good and accurate mortgage commitment letter. Sure, many lenders and loan officers can give conditional commitment letters. And I am talking about such letters that have conditions out the ying yang. Almost like it was never underwritten.

What needs to be done to perform a good commitment letter in order to meet that commitment date?

1. An acceptable appraisal - Many of us don't order an appraisal until we know that we have a fully executed contract. Now, an appraisal has to be ordered, a date and time set to inspect the home, and then that appraiser getting the appraisal back to the lender in a timely manner. It could take 2 days to order the appraisal, 3 days until the appraiser gets out to the property, and 3 more days until the appraiser gets it back to the lender. Just right there is 8 days. And in some cases, this could be a quick turn-around time. Keep in mind, it also depends on the type of loan, if one is dealing with the HVCC, or just the fact that the appraiser is having a hard time contacting the listing agent. Overall, it could be a solid 10 business days until a lender sees an appraisal and this would not include weekends. So if my numbers are correct, this is 13 days, almost 2 weeks.

2. Time of mortgage application - In regards to my example number 1 above? The borrower couldn't meet with me and get me their appropriate information until April 5th. That means I have roughly 11 more days, 9 of them which are business days, to get a commitment letter out in time.

3. Difficult loans - Each and every borrower is different from the next. I keep hearing some realtors say that x,y,z lender got such and such borrower done very quickly. All I can say is that each and every buyer is different from the next. Some loans are easy and some are difficult. In many cases, once we start to dig deeper into that borrower, we need more information. A good example are self-employed borrowers. Sometimes we need more proof for write-offs to justify more income, etc, etc.

4. Underwriting Time - Each lender is different and each time period can be different if real estate is busy or slow. It's safe to say that it should take 5 business days for a loan to be in underwriting, But this time needs to be factor into the whole equation.

Overall, as you can see, there can be many reasons why it could take more than 2 weeks to get a realistic commitment letter to meet the commitment date. If you take my #2 and # 4, subtract the underwriting days, it says that I have 4 realistic days to process a loan. And this is just not enough time. And what about the appraisal? What good is a commitment letter if it is subject to an acceptable appraisal? So.....

team work

Team Work & Communication

So how can a realtor help in achieving the commitment date? They should be calling up the loan officer to get a better feel for that client. To find out such things as their current underwriting time. Is the borrower complicated? Meaning, do I have everything that I need to properly process and underwrite the deal. ... and so much more.

Overall... keep in mind everyone, that each borrower is different from the next. That we see too much misleading advertising for 10 day closings from certain lenders. (read the fine print to see how this has to happen) And lastly, that we all need to work together. Don't hesitate to ask and not assume.

Food for thought… A 30 day closing in my opinion is very realistic, but a commitment letter due in 14 days is not. Weekends and appraisal times need to be considered.

_____________________________________________________________________________________________________

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

Experience & Knowledge at its BEST !!!

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

Important Information about the First Time Homebuyers Tax Credit

Re-Blog

Featured

Comments(44)

Comment

Show All Comments

Sort:

Bob Sooy

Realty World Northeast LLC - Sugarloaf, PA

Jeff,

Great post. I think the key here is to work together. Simple.

Apr 11, 2010 12:42 PM

MeLisa Minter, Realtor

Minter Real Estate Services - Taylor Lake Village, TX

Bay Area Houston Real Estate Agent

Jeff, I like this post.

I normally work with sellers, but its good to have an idea of what to expect, especially when the selling agent is telling you something different.

I will bookmark this post and share it with my agents.

Apr 11, 2010 01:02 PM

Martha Brown

Long & Foster Real Estate, Inc., Annapolis MD 21403 - Annapolis, MD

Your Homes Around Annapolis Agent

Jeff- EVERYTHING takes longer now a days. Everything. I am dealing with one now where the price changed and a new disclosure had to be sent with the 3 day rule. Then the lender said when it came out of underwriting that there were some internal issues that needed documentation (new home owners insurance reflecting new amount, new HUD1 reflecting new amount from title company and last employment verification. The lenders policy was 48 hours for such then another 24 hours to prepare closing documents. So...one change caused a 6 day delay plus 2 days for weekend...8 days total.

