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Five Keys to Quick Closings from the Lender's View

So the offer has been accepted and the closing date is 27 days away. Seems like amptle time, right?

Depends

If you want that file to close on time there are FIVE KEYS to drill into the borrower that will help regardless of the lender. You see without the FIVE KEYS there is no lender who can be guaranteed to close the best loan on time.

The mortgage broker in most cases will take care of ordering title, ordering insurance, ordering the appraisal, and scheduling the closing but there are certain things a buyer or real estate agent can do to expidite and if they do these things, regardless of who’s responsibility it is, the loan can almost be guaranteed to close on time.

1) Get the borrower’s RESPA documents and any other required initial documents back to the lender the day after receiving the package. In today’s climate most packages are sent to the borrower overnight. My company includes an overnight envelope with our UPS label already affixed so there is no excuse. If the borrower has questions they should FIRST review the package with the LOAN OFFICER. Sorry, as good as the real estate agent may be there will be dozens of answers the borrower can get only from their LOAN OFFICER. This does not mean the agent cannot review the loan with the borrower but just like we don’t want loan officers writing offcer letters and buy/sell agreements the agent really does not need to be making changes or comments about the loan documentation. Don’t be offended – there is no way you can possibly know all the answers.

2) Do not put the appraiser off. In fact, if the appraiser has not contacted the borrower within twenty-four hours call the lender and see if you can call the appraiser directly. Most appriasers will call immediately to schedule the appraisal so this generally isn’t an issue but keep in mind it may be.

3) Gather documents the lender may not have asked for even if you applied for a loan which does not require them. If you are with a manual underwriting lender they may come up with some crazy stuff days or hours before closing. Get copies of all of your income and assets documentation. Find your most current statement from all of your credit cards and loans. Keep ready the last two years of income tax documentation and all pages of the last 12 months of your bank account(s). You may not need these but you should always keep them together and ready anyway.

4) If you have had any judgments or collections against you including a divorce or a deceased spouse which may come into play make sure you have all of your legal documentation at hand should the need arise the morning of the closing. Bankruptcy discharges and all the documentation that go along with what was supposed to have been included in the bankruptcy are very crucial.

5) No matter how hungry you are or how long it has been since you sold a home do not drive the loan officer or processor nuts with phone calls. A once a day conversation is all that should be required to get the information you need. If you are working with a lender like Novation Mortgage you’ll probably have a website you can login to for instant updates about the status of the loan.? Everytime a loan officer or processor receives a call and they have to answer a question that means they have to stop working on their current task (which may have been yours and someone else called), get back into the mindset of the loan you are calling about and probably do some research to answer your questions. That means your five minute phone call could cost twenty minutes of work time for the processor or loan officer. Multiply that times about 10 calls per day and that’s how phone calls clog up the system.

Is this a guarantee that your loan will close on time? Hardly. There are title issues, insurance delays, lender workload (especially near the end of the month or the end of the year), appraisal issues, and even attorney issues. The keys are to remove the five possible delays.

Generally the top causes of loans being delayed in closing are:

1) Borrower not being expedient in returning documents
2) Seller slow (HUD especially) in returning executed agreements/addendums
3) Insurance agents/companies returning incomplete or incorrect insurance policies (you have NO idea how often this happens)
4) Borrower not being able to provide the necessary documentation and thus losing their qualification for the original loan program
5) Appraised value coming in lower than the contract value
6) Changes in borrower’s status: marital, employment, income, credit (somebody is GOING to buy a new truck or quit their job or leave their spouse)
7) Government contracted closing agents (argh) who don’t (a) care about your closing and (b) have a clue about what they are doing because they worked at Timmy’s Ribs and Burgers last week.

I hope this gets your mind thinking about how to get it to the table smoothly and if we all communicate and work together without acting like evil step-sisters we can do it!