Too often, loan closings gone bad could be easily avoided buy better communication and explanations. In many cases, communication between the lender, realtor and borrower breaks down, and the majority of times simply due to assumptions.
The lender assumes that the realtor ordered something; the realtor assumes that the realtor on other end handled something; and borrowers feel that they simply just need to show up at settlement. Proper communication can alleviate problems and prevent delays. The key is establishing these parameters up front and throughout the process.
Before choosing a lender and realtor, interview them. Ask basic questions about the process, hurdles, and expectations. If you are not satisfied, maybe you should keep looking. If a lender or realtor is unable to answer your essential questions to your satisfaction, that should be a warning sign of how the transaction will go if you do proceed.
Glenn, a loan officer from Pennsylvania wrote to tell me how he sent a borrower that he approved to a realtor in another market and explained that everything was set. They were approved and he would handle ordering the title and appraisal once the contract was ratified. The realtor ordered title work with another firm without notifying anyone.
A week before closing, the buyers received a bill from the title firm for “work performed” which both shocked and scared the buyers. The realtor advised them that if they did not use that firm, they would be billed. Glenn, while unhappy, acquiesced and worked on settlement. That firm missed the deadline for settlement (only 2 employees) because one was on vacation and the other “didn’t feel well”. The buyers incurred significant additional costs and it ended up that the sloppy firm was still several hundred dollars more in cost than Glenn’s.
Emily, a processor here at Freedmont ® explained that some of her delays are because some Human Resources departments are not quick at responding. She offered the advice to ask borrowers to notify their HR department to expect calls, emails and requests and to please fill out and return within 24-48 hours. Good advice, and I would add that the borrower should also notify his CPA (especially if self-employed), insurance agent, and others also to be on the lookout.
Communication is key in any endeavor, but especially so in financial transactions. The recent rate drop has created a mini-boom in refinancing activity, which has many lenders caught off guard. Appraisers are now running a few days behind, as are underwriters and others.
Speak with your lender about expected turn times and plan accordingly. If in doubt, discuss adding a few days to the proposed settlement. It is always easier to move up than to push back.
The earthquake on Tuesday seemed to help stocks and push bonds a tad higher. Reports indicated that it was a 5.9 magnitude. No confirmation yet that S&P already downgraded it to 4.8! If you laughed, thanks.
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