Apr 11, 2010 01:57 PM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

TINA.. comment # 10.... . the banks owning properties that have quick commitment dates and settlement dates? I have no idea why. To bust lending stones? lol And yes, 30 days to close a loan is doable, but still pushing it on many loans. But if I am closing a loan in 30 days, make the commitment date at least 21 days or longer from the contract date. What irks me is that there is a mortgage company that guarantees closings in 10 days... but once you read the fine print, you begin to laugh. It's called a marketing ploy. Sure, I could close a loan in 10 days if I really had to, but not each loan that I come across... Overall, as you mentioned, just educating everyone involved in what to expect. But how does one know if the realtor doesn't contact you prior to the contracts being drawn up. thanks for your feedback.

CHARITA..... . I think some are still stuck in that time zone. Besides, even 2 weeks was hard, unless it was a slam dunk conventional loan. But from start to finish, 2 weeks is still tough back then because you would have to stop working on some of the other loans. Ask any good honest loan officer about this. But you do bring up some good points and thanks for sharing these.

STEPHANIE.... . glad to be your hero, but what loans were you closing in one week? lol Seriously, every once in a while I would close a loan in 5 to 7 days, but to help someone else when their previous lender dropped the ball. But other than that, it would be asking too much from everyone involved in a loan. But overall, as you have stated why it takes so much longer, we need to keep getting this message out there. Besides, just because one loan closes quickly doesn't mean they all can. That is something else that I am trying to get across to so many out there. thanks

MICHAEL.... . I would love 30 days for a commitment and 45 days for a closing. Less stress and more time to get things done. In NJ there is an automatic extension of 30 days if the commitment date is missed. thanks PS>. I can do loans in PA also... ;o)

CHRIS..... . there are still many lenders and loan officers that aren't just good.... and in some cases give the rest of us a bad name. And sometimes I pick up new clients because of these lenders dropping the ball. Overall, I am glad that you check with the lender to ensure that the dates are enough time.

MICHELLE.... . that's awesome that you even talk to the lender prior to showing the buyers a home. Yes, communication is soooo important, yet so lacking in many cases. I wrote about communicating. Communication - How important is communication? And thanks for that very polite compliment.

MITCHELL..comment # 16... . your closings are taking 60 to 90 days? I know we briefly talked about this when we last met, but I would be glad to help some of your clients. Just give me 45 days and we'll all be happy. ;o) Especially your clients rate locks expiring. If it wasn't the fault of the borrower, then that lender should be extending that rate free of charge. In any case, thank you very much for that polite compliment.

Apr 11, 2010 06:31 PM

Pam Turner, REALTOR®, e-PRO®, SFR

Century 21 Belk Realtors Dalton GA - Dalton, GA

30-45 days is typical for me, but I get nervous when it stretches out to 60 and we've had to extend - a lot of times those just never close.

Apr 11, 2010 11:35 PM

Renée Donohue~Home Photography

Savvy Home Pix - Allegan, MI

Western Michigan Real Estate Photographer

I was just fit to be tied on one of my previous transactions. Our mortgage committment date was set unrealistically by the sellers (we are an extreme seller's market here) and the lender PROMISED PROMISED PROMISED and couldn't deliver. We did close but it was frustrating with the promises that were made. I made every attempt PRIOR to contract execution to make sure we could hit the dates but we couldn't. Too many lending difficulties these days!

Apr 12, 2010 12:20 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

BARBARA ... comment # 17 .... . I never said it was always the realtors fault. What message I wanted to get across here was that realtors in some cases need to be more realistic with their commitment dates and settlement dates. And yes, contacting the loan officer prior is always a good move. But you stated that sometimes it's hard to reach the lender or loan officer. As many of us know, this can be a red flag 50% of the time or more. And yes, the new rules are making it tougher to have closings happen on the contract date specified. thanks for your input.

JOHN.... . the norm is 10 days? Sorry, but I don't care if it's a conventional deal. I will say this, because I know a few good loan officers and lenders in Florida. Okay, maybe if the lender only does conventional loans, that they are a small company or maybe the processor only has 1 or 2 loan officers on their desk... etc etc. But conventional loans have to be HVCC compliant. Sorry, but I just don't think 10 days is the norm, no matter if they closed that one loan or a few in 10 days. In one part of your comment, you stated 10 business days. Well, that could now mean 12 days all together. In any case, it comes down to expectations, and when things get done. You need an appraisal and title to be ordered and finished in 6 days then for a 10 day commitment.. and fully processed. I would love to see some of the commitment letters that you have received. I would bet they are many conditions on them. Just too much out there to get a commitment in 10 days. In any case, thanks for your feedback.

