Is it just me or is this happening to others too? On three of our recent deals, something rather unique has happened that derailed the closing at the last minute.
On all three occasions, sudden conditions miraculously appeared during the final hours before closing. When we asked why these issues suddenly became significant we were given the same explanation:
“The original underwriter went on vacation and when the replacement underwriter looked at the file they discovered the problems.”
What??? One could understand this happening once, but not three separate times over a three week period.
So I’m thinking that there are only two possible explanations for the phenomenon and they both involve billions of taxpayer dollars.
One is that the banks are so flush with cash that they really don’t need to make loans to stay in business. Why would you care about customer service when you can easily get the money for doing nothing?
The other is that they really are spending the money on vacations and the good life. Obviously, they are not using it to make loans.
Whatever the reason, the poor homebuyer is left in the lurch as the “vacation” shuffle continues. It must be nice to have such liberal time off benefits.
In the meantime, loans are lost as contracts expire.
No problem, they know where to get the money.
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Richard, interesting. I always find it amazing that when the person taking over the file finds something wrong. Something sure does smell rotten in Denmark. You are on to something here!
That is a beautiful photo, where did you take it?
Richard......one of my team members just experienced that.....both parties were without shelter.....the bank had no explanation other than there was another condition to be satisfied, the day before closing....took a week.
Richard,
Three instances over that period of time is not a coincidence. Sounds like a conspiracy to not give loans.
Rich
Richard, it seems like to me that the home buyer and seller are always the ones who seem to get stuck right at closing time. Frustrating!
Richard - When they are not spending our money on vacations then they are using it for their bonuses. The little people get the vacations...the guys at the top get the bonuses. The reason nothing will be done to correct the mess...the politicians get the money through PACs. See it all works out for everyone but who it was intended for.
Hi Richard! It's possible the banks are using the taxpayer's money but I can assure you the underwriters are probably too low on the totem pole to be reaping the benefits!
You can be assured. . .they will be coming back for more when it runs out!
Conspiracy??? Of course.
They know a deadline is approaching for the tax credit. They never "gear up" for deadlines. They simply have no identification with the consumers in our country, you know, the folks who underwrite the economy. Those folks who have been "screwed" royally over the past 4 years of the mortgage mess.
Andrea...
Well, the initial comments suggest that I am NOT crazy. Wow, this could get interesting.
The film photo is was taken at White Crest Beach, Cape Cod Massachusetts! Thanks.
Barbara...
OK you just confirmed it. "A week" seems to be the most common suggested delay. Not one day, not two, but a whole week. There is something afoot here. Thanks.
Rich...
I truly believe that to be the case. Thanks.
I hear you Richard, Where are our representatives from NAR? Most Realtors have been complaining about this type of experience since September of 2008. If it takes more than 1 year to make policy in this country we should all be outraged! I guess they have figured out, all of us will either forget within 2-3 months or were all too busy to complain and fight for what's right!
The real villan here is special interest. In this case it is the banks. The Obama administration signed a Bill that had been stuck in committee for years keeping banks out of real estate. Now those same banks who made this big mess to begin with are screwing with us. AND they have their lobbyists out telling us big government is the problem and they should remain as unregulated as possible. The sad part is too many Americans are drinking the lobbyists koolaid. We need strong government oversight . Not in the form of government take over but in the form of regulation. I do not know where NAR is but they need to be lobbying harder. The situation is terrible. In my opinion this move by the banks is an effort to get mortgage brokers out of the business. Silly you say? Tell me where the independent gas stations went after the oiol"crisis" of 1972. It is reprehensible that the folks that made the mess are now trying to dictate the terms of the recovery. (rant ends)
I hope all of them eventually closed!!! I read a blog yesterday where a seller was not able to close because she was too old... (80 years old)...
Re: comment #12 - I hope that 80 year old buyer takes the lender to court for age discrimination!
You are not imagining things...this could be a heck of a spring...as if it hasn't already kicked my butt. Haven't had a day off in months! To have the lender pull this at the last minute will be the death of me! I do find that my in house lender (a bank) and other local banks are less inclined to pull this stuff...at least so far.
