How Using an Out of Town Lender Can Slow Down the Loan Approval Process

Real Estate Broker/Owner with Crescent City Living LLC Licensed LA RE Commission

Recently, I listed and sold a condo in New Orleans. Now, the entire condo buying and selling experience has changed from years past, with fewer lenders willing to step up and do the necessary work to get a complex approved by FHA. It used to be that by answering a few quick questions a lender could get what was called a “spot approval”. Those days are gone and while the rule changes may have been made for valid reasons (although I’m not quite sure what they are), they have served to make the entire process a little more cumbersome, especially for the seller and the condo association.

Jumping through all of the FHA hoops was tiring enough, but dealing with an out of state Wells Fargo underwriter served to make almost everyone involved in the process want to scream…including the loan originator who worked for the same company.

working together

Lapses in communication by the underwriter, repeated requests for documents and information that had already been provided and an apparent inability to actually review the documents they had in hand all served to draw out a closing a full 30 days past the date set in the original purchase agreement. Keeping the buyer from moving in, the seller from moving on and everyone else in a reactive mode, cringing at what new hell they might dream up as the torture de jour.

While the loan originator (who is the front line contact with the buyer and the agents) has a local office, the underwriter sat waaaaay over in Jacksonville, Florida. They didn’t have to make small talk at the water cooler with the originator, they didn’t pass each other in the hall and get a quick update on the status of the loan approval. The underwriter had no incentive to actually get the deal done within the deadlines of the contract. Instead, they focused on the minutiae and stopped or stalled the process over and over again as they requested item after item above and beyond their original request list.

I got tired of asking “is there anything else you need to finish processing this loan?” only to find out days later that yet another document was required – or, even worse, that they were asking for things that had already been sent to them. They even had the gall to throw in a last minute, previously undisclosed seller FHA fee while we were sitting at the closing table signing the settlement statement.

Get to the point, Lisa

The point is that when a buyer uses an out of state lender, everyone in the transaction is faceless to the underwriting staff. You are just another file that they have to get processed instead of being a customer.

That’s why we always, always, always advise our buyers to use a local lender. Someone you can get face to face with. Someone who is working with you, not just on your file. Someone who isn’t reliant on phone calls and email to communicate with the underwriter, but instead can walk down the hall and poke their head into an office for an update.

If you need someone like that, we’d be happy to give you a referral to some New Orleans area lenders we have successfully worked with in the past that didn’t make everyone want to beat their head against a wall.

Buying a home is supposed to be fun and we don’t like to work with people who suck the fun out of it. You shouldn’t either.



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Terri and Lisa | The West Bank Living Team For more information about home buying or selling on the West Bank of New Orleans, or relocating to or from NAS JRB New Orleans, please contact the West Bank Living Team. It would be our pleasure to have the opportunity to assist you with any of your real estate needs and have a little fun while doing it!


Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Leslie Ebersole 06/04/2010 03:43 AM
  2. Joe Metzler 06/04/2010 03:58 AM
  3. Kathryn Maguire 06/04/2010 05:58 AM
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Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services
Lisa- I have not experienced that at all. I close all the time with Jeff Belonger and have never had an issue with closing on time or any obstacles. He is in New Jersey and we are in Florida. :) Katerina
Jun 04, 2010 06:35 AM #19
Team Honeycutt
Allen Tate - Concord, NC

I agree...I've done a few deals this year with lenders from out of state and the process was a little bit longer and muddied...

Jun 04, 2010 06:54 AM #21
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX

You are so right about that faceless and out of reach entity...They need to be local so if need be you can wring a few necks! Wait, did say that or just think it???

Jun 04, 2010 07:33 AM #22
Bruce Bills
RateWindow (Powered by RealEspace) - Plano, TX

     Using a local lender is not the answer to your quandry.   Local lenders can limit access to underwriters just as easily as a lender located states away from your location.   The fact of the matter is that in today's environment loans are simply hard to get done.   Most of the larger lenders are quoting very long turn times, and with all the regulations and rules they have to accomodate, they are paranoid about making sure the loan is well documented and complete.    This seems to be done to a point of extreme frustration for everyone involved.   Don't think the underwriters and loan officers are not steamed just like you.   They are dealing with quality control issues that are changing almost daily, rules that are not applied consistenly between lenders, and a host of other issues that are making underwriters wish they weren't underwriters.


     I suppose the best advice is to make sure your buyers know the lending process is going to take time, and that it may be frustrating at times.   This is just how lending is done in today's environment.   It's just not easy, and the rules and requirements are taking out all the chances for good customer service.   I tell people to be ready for an unpleasant experience, and a process that is going to test your resolve.   If it turns out better than planned, then we all can be grateful.


Bruce Bills


Jun 04, 2010 08:25 AM #23
Susan Mangigian
RE/MAX Preferred, West Chester, PA, RS152252A - West Chester, PA
Chester & Delaware County Homes, Delaware and Ches

Hi Lisa!  You go girl with your gold star!  I regularly use Wells Fargo and while I do love my local mortgage rep, he does answer to someone in Ohio, I think it is, and this creates delays and inconveniences.  He's wonderful, but the process is cumbersome.  

Jun 04, 2010 09:25 AM #24
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

If they don't understand your local market then you're probably toast.