CRAIG.... . I agree 110%.... I wrote about expectations. Setting all expectations to be reasonable. thanks

SUZANNE.... . wow... thank you very much for the kind words and for that polite compliment. I would not say perfect, but I do think the message should be spread amongst all realtors and lawyers out there. In a time when things are a bit tougher from past years when trying to get loans done, I am seeing dates set for quicker results than I did in past years. Just curious to as why? It should be the opposite in my opinion.

NEAL.... . I loved your comment. Yes, I have heard of so many loan officers run away after certain dates couldn't have been met. I know this myself because I end up doing about 5 loans a year that other lenders dropped the ball on then the borrower found me online. So I clearly understand what you are saying. But I rarely get a realtor that would ask me if the dates set are realistic. Or that the dates are amended after it took longer for the contract to become binding, finished with all signatures. Overall, you bring up some good key points.. thanks for your feedback and input.

J. PHILIP..comment # 22... . I wonder why 60 or 90 days... did you read Mitchell's comment # 16? He said the same thing. I would love a 45 day closing... I think 60 to 90 days is way to long. And I have even closed a few loans in NY and Long Island in the last 6 months. Maybe the lenders in that area are just slower. Maybe we should talk. ;o)

Apr 12, 2010 01:47 AM

Joe Pryor

The Virtual Real Estate Team - Oklahoma City, OK

REALTOR® - Oklahoma Investment Properties

I always point out that the closing date on the contract says on or before. In the old days of anything goes lending without proper documentation, sure we could close quickly. Now that a full process is required with timelines, regulations, and full docs, we need to get real. Since I go back 20 years in business it just seems like normality has been restored.

Apr 12, 2010 02:01 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

COLEEN.. comment # 23... . I am going to take a stab at a specific comment that you made. You said.. "It seems to me, though, even when all of the documents are ordered and obtained in a timely manner, things often fall apart on the lender piece. Not sure why that is, especially when clients have info documenting their stellar credit ratings, etc."

Not attacking lenders in Florida, but a lot of how a loan gets done starts with the loan officer. How good of an application that they take and how much of the information did they collect from the borrower. This also happens in other states, when loans need extensions. About 25% of my business is done in Florida and I am baffled myself on how long it takes some lenders. Yes, it could be the lenders, but most of the blame that I place is on the loan officer. I might write a blog on this...

Overall, yes, time lines need to be talked about, with all parties involved. I would love to have a 45 day closing, with a commitment date due 30 days from contract. My life would be much easier. But overall, in my opinion, hitting specific dates comes down to good communication and being prepared with the borrower going into contract. I think many loan officers don't do the appropriate leg work upfront when they pre-qaulify a borrower. Just my opinion.

BOB.... . I would agree... and thanks for that polite compliment.

MELISA..... . I am sure agents would sometimes tell you something differently. I have seen and heard it first hand myself. And so many people point the fingers at others. And thanks for the compliment.

MARTHA.... . it clearly sounds like this loan officer is not setting expectations for all that are involved. I wrote setting expectations to a certain level. You know that even though I am New Jersey, I could always help out some. I can do loans in Maryland. ;o) PS.. if my policy was 48 hours, I tack on 24 more hours and stay on top of it. So many things can happen just to delay the answer for one more day. Hope that deal works out for you and your clients in the end.

PAM.... . I am still amazed at 60 day closings... I wish I had that much time. ;o)

RENEE... comment # 29.. . I am sure many of the sellers have help from their agents when it comes to not setting realistic dates. But when a lender promises and promises, it's usually to get everyone off their backs, especially the loan officer. I see and hear this more often then we should. Overall, yes, there are many lending difficulties, but so many use this as an excuse when things are delayed, which ticks me off. How does one know what the truth is anymore?

Apr 12, 2010 02:15 AM

John Neil

Bank of Utah - Logan, UT

I don't know what you guys are talking about. I am still closing loans in 7 days (on average)...totally kidding! In all reality, I think a 30 day closing is realistic but there are cases when it goes longer than that and I think it's critical that the Realtor call the loan officer to get a feel for realistic timelines and potential pitfalls for each loan.

I saw an ad the other day that promised a 3 day closing. After reading the fine print, I learned that this is 3 days after they have the appraisal and all the conditions signed off too. Unbelievable! I hate that some people fall for this garbabe!

