Tuesday, October 25, 2011

What's it like trying to process and close mortgage loans these days.

  To the best of my ability, I am going to try and explain what its like trying to get a mortgage loan closed these days.  My clients never hear this side of the story as I do a good job of shielding them from the day to day nonsense of dealing with banks in 2011.  Frankly, if I told my clients everything I deal with, they would be suicidal and probably not believe half of what I tell them anyway.

  Just getting the loan to the bank is much more difficult and paper intensive than it used to be.  It used to take me about an hour to put a file together.  It takes 3 times that now. The lenders have added (and continue to add) new disclosure forms all the time. Mostly, they are due to new legislation or amendments to current legislation.  When we receive them, we most often are not sure exactly how to fill them out and we get very little direction from the banks on how to do it.  Added to that, we can speak to 3 different people at the bank and get 3 different answers.  Its crazy but a most of the time, the banks are getting no direction from the regulators because the laws are all subject to interpretation.  Its the blind leading the blind. The politicians pass the laws and its like the wild west after that.  Good examples of this would be the Good Faith Estimate and the Mortgage Broker Disclosure Form.  The updated GFE is more than a year old and I still have a hard time explaining to clients how it is structured.  Here are some more examples o wha i deal with getting a file to the bank:

1. Most of the dates on the paperwork must match. 

2. If some of the documents are not filled out properly, the bank may cancel the loan and the interest rate lock.

3.  If you submit bank statements that comprise a hundred pages and the last page of the statement is missing, some banks will suspend the file pending receiving that last page.

    Getting the commitment letter can take 2-3 weeks.  In a normal environment, it would be 2 days.  The appraisal process is a disgrace and that's not an understatement.  It used to be that I could order an appraisal through an independent appraiser who I knew and trusted and that appraisal would be good at any lender.  Now, the bank orders the appraisal and I am not even allowed to speak to the appraiser.  In some cases, I am 3 people removed from the appraiser.  What should take a few days, is taking weeks.

   We are seeing more bizarre conditions now than ever before.  I had 1 bank tell me that he borrower needed to change the address on their drivers license because it didn't match their home address and that they needed to explain why their bank statements were coming to their primary residence.  How do you explain this type of stuff to a client?  I have seen banks sign off on appraisals and then weeks later ask for additional comparables right before closing.  Moving files into the closing department is like pulling teeth.

   The positive in all this is that my clients know almost none of this as I do a good job shielding them from the nonsense.  Most of the time, all they know is that it takes a little longer to close a loan and there are more documents to sign than before.  Their experience is very different from mine but that's the way I want it.


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