As you all know there has been an increase in applications in the recent months. Much of the increase can be attributed to a drop in the rates that open the floodgates for Streamline FHA refinance activity and rate and term refinancing activity for those with equity. Many wholesalers that were 2-3 days in underwriting dropped back to 7-8 days in underwriting. When you have a 30 day escrow that begins the day that the bank accepts an offer, in a month like February, which is short and has a bank holiday, there is little margin for error.
Many times the wholesaler will offer incentive for a full package. This would include an executed purchase contract, preliminary title report, appraisal and all other documentation that the findings has asked for. The goal is to have the underwriter touch the file once and clear the file for loan documents. Many times there are a few conditions that are required to be met for this to happen so the Loan officer gathers the items and sends them into the wholesaler. They are then reviewed which may take 2-3 days. Finally, clear to order loan documents.
The delay starts with the banks inability to get an executed contract back to you in a timely manner. On the worst file I have worked it took one month plus prior to receipt of the fully executed contract. The contract was accepted on the 22nd of November and I received the fully executed contract on the 23rd of December. At this point I was given the escrow company to request a copy of the prelim.
Here is where I get to my point. Many times at the point that the file is approved it has been much longer in # of days than we would all like. In a perfect world the bank would quickly sign the offer, escrow would not be slammed and title would get us the report. The file would be submitted and no conditions would be needed, We would go straight to loan documents. This is rarely the case as the wholesalers are being very thorough in their underwriting. The more they need the less they want to touch that file again. It is our job as Loan Officers to collect all the documentation that they want to ensure the fewest amount of touches per file.
There have been several instances, primarily on a gift letter for FHA, that a consumer is reluctant to ask the giftor for a copy of the bank statement proving they have the funds to gift. I understand a parent or family member being reluctant to let another family member know how much they may have. At this point we are asked by the client and the Realtor if we can give them what we have, get to the signing and ask the parent at that time for the document because the parent can see that this is going to happen.
The Answer: Anytime we ask an underwriter to fore go a document that is necessary to make the file saleble or insurable in some cases we are asking them to put their job on the line to trust that we will deliver. They are doing a loan officer a favor in good faith to help us keep moving forward so our Realtor partners do not begin to believe we are not performing. In the event the relative refused to give up the documentation at a later time and date and the loan had been funded in good faith we are subject to a possible buyback. This is a cuss-word in the broker world and at the wholesale level. This is very costly.
Underwriters want to get the file moving forward as bad as we do. All they want is for us to get them the proper documentation at which time a RUSH can be an acceptable request. We are rushing to meet a bank imposed deadline that started slow because they could not get the contract out.
The Solution: We are all a team looking to accomplish the same goal: to close a transaction and help a client into a new home. The smoother the process the better. As the professionals it is our job to convey to the consumer the importance of the documentation and why it is necessary. Communication and working together is the key.
I am very fortunate to have some great partners in the business who help to facilitate the closing in a manner that makes everyone happy. I am writing this to go on record that there are times that a client echoes frustration in the turn times. This is a great opportunity to support all parties involved and educate the consumer. I have seen many cases where the professional chooses to complain along side the consumer. This is unacceptable. We all want to get the deal done.
If you want to delay your file from closing then ask your Loan Officer to ask for a rush prior to them having all the appropriate documentation. Ask them to try to skip steps in the process. In the end all the steps have to be complete. My question is whether you want them to happen prior to the client signing or prior to the client expecting to get the keys. A smooth post signing closing is a happy client no matter what the ride before it has brought. As long as the ride has been explained and they have been educated they are happy to have the key.
Asking for Rush without all the documentation necessary is certain to cause an Underwriter to want to delay. Just ask yourself this: Do you like working on files that come to you complete and well packaged or do you like the incomplete sloppy ones?
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