FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware

Jeff, a commitment letter shouldn't take three weeks under normal circumstances. I think the Realtor and the Loan Officer do need to be on the same page and set realistic expectations for what good customer service is all about.

Jeff - what is wrong with these lenders? I think they are stalling because their lines are full and can't fund them.  I would rather refer the deal out than to ruin my name and give me a bad reputation around town.  It is sad to say but I hear this as well more often these days.

Missed commitment letter dates immediately cause the buyer to be out of contract. It is the second most important date on an agreement of sale. It CANNOT be missed. Anyone who is dealing with a lender that misses one should immediately proceed to the next lender, don't look back, do not pass go, do not collect 200.00. They obviously don't really care about you. Timeliness from applications, through commitment will ensure that you'll will complete the transaction at a punctual CLOSING. It's amazing that there are folks on both sides of the fence that don't get this. Nice job. 

GARY..... especially under normal circumstances. But it does start with the loan officer and how complete their 1003 mortgage application is and how much information as in paper work, that they have gathered.  It is taking us a solid 10 to 14 business days for a commitment letter... and not a commitment letter that is full of conditions. By that I mean an ugly conditional approval with most items listed on it.  One thing that can hold this up is a timely appraisal.  But yes, overall, we all need to be on the same page, both realtor and loan officer. I hardly get any realtors that even call me up, if I don't know them, asking me if the commitment date is going to be a problem.  thanks

NAOMA.... . I semi disagree that many are stalling because their lines are full and that they can't fund.  Because you don't need money to write a commitment letter. And in many cases, you still have 2 weeks or more until settlement, after the commitment date.  I just think so many loan officers don't pay attention to the commitment dates when they first bring the loans in nor do they set the clients expectations to a certain level.  thanks

SCOTT.....  not in all states.  I am almost positive, that if this hasn't changed, in NJ, if the commitment date is missed, there is an automatic 30 day extension made. It's not in the contract, but it is a rule/law, unless clearly written into the contract that there shall be no extensions made, unless sent in writing and all parties have signed it.  But you are right for the most part.... there is a cause and huge concern if the commitment date is missed. Now, I will admit, I think some people get all bent out of shape when this does happen, but it all depends on the reasons and the time frame that one had to achieve this commitment date.  But I have seen many borrowers get the commitment on time, yet their closing is delayed or even in some cases, their deal is denied the day of closing. This makes you wonder if the commitment was even valid or if they had unrealistic conditions on it, knowing that they wouldn't be met.  Thanks for your input and thanks for the compliment.

In these times nobody can feed applications into a box and get a magic result in any guaranteed number of days which is why I say finance contingency addendum are a joke in some cases. I do, however, alert all parties when it's not going to be a straightforward transaction which could include: self-employed borrower, a borrower participating in special assistance programs, borrowers purchasing an unusual property, non-owner occupied properties, etc.

I think it is important for my loan officers (any loan officer) to keep the agents in the loop. I also think agents need to recognize that these are different times and reflect lending as it was 10 or 15 years ago and is nothing like it was 4 or 5 years ago. Every agent I am working with and have worked with recently have been told up front things are different and if there are any speed bumps they could definitely slow the process.

Sure, give me a home buyer with 20% down, never a late payment, buying a home at reasonable market rate, already has the other one sold, has good job history, good income, good assets and good credit - 3 to 5 days for a clear to close from the date I receive all documents. The last one we were almost ready to close by the time we got the fully executed LEGIBLE sales agreement. But that's not every single deal - they are all different and everyone needs to realize there are no more cookie cutters. I have one right now we'll be lucky to clear it in 21 days. I also have a duplex purchase with an FHA 203k with EEM - it ain't a clearin' within 5 to 10 days! They put 45 on the contract and before I even moved forward I asked what their contingency is if this isn't closed within 45 days :)

What I find unacceptable is for a realtor to pull a short date out of the air without asking the lender if it is realistic. 

Jeff - Great post!  I am trying to figure out how we can send TURN TIMES to Realtors on a regular basis and have them not only read them, but also understand what they mean??  That does along the lines of what Ken Cook said...problem is...them relating to it!  Mtg Bankers are lucky, becuz they can pull a 3 day er....out of their ass once in a while...

Problem is that then it becomes the RULE, rather than the exception!  JUST YESTERDAY I had a OTP come through with a 10 day  loan committment on it!  WHAT???  HELLO?? BUELLER BUELLER BUELLER?

