This morning I heard a Realtor talk about current happenings in real estate. She made the comment that we should not even have 30 day escrows any more and we should toss out the short contingency removal times.
In my area, San Jose, it is common for most contracts to be written on a 30 day escrow with 17 days to remove the financing and appraisal contingencies. Many times the realtors making the offers don't look at the calendar and consider the weekends and holidays that may be coming up.
I think during the crazy times of loans the mortgage industry lured Realtors into fast closes for the transactions. All we did was take a loan application, run a credit report, and order the appraisal. Within 30 minutes of meeting with a customer I could have a complete loan application and have my credit report and the appraiser was on the way. We would obtain the appraisal within three days and the loan was sent to the bank. The bank "glanced" at the loan and approved it.
I am writing this assuming 100% complete honesty on the part of the customer and the mortgage broker. As soon as the bank reviewed the loan application and the appraisal the loan was approved and loan documents could be ordered.
For honest people this was a wonderful system and way to do business but we all know what happened. So that created the loan market for today. Today every loan (at least every loan that I do) requires proof beyond proof; taxes, pay stubs, bank statements, etc and etc. The files are now thick and paper intensive.
That creates a slow down because now an underwriter needs to not only look at but study - really study every piece of paper in the loan file. That certainly slows down the process from a few years ago and because there were so many 'questionable' loans in the past the underwriters are determined to not let any question go unanswered.
As of this writing I have only gone beyond the 30 day escrow 4 times in my career...but three of those times have been in the last year and I have been doing loans over 40 years. I think Realtors put undue pressure and stress on each other and the buyers and sellers by continuing to demand 30 day escrows. It might be wise to reconsider the length of time allowed to complete the escrow.
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