Jun 04, 2010 10:22 AM #25
Pippa Mac
Chevaux Group Realtor, The Woodlands and Spring - The Woodlands, TX
The Woodlands TX Real Estate

Lisa, I recently lost a whole deal because the out of state lender was not familiar with the laws here in Texas ... great article here!  pippa

Jun 04, 2010 12:17 PM #26
Janet Guilbault
Guild Mortgage - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

I see most of the lenders here are defending the whole idea of out of state loans.

Not me. I am a lender who fully agrees with you that the best course of action is to use a local lender.


Jun 04, 2010 12:36 PM #27
Rob Lang
At Home Kansas Team Powered by Keller Williams Partners Inc / - Lawrence, KS
Local Expert in Lawrence Kansas Real Estate Homes

Thanks for the perspective and for posting this on Active Rain!

Jun 04, 2010 01:28 PM #28
Pam Turner, REALTOR®, e-PRO®, SFR
Century 21 Belk Realtors Dalton GA - Dalton, GA

I have a deal now with an out of state lender - but the buyer's in the military and this company caters to those individuals - I have the seller, I'm just going to hope for smooth sailing.

Jun 04, 2010 01:39 PM #29
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

HI Lisa -- I have experienced this as well much to my chagrin.  It's frustrating when this occurs.  It's much harder to get accountability sometimes with out of state lenders in my experience.

Jun 04, 2010 04:24 PM #30
Lisa Heindel
Crescent City Living LLC - New Orleans, LA
New Orleans Real Estate Broker

Thanks for the comments everyone!

Janet wrote: "I am a lender who fully agrees with you that the best course of action is to use a local lender".  That's my point in a nutshell.  Most of us are champions of shopping locally and supporting our community economy, yet we don't apply that same thinking to the lenders who we refer our clients to. 

As a listing agent, I have no control over who the buyers are using to finance their home purchase.  But, I do have the chance to observe the differences in how a transaction progresses when using a local lender vs a national one.  Most (but not all) of the time, the local lenders win hands down.  The exception to this would be military buyers who are using USAA or Navy Federal.  Those are stellar examples of companies who have their processes down pat and close deals on time with as few hiccups as possible.

As mentioned by several of you, things are done differently from state to state and region to region.  If a lender is not familiar with local customs and laws (which is a huge deal in Louisiana since we still practice Napoleonic code) the entire process can be frustrating.


Jun 04, 2010 04:31 PM #31
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Thank you, thank you, thank you.  so many people shop and reshop loans over and over to get the best rate.  That doesn't mean anything if the sale can't close because of the lender!  I just had one recently blow up because of such an issue.  They are working with another lender now, but if they had listened in the first place.....

Jun 04, 2010 04:50 PM #32
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Hi Lisa, good one.

I have had several exceptions recently however.  Most of my buyers are from out of state, very financially stable.  I ask them if they have a relationship with a bank or credit union 'at home'.  The last 3 out of area lenders were excellent, right on the money, and had great service.  And very low loan fees.  One had NONE - and a low interest rate.

It was a bit of education about NV customs and laws. To start with, closing here means the minute it records. In many states closing means when the parties sign their paperwork - sometimes at the same time.  Here, it can be days apart, then it goes back to the lender, then funds, then records.

Close of escrow = the minute it records.  We don't use the term settlement.

I have had much more trouble with out of area title companies, communication with them, plus they have their usual customary closing costs - I tell them, I don't care what you think is customary, the contract says who pays what.

Jun 04, 2010 07:02 PM #33
Kristen Wheatley
Better Homes & Gardens | The Masiello Group - Brunswick, ME
Supporting Success - Best Job in the World!

So true!  Fortunately most of our buyers choose a local lender.  We tend to have so many problems with out of state underwriters and lenders.  Several closings at our office have been held because (at the last moment) the underwriters demanded that there be a termite inspection. termite inspectors in Maine.  Why?  There are NO termites in Maine.  It took days and days to get them to fully understand this.

Jun 04, 2010 07:32 PM #34
Wendy Rich-Soto, Realtor Strategize, Stage, Sell
Keller Williams Realty, LA Harbor - San Pedro, CA
Owner of @ the WRichTeam

Out of town makes this 10 times harder than it needs to be! 

Jun 04, 2010 08:54 PM #35
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Lisa it sounds more like you were dealing with a short sale than a trusty mortgage broker:)

Jun 05, 2010 01:26 AM #36
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Lisa, I feel so sorry for you!  I refuse to work with any buyer who will not use a local lender.  When I list a property I usually recommend to my seller that they require a local lender on the buyer side also.  If I can't walk into their office I don't want to deal with it.

Jun 05, 2010 07:00 AM #37
Charlottesville Choice Homes
Keller Williams Realty - Charlottesville, VA

Some lenders might take exception, but it is the rare, rare lender that can navigate an out of town loan.

Jun 06, 2010 10:53 AM #38
Sandy Fenton
Keller Williams NY Realty * Licensed Associate Broker - Mount Kisco, NY
ABR, ASP, CDPE, GRI -Westchester NY - Condos to Luxury Homes

I will agree that with most transactions, the local lender is the way to go.

I completed a transaction fairly recently with a couple buying their first home. One of them worked for a global banking company and their hands were tied regarding the lender to use because of a conflict of interests.  They used a bank that was waaaaaayyyyy out of the area (not quite as far as the west coast) and it actually was not a bad deal at all.  The lender was very open to communication and everything went fairly smoothly.  The only issue was that they underestimated our NY closing costs, but we were xpecting that, so all was well.

Jun 18, 2010 07:44 AM #39
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