Richard, this has been happening with commercial loans as far back as I can remember. The underwriter always seems to need another piece of paper and doesn't seem to get too upset if it delays the closing. It looks as if the underwriters are getting just as critical with home loans. I hope your three closings work out.
The banks inadvertently discovered a new business strategy. Rather than be successful, it is better to fail because there is so more money they can get that way and whatever they ask for they receive. Imagine our fate if we took the same approach.
Bob...
And if that's the case, just tell the truth and not make up some phony baloney excuse about a vacation. Thanks.
Diane...
That explanation makes perfect sense to me. Thanks so much.
Susan my dear...
No, but they have been instructed to "cover up" for their bosses! Have a great day my friend.
This situation is infuriating --- Richard, its happening everywhere! The banks are used to be in the business to make money by LENDING money----but it is almost as if you cannot PRY it out of their hands---but why bother??? when the Government is handing it out so freely!
Richard, That is so frustrating. I hope they close.
This makes no sense whatsoever. It's too bad that Americans can't vote against the banks...oh wait, yes they can...remove their money and place it in credit unions....hmmm
No accountability for these ^(*&%#$*>!!!!! Just lost a deal in FL when the bank accepted a better deal AFTER 2 weeks earlier accepting a deal from our co-broker there. No recourse....
Incredibly frustrating. Sadly, it's the buyer and seller who are left out in the cold....in some cases, literally.
Three in a row??? Thats crazy. What is really crazy though is that it should make no diff if one underwriter leaves and another takes over the file. They should all be on the same page as to what is needed to close. It should not differ from closer to closer. Sad state of affairs for sure.
It's bad enough when the underwriter adds a new condition, but I have had the person conducting the FUNDING REVIEW add conditions.
How sad and frustrating for your clients. Its devastating news and I can't imagine having to explain and counsel three different sets of clients in the same week regarding the same lame excuse of the overseer of the file going on vacation and now the new person wants more docs. I hope all of the files closed or will close in time for everyone to get the first time home buyer credit. Best wishes to you and your clients.
Richard they definitely don't need to lend. They got billions with zero interest and can make an easy 3% buying treasuries or making a few loans. Why risk more foreclosures?
It just happened to use too. Clear to close last Friday.
Then other conditions. Bank of America...surprised?
I have not gotten the vacation excuse but I have dealt with the frustrations you experienced. I can give you two explanations for what is happening. First of all banks do not make money by lending you money. They make money by selling your loan to an investor. Before the housing bubble burst, lenders did not worry about selling the loan once it closed. There were many investors earger to gobble up mortgages. Now, everyone is gun shy. What now happens is that once a loan goes through the lender's underwriting process, they want to be sure they can sell the loan so they give it to the investor to make sure they are willing to buy it. The investor may look at the file and ask for additional documentation. In essence, it goes through a double underwriting process. This is what causing the delays.
The second explanation is that lenders are cutting back on their expenses so where there may have been 3 underwriters, there now is one. Obviously, this will delay approval time.
"Paranoia is defined as the exaggerated or unfounded fear that others are trying to hurt you. That includes thoughts that other people are trying to upset or annoy you, for example, by staring, laughing, or making unfriendly gestures."
But it doesn't appear to be unfounded or exaggerated when your a real estate agent.
Comment #28 seems to be the most reasonable explanation.
Are all three with the same lender? I'd try to find another lender to recommend to my buyers. Three strikes and they're out in my book.
Richard,
I've run into this, too. I think sometimes vacation is a nice way of saying that the person is no longer there. I wish banks would decide what their primary business is. :)
Steve
I don't think anyone expects a closing on time anymore. I get so angry over "another stipulation"! I know it is not the local LO causing the problem but his underwriter and their higher ups. This is a frustrating year!
Richard - Paul Warkow comment #28 made a good point which raises a question ..... if the banks are acting as a middle man and selling the paper surly a good Mtg Broker is a better route to go ..... Interesting enough I've have had a bank employee use a Mtg Broker as they provided better a rate than the bank that employed them
Morning Richard, My concern with what you say would be that two different underwritwers looked at the same file and reached differing conclusiobns !