Apr 12, 2010 03:40 AM

Kyle Jan

Scottsdale, AZ

Phoenix AZ Homes for Sale

Great topic. I have been trying to communicate similar concerns to my realtor's. I feel that the perception is that we as the lender will take longer if the dates are extended. In this market, time is of the essence, as lenders we know this. Guideline changes, funds running out, MIP increases, 2nd appraisals and etc. I am not taking any longer than I need to get an approval and close. Being realistic serves everyone better. Missing commitment dates and etc only worsens the experience for the client, it adds a level of stress that could be avoided with more realistic expectations in the beginning. Everyone understanding the market and process is the key.

Apr 12, 2010 03:44 AM

Cari Anderson

Danville, CA

Jeff: couldn't agree more. In the past, I've bent over backwards to meet commitment dates as written in the contract whether I've been contacted before hand or (more likely) not. These days, it's not enough to hustle. With all our new regulations and procedures it may be impossible to meet expectations if we are not contacted ahead of time and consulted with closely before writing the contract. Great info. Thanks for putting it "out there."

Apr 12, 2010 07:22 AM

Damon Gettier

Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA

Broker/Owner ABRM, GRI, CDPE

I always write the commitment date as the day of or the day before closing.

Apr 12, 2010 08:32 AM

Mitchell J Hall

Manhattan, NY

Lic Associate RE Broker - Manhattan & Brooklyn

Jeff, While lenders may be taking a little longer than in the past we've always had 60 to 90 days closings for coops and many condos. Houses can close faster. It takes so long because of the management companies that manage condos and coops. Even cash sales can take 60 days. The condos and coops have their own purchase application and board package. We can't submit the board package to the management company until the buyer already has a loan commitment. A copy of the loan commitment letter goes into the package along with other documents, references etc. The management company can sit on the application for weeks, then they send it to to coop board or condo association. The board has up to 30 days to approve the purchase. Some require interviewing the purchaser. Then scheduling a closing date that all parties can agree on. There are usually several parties (buyer, seller, and their lawyers, lender attorney, title company, closing or transfer agent) The management companies closing department is often backlogged and under staffed. I had a rental sublease in a condo that took 2 months to get approved. I had to change the lease dates twice. In another condo rental it took less than 24 hours to be approved. Go figure!

Apr 12, 2010 11:28 AM

Steve, Joel & Steve A. Chain

Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA

Jeff,

We see it common place that the commitment happens when the loan is funded. Glad to hear it's not that way everywhere.

Steve

Apr 12, 2010 04:27 PM

Neal Bloom

Brokered by eXp Realty LLC - Weston, FL

Realtor CRS-Weston FL Real Estate

Jeff,

I'm surprised the agent wouldn't consult with you first before putting in a commitment date. Don't you think it would make more sense if they at least got an idea before throwing in a date? What happens if they don't call you and a contract is promised with let's say 15 or 20 days and then you can't meet it. Don't you think both parties might be a bit upset or disappointed if they packed and had to make moving arrangements and then comes the snag? I'm not saying everyone but you know that most people expect us to know the drill. I'd want my Realtor to be in communication with the loan officer or mortgage broker. It's my deposit and I want to make sure it's protected. Sometimes you'll get a bitter seller who would want to try to collect the escrow and this is coming from me...an agent who is mostly on the listing end.

Sometimes I've even caught buyers agent putting in a closing date of on or before 30 days and then try to put in a loan commitment date of 45 days...makes no sense and I'm not sure that is a mistake.

Apr 13, 2010 09:48 AM

Sheldon Neal

Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ

That British Agent Bergen County NJ

Amen my man ! I never write up offers with commitment dates less than 30 days !!! If it comes in sooner then great :o)

OH AND HAPPPPPPY BIRTHHHHDAY BRUTHA !!!!!!!!!!!!!!!!!

Apr 15, 2010 03:27 AM

Georgie Hunter R(S) 58089

Hawai'i Life Real Estate Brokers - Haiku, HI

Maui Real Estate sales and lifestyle info

Someone said it's your birthday, so just wanted to say HAPPY BIRTHDAY!

Apr 15, 2010 12:39 PM

Kate Elim

Dockside Realty - Spotsylvania, VA

Realtor 540-226-1964, Selling Homes & Land a

Hi Jeff...My commitment dates are always pretty close to the settlement date. Most of our appraisals do not get done until just before settlement. Without that important information we cannot get the commitment letter. I've had listing agents question the dates I use and I tell them exactly why I do it and will not change it.

Kate

May 22, 2010 11:06 AM

Jan Mullins

First Credit Union - Chandler, AZ

Jeff, You said it best with this line..."Team Work & Communication". With everyone working together and communicating, all parties get what they want in a timely manner.

Jul 12, 2010 07:10 AM