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Time Limit on Loan Approval on GAR Contract? Okay, go ahead …

Before I get too deep into this post let me say that I respect what real estate agents do. I know and understand what they do because I have a very close relationship to a brokerage run by my sister and owned by my wife. Also let me add that I believe applicants should be required to have something to lose if their loan application contains misrepresentations or if they change status of job, income or credit during the loan process.

If a real estate agent is going to have the authority to place pressure on a lender through creating a time constraint on loan approval then the agent must be required to attend a lender offered (not real estate training company offered) mortgage 101 class. They should also be required to work in a mortgage brokerage for 30 days. You see, the problem 95% of the time will be found with someone other than the lender. Lenders, like my Novation Mortgage, can underwrite and fund a loan in 24 to 48 hours. It’s the trail of tears leading to the underwriter’s desk where problems flourish.

A smart buyer will get pre-qualified before they ever speak to a real estate agent. That way they will know their buying power and how much it will cost them. That same smart buyer will be honest and accurate with the data they provide on their initial mortgage application. They will complete the application using real numbers and accurate facts. But I am dismayed for there are precious few of this type of buyer. If you are a buyer reading this blog posting I have the feeling you are one of the smart ones. Thank you.

Agents want a time constraint? Put it on the buyer – do not put additional pressure on the mortgage side of the table – we refuse to accept it. We will work no faster unless we can charge more and that won’t even help – it will just help us feel better! We are limited on how quickly we can assemble a loan package on the broker side by how quickly the agent returns to us a LEGIBLE and FULLY EXECUTED sales agreement, the appraiser returns an ACCEPTABLE appraisal, the title comes back clean, the insurance agency sends the policy with the correct spelling and verbiage (oh, sore spot for us lenders there), the borrower returns the fruitin’ RESPA package … HELLO????

Do you know that we cannot use a faxed copy of a faxed photocopied sales agreement to fund a loan? Do you know that with some insurance companies that have the words FARM and BUREAU in their name that the buyer has to physically drive to the agency and give them a check to get the policy issued and if the Loss Payee Clause is incorrect it takes an act of congress to get it corrected? Do you know that if the broker submits a loan package to the lender without all of the required documentation (as this provision will make them feel pressured to do) that the underwriter will put the file in the “I’ll get to this one when I have all the documentation” stack? Can you believe that an applicant can state on their application that they make $10,000 per month and then have evidence only for $9000 and that this actually can make a difference in their DTI large enough to cause a denial and did you know that applicants aren’t always the quickest at getting ALL of the required documentation back to the processor?

How many times have loan originators said, “I need all pages, back and front, everything that comes in the envelope, of your last two bank statements”, and what comes in the package? Page one only. Or pages 1, 3, 5, 7, 9, and 11 – because they copied only the FRONT of every page.

10 to 14 days. That would be wonderful and lovely and as a lender and a broker it would make my life so much less complicated and stressful. The problem, Tim, is people. People don’t do their job. You see, appraisers get paid whether the loan closes or not. Insurance agency employees charged with typing the “Loss Payee Clause” get paid whether they spell it MORTGAGE or MORGAGE … can you even imagine this happens? And can you believe that so many people have committed mortgage FRAUD that we not have to check, check, recheck, hire someone else to check at a cost of about $65 PER LOAN closed or not, and then do a final check on the entire packge: the property, the seller, the listing agent, the buyer’s agent, the buyer, the appraiser, the title agent, the mortgage broker, all have to pass a FRAUD RED FLAG examination to make the loan package a viable commodity on the secondary market? Does anyone know what it costs me to deny alone? Anyone? You there in the back with the yellow jacket. That’s right! About $700 is what it costs for me to deny a loan IN THE EARLY stages of the process.

No. Probably not. But that’s okay for this is only one of the reasons it takes so long to close a loan. We call it fiduciary.

My first blog was so much better … I should sue Gates. Anyway, back to the action.

And HUD, oh good grief! HUD takes two weeks to return a fully executed contract on which the signatures cannot be made out and heaven forbid there be any addendum.

So while we all would like to put everything into a nifty little package and say “presto change-o instant closing loan-e-o” it ain’t going to happen UNLESS:

All buyers call the Loan Originator FIRST before even THINKING of calling a Realtor?