Posts tagged Mortgage

One Reason Why Real Estate Closings Are Being Delayed

“I had four closings last week, and three were delayed because of the banks.”

“I had three closings this week and they’re all screwed up because of the banks.”

“Our movers said that every single one of their moves was delayed because of the banks.”

These are just a few stories I’ve heard over the past month. Parts of the Charlottesville real estate market are picking up, but one aspect that is adding tremendous frustration to the process is the lending side of the equation.

There are a lot of variables that can affect a real estate closing, but there is one truism – don’t schedule your move for the day of, or the day after (and to be safe, wait at least two days) closing. In Charlottesville, you don’t get the keys until the transaction is recorded.

This is not personal; most of the lenders are really nice. The system right now could justifiably be construed as a disaster. The “system” being those people who touch the loans is a mess. From the lender to the processor to the underwriter to the closers, the system is screwy. So …

Be prepared. Be prepared to be patient, to answer more questions than ever before – from multiple years of tax returns to a copy of your college diploma – if the lenders ask for it, it’s not because they want to annoy you, it’s because that’s what the system tells them to do. If they ask for it three times – that’s a pretty clear indication that the system is broken; don’t fight it, just do it.

From The Perfect Loan File in Forbes: (read the whole thing)

It all comes down to your proof. If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” – because it won’t be. This is where the approval process tends to go off the rails, when the lender asks for specific documentation and the borrower supplies something else. Here, too, is where both sides get frustrated. So if the lender asks for a bank statement and there are 5 pages for that bank statement, send them all 5 pages, and not just the summary. If you send them the summary page and they ask again, don’t complain that the lender keeps asking for the same thing when you never sent it in the first place. This may sound elementary, but the vast majority of mortgage approval process woes stem from scenarios just like this.

Why are lenders being so much more redundantly, infuriatingly stringent? Because they need to be able to sell their loans on the secondary mortgage market (you know – Fannie and Freddie). Now that there is some risk associated with making loans, lenders are being overly cautious. Related: How to Explain the Mortgage Crisis to an 8th Grader.

Such is life. Knee-jerk reactions are human nature (see: HVCC). We’ll get through this, but for now, be prepared for frustration, and use a lender you trust; I greatly prefer local lenders (with one exception).

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Changes coming to FHA loans

“We want to ensure that we are able to continue to support the housing market in the short term and provide access to homeownership over the long-term, while minimizing the risk to the American taxpayer,” Housing and Urban Development Secretary Shaun Donovan told a congressional committee in written testimony.

…The FHA charges an upfront insurance premium of 1.75% of the total cost of the mortgage which most borrowers can roll into their loan, and then they pay additional annual premiums of either 0.5% or 0.55%, depending on their down payment. … The FHA says that it will limit the amount of money that sellers can provide for closing costs on home sales to 3% of the home price, from the current level of 6%.

…One close observer of the mortgage channel, who we hope to interview soon in The IRA, says that given the recent deterioration of mortgage credit, it is impossible that BAC has not gotten its pari passu portion of the losses which are hitting the FHA.

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A Cautionary Tale – Yet another Due Diligence Question for Buyers, Sellers and Realtors

( ed. note : one of my more favorite questions of late is, “tell me about one of your dissatisfied clients, and why they were so dissatisfied”) We’ve never seen a lender hauled before a panel of their peers on ethics charges (as happens in the Realtor community) though there’s certainly been ample cause. … There are a lot of good lenders who can get deals closed in this lending environment and will tell you if it’s not going to work.

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Green Financing reaches possible mainstreaming

CEO, Tomek Rondio, will introduce the National Green Residential Mortgage Underwriting StandardC at the Capital Markets Partnership Organizational Meeting at JPMorgan Chase, 1 Chase Manhattan Plaza, 28th Floor, NYC, June 19, 2008, 1:30-5:00. … During the past seven years they have completed due-diligence, tested and refined this market opportunity, authored underwriting standards and are well-positioned to move forward and expand nationwide as leaders in green real estate financing.

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Some good news

Keeping with my grasping at good news theme : From an email sent to SunTrust lenders on Friday: This e-mail has been distributed to all Retail employees who are on the STM Communication Intra-Day Pricing Change distribution list. Price Change: IMPROVING MARKET New Rate Sheet: 2008 076 A Available on intranet: 4:00 pm Please be sure to share this notice with all appropriate Retail employees in your branch or office.

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