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SubPrime Ripple Effect; is your closing date safe?

Mortgage and Lending with Wells Fargo Home Loans


The problems in SubPrime lending are starting to take a toll on the rest of the lending world.  As fewer and fewer lenders exist to approve, underwrite, and fund loans the remaining SubPrime AND Conforming lenders have to pick up the slack.  Well this sounds great for them... at least at first.

The new problem is that lenders have to figure out how to fit "80 pounds of [loans] in a 5 pound bag".  The result is that underwriting times are becoming extended.  Long gone are the days of 24 hour turn around times.  Some lenders are running at 5 or more business days between the time the loan is submitted and the time it is finished, add in another 3 days at least between when conditions are submitted and when it is cleared.  What used to be a couple days to a week process has become at least a two week process.

So what is the solution?

Keep on top of things, be proactive not reactive (get it done ahead of time, don't wait to be asked).

Or find a lender that can still get things done tomorrow... literally.  If you know who to work with you can submit a loan today and fund it tomorrow.

Rick Turner
Key Realty - Toledo, OH
Puts People In Their Places!!

The way I see it, the new challenge for me, as a Realtor is to work with buyers ahead of time, through Home Buyer seminars and the like to educate the serious purchasers that they need to get their house in order before they start shopping.  Then when they are ready to shop, they'll be clean as possible.

More work but if we start now, we should have more opportunities down the road....  Gotta be like the farmer and plant seeds now for the future!

Good post!

Thanks &,

Mar 30, 2007 07:08 AM
Brian Papaccio
Wells Fargo Home Loans - Newark, DE

Rick  That is a good point and many people are starting to clean up their credit, etc. so they don't have to go SubPrime. 

However, the problem is there are too many loans for underwriters to go through in a reasonable amount of time.... both SubPrime and Conforming lenders.  The example I gave of 5+ days for underwriting is for a nation wide bank who is in the top 5 for mortgage lending.  The remaining subprime lenders are backed up as well.  So it doesn't matter how much your borrower cleans up their credit and everything else, if the process is not timed well, underwriting could cause your closing to have to be delayed.

Mar 30, 2007 07:19 AM