I think the problem here is a lack of veracity. If the underwriter can suddenly determine that there is more money to be made by selling the loan to a different investor that needs additional documentation, then be honest about it!
Don't insult your CUSTOMER'S intelligence with this vacation crap. It's condescending and demeaning. And while I won't name names, in two of the scenarios, the words "bank" and "America" might have figured in somehow!
Richard: I experienced that on a loan that had three settlement extensions last month. The underwriters were always out. They kept up the mantra, "Just get an extension from the seller." Problem is, sellers get sick of giving extensions. Thankfully, we got it closed, but if we had to ask for one more extension, my buyers would have lost the house.
Great you wrote about this. This is one of the things I tell buyers to ask their lender. "When is your vacation?" If it's during the time before closing, they need to find a new lender. Nothing gets done and the substitute can't take care of problems. Underwriters are just as bad. When's MY vacation??? My business goes right along with me!
This is absolutely deplorable. I recently had a transaction where everything was agreed and then our favorite bank came back and stated "OOPS, we decided to change our agreement, raise the price and extend the closing date...AGAIN and BTW we fired our last negotiator who signed off on all this!
My clients refer to this lender as "Bend Over America"
They think that they don't have to give an explanation for it either. The funds should have been given to the deserving families so they could have purchased the homes CASH. Hence no underwriter needed
Rich,
Interesting post. Perhaps you are dealing with the wrong lender(s). Try using a a Comminity Bank. As they are smaller and operate in a smaller geographic area you may find these issues to vanish. Community Banks have plenty of money to lend and often have the interest of their community at heart. Back in the stone ages of mortgage lending the source of funds were building and loan associations or savings banks. These banks have been replaced by community banks. Hope this will work for you.
Ira
Richard:
This might be a bit of a reach, but this happens on almost every loan lately. I've just assumed it's because they want an excuse to have another underwriter look at it to try to find reasons not to give loans.
Richard:
This might be a bit of a reach, but this happens on almost every loan lately. I've just assumed it's because they want an excuse to have another underwriter look at it to try to find reasons not to give loans.
Richard:
This might be a bit of a reach, but this happens on almost every loan lately. I've just assumed it's because they want an excuse to have another underwriter look at it to try to find reasons not to give loans.
Had one with a lender I've used and been happy with for years and years get derailed in underwriting this week too Richard. I didn't get the "vacation" line, but none the less, I think something is going on that we have yet to hear about.
Richard, I have said it before and I'm sure I'll say it again...If you are not being rewarded at the time of completion (only) then there is nothing to force you to do your job on time. I think everyone should be paid by commission...things would change!!
Richard, this seems to be common. I have had that happen to two recently.
Hmmm . . . maybe the "vacation" is that they were fired. Maybe they were fired because they didn't dot the "i" and underwrote the loan anyone. But, I do agree with you -- THREE is a bit much, and very unusual.
Richard, you wrote this:
If the underwriter can suddenly determine that there is more money to be made by selling the loan to a different investor that needs additional documentation, then be honest about it!
This is off base. The loan is locked to a specific investor by the loan officer and then submitted to the underwriter to get underwritten to the guidelines for that specific investor.
The underwriter does not care if more money can be made by selling the loan to a different investor, and has no authority to simply switch investors (for any reason).
It is unfortunate that conditions have worked their way into every little step along the way of the loan. I know how frustrating that is. Please know that it is NOT the fault of the underwriters.
The job of a smart and savvy loan officer is to stay ahead of the underwriter by making sure all the cans of worms stay tightly closed, and by solving conditions before they ever have a chance to arise.
Vacationing with Americans' billions of dollars? Well...duh...
Only in America. Isn't it a great country or what? You can legally get other people's money and take some time at the beach with it?
Now, if tomorrow you receive an official letter from the government, with a $10,000 check for vacation, explaining this is coming from taxes' payers, will you return it without any thought? What about a $100,000 check?
I agree with Sara above that your relationship with an in house bank could help your clients. I certainly would be scared to let a buyer use an online financing co where one has no idea what human beings are following the deal from start to finish....
The same holds true for title attorney's offices... if someone has my clients's file, I expect that they will pass pertinent info to a colleague before heading out for vacation. Not too much to ask. Nature of the business to need to work with someone who knows the deal/file.
