The Lending Fallout from the Trenches
In this crazy market of foreclosures, investment purchasing, and economic shakiness, I have experienced that lending institutions are sometimes risking losing good, qualified buyers in their fear and sometimes downright inaction.
I have had two escrows within the last three months that have gone longer than the typical 30 days it usually takes for getting an escrow closed, based entirely on the lenders.
In one escrow, I had an extremely well-qualified buyer who was purchasing a residential full-time home, but we kept hitting snags. The lender was located in a different state — which I've learned to now insist on a buyer having an in-state local lender due to such extreme differences in markets and the difficulty in not having face-to-face interaction.
When I called to check on the status of the loan on day 18, the lender had not ordered the appraisal. So I called the buyer's agent to let him know that the lender was not staying on top of things, and I then left it in his newly licensed hands (which I didn't know until the end of escrow).
I continued to call the lender each day to make sure things were moving along and I kept getting the same answer, "Everything is moving along, we're moving forward" — which really translates to "something's come up and I'm not going to tell you about it" or "I have a tee time at 2 and will get to this file tomorrow."
A few more checkup phone calls later and the lender became upset at my frequent calls and
wouldn't talk to me anymore.
Flash forward to day 35 — which should have been COE — and the appraisal still hadn't been ordered, despite the lender assuring me it had been.
It wasn't until day 42 that the appraisal was finally ordered, but the lender then had an appraiser more than 2 hours away do it so we didn't get it back for another two weeks.
By the time three months rolled around, the seller was very upset and on the verge of canceling. Luckily, we were finally able to close before that happened, but I think I have a cell phone bill that will be three times the normal amount from the last week of the escrow alone.
As if that ordeal wasn't bad enough, now I'm onto my next transaction and running into more problems. In fact, it has been ongoing for 60 days now, due to the lender sending the file into their QC department more than two weeks ago where it seems to have fallen into a black hole of no return!
The buyers had submitted paystubs that looked very similar and had the same dates on them. This raised a huge red flag with the lender so it was sent to QC to verify the documents.
The buyer's employer had made an error when printing the paystubs, so the buyer got a letter from his employer verifying his income. But that wasn't good enough. The lender sent the original documents to the FBI for fingerprinting and complete questioning ...
The lender now has no clue when the file is going to come back approved, since the QC department doesn't tend to communicate well with others.
After these two "challenging" situations, it has become quite clear to me that there is a lot of fear among lenders that is preventing them from moving forward on transactions today. But why do well-qualified buyers have to pay the price? After all, many lenders helped create the current lending situation by providing loans that were dangerous to the common home owner/new home owner who didn't fully understand what they were getting into.
I only hope that lenders realize when they have a truly good buyer on their hands, be thankful for them, and then get the loan done in a timely fashion and stop putting up roadblocks.
Amy Steele is a full-time REALTOR® with Bibby Realty in Crestline, Calif.
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Comments
hi, guys I think about it The Lending Fallout from the Trenches,If I seem to be obsessing on the global credit situation, forgive me, but it can’t be ignored as it all affects the ability for buyers to borrow money to buy homes here and elsewhere.I wonder how this works. Do the banks show up to bid on these properties to retain title, or do people just buy them for whatever price, the city transfers title, and that’s the end of it.
Rocky
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Posted by: avnish | July 25, 2008 03:10 AM