Janet...
Then how is it possible that two different underwriters can see a loan so differently? And if the investor has specific requirements from the get-go then why are they only uncovered on the day of closing ... and why does it take another two weeks to close once the documentation is supplied?
I once attended a closing for an agent for which I was the broker-in-charge. At the least minute the lender wanted to make certain that the earnest money had bben paid in a timely way and was deposited.
I had a copy of the check, the deposit slip, and since I was the responsible broker I said that I would sign an affa-davit assuring the check had cleared. (after all, by that time I was responsible for the money anyway.)
Not good enough.
And isn't it crazy that a major, national bank would admit that they didn't care enough about a customer to interfere with an employee's vacation?
And I have one more question ... who is the bank's customer ... the borrower or the investor?
Obviously it's not the borrower because loans are lost because they do not close on time and the big banks response is simply: "We don't care."
3 times is a crazy coincidence! Must be enjoying some island cocktails somewhere.
I wish I had the vacation schedule of most banker and lawyers who work on my files. Must be nice.
Hi Richard,
I had a problem like this last summer. I had four closings that were just insane. All with the same big-box bank. It wasn't vacations - but the effect was the same....contracts expired, tempers were short and the banks were telling us to just be "patient." If I heard one more time that there was "one piece of paper missing" one more time I was going to scream. Among the problems....
1. Paperwork was missing FIVE TIMES - the closing was delayed five times and over one month. Each time the deal was almost lost.
2. I had the listing, but the buyer couldn't get from the commitment letter to clearance for over 9 weeks. The closing almost didn't happen.
3. A client with 60% down was held up for 8 weeks over an $80k loan because it was a cooperative and they were holding back over the flip tax. The flip tax was less than $1000.00 - did I mention that the buyer was putting down 60%? Ya gotta be kidding me!
4. This one was the best. The bank held up the loan on a cooperative over fidelity bond insurance. I ended up calling every listing agent in the building (5 in all) to tell them to tell their sellers to lean on the cooperative board to up the insurance. The board complied. BUT because they were at the end of the contract period - the bank tried to raise the interest rate AT THE CLOSING TABLE. "Oops you are paying 1/2 a percent more for life because WE held up your loan for 12 weeks...so sorry!"
I had one other closing with that bank. This time the LO was great - he got everything done - so I though "GOODY! a decent LO at this bank!" Then he LEFT that bank - siting that it was too hard to get anything done!
On the ocassions when I sit down for a little Blackjack in a casino, I do really well... until the dealer takes a break. And then I suck... until the regular dealer gets back.
Same thing?
It's a really good possibility that you are right on both of those theories my friend. One day the madness will hopefully stop.
It just seems to keep getting harder and harder for a buyer to obtain a loan no matter how qualified. Perseverance helps some, but it's frustrating.
Richard:
I think Steve's comment is interesting. I also feel this way about attorneys who drag their feet or otherwise jeopardize the transaction. If everyone were paid on commission-only, there would be more motivation to achieve a successful outcome. Since, without one - there would be no money for their vacation...
We're having many of the same issues here Richard. It seems that the underwriters now can overrule appraisers, inspectors, and every one else in the transaction.
the whole situation makes me sick. How can they still be getting away with shell games like this?
Hi Richard,
After reading your post and all the comments .....Seems things have not changed in the last year and a half.
You kinda wonder when will it REALLY effect us......how many more surprises to come????
Richard.....
What we are not reminded of enough is that the banks are a business run by CEO's and Presidents who are accoutable to their shareholders first..... and then everyone else. In addition, they know not what they do....
Thank you for your informative post.
With those kind of attitudes, no wonder businesses are moving overseas. I can't believe the bonuses these executives are receiving. Some of the bonuses they receive most of us would not make in a lifetime.
It's getting to the point where banks will want DNA samples in order to close. It's beyond ridiculous already! Banks really need to be more regulated.
It's always the little guy isn't it?
The topic of 'IRA Transcripts' being required by lenders came up in sales meeting this morning - supposedly you can go online and get them but 2009 isn't available yet.....it's always something.