In general, EDUCATION continues to be the key!  Yesterday I had an LO on AR, who works for Bank of America...tell me, he didnt have TIME to stay on top of the guideline changes...and that they rely on their processing side to handle letting them KNOW if there is a problem!  GEEZZ!  EDUCATION PEOPLE!

Nice job jeff.

Darin

KEN... so, what's your point?  Communication and just don't assume?  ;o)  Seriously, well said. 2009 is totally different on most levels than it has ever been since I have been in this business, which was 1992 when I started. And yes, what is more frustrating is when I get a contract of sale with a settlement date, but no commitment date.  rut row... or when the agreement of sale is not legible.

Overall, as you and I... and so many others would agree, communication is key, especially between the buyers agent and the loan officer.  As many would say, time is of the essence.  Thanks for the in depth comment with feedback.

TOM... .  yes, that one is probably my biggest pet peeve.  And to think that the realtor writes it down because they know it all, or because their lender would knock these out in 10 days, but this was a year ago or two years ago. As Ken pointed out, times have changed, especially in 2009. 

DARIN.... excellent point, that us Bankers can pull out 3 day approvals with a commitment... but that it's not the norm..... but then others expect this.  Great point.

As far as the loan officer from B o A that states that he just waits to get the updates from his processor?  Huge mistake and that person shouldn't be in this business.  Yes, education is key and just for the fact that we, as loan officers, need to stay on top of any and all changes.  Thanks for your input and for the polite compliment.

Working hand in hand with the bank to have timelines and most importantly expectations for all parties on the same playing field is very important.  A committment letter is a great piece of the puzzle for buyers to have when they are ready to make offers, because the seller knows that they have already gone through much of the underwriting process.

I always call the mortgage person before we submit an offer, I like to have my timeline ducks in a row. Each and every client is different. I am not a mortgage person, I am the realtor. I count on precise information from the mortgage person, as they count on precise information from me.

I don't know how many other realtors call their mortgage people prior to submitting an offer to go over dates. Could it be that I am just ... anal retentive on this one?

Jeff: The commitment letter is a important document.. The bad thing is some are not worth the paper they are written on.. This is why one needs a good report with the lender so you know if you are getting a good commitment letter...

Thanks for the reminder.. I just called to remind my lender to send a commitment letter from yesterday :)

Jeff,

It goes back to what our contracts say in FL. You have a time line to be met...if the buyers agent doesn't ask the mortgage broker first if they can get the commitment in that time frame then they mightget burned because in the end we all know you guys will hold no liability because you aren't a party to the contract even if it says it in ours. It's the buyers agents responsibility to make sure their buyer stays within the time lines so I suggest they find out first before writing it in the contract. This way everyone is on the same page. It also says in our contracts that if the commitment date can't be attained in time...the buyers agent must advise the listing agent within a certain period and the seller then has the option of granting an extension or canceling the contract. If it isn't in writing and the time passed then the buyers deposit is jeopardized.

Hi Jeff -- Interesting post and very germane.  I have found, literally almost 100% of the time, a lender has NEVER produced a commitment letter on time, and never without prompting.  I know many agents as well.  The last transaction I had, the loan was overdue by almost 3 weeks and the buyers agent never bothered to check, I had to do it all as the listing agent. Argh.

Very unacceptable!

MORGAN.... . I think many of us commenting would agree with that, that we all need to be on the same page. And yes, the commitment letter, if real  { ;o) }, does let a seller know that it should be a go. I fired a loan officer 4 months ago, because they gave a commitment letter to the buyer 2 days after application, after he received their info. I was like you have to be @$@^!^! ... he said that they did this all the time at the other company. I said.. common sense, the underwriter hasn't even looked at this.  What a big law suit happening... thanks

ANDREA..... wow, that is awesome. Out of every 10 borrowers, I might get one call from the buyers agent asking the same.  I think too many put too much stock into the pre-qual letter or the pre-approval letter.  I even got some weird looks (well, it was over the phone, but I could sense weird looks), when I brought to a realtors attention that I felt that we weren't going to make a commitment date... (for what ever reasons).  But I put myself out there from the get go.  So the same can be said for loan officers also.  thanks  PS>.. I am not perfect, things happen... but communication is essential.

ROLAND......  I will agree 110% about this and have written about this several times. Just as I have said that many good faith estimates aren't worth the paper that they are written on.  Overall, I think we all need this reminder, more than occasionally.  I know it helps me to remember also and keeps me focused on stuff like this.  thanks

NEAL.... you are absolutely correct....  even though if we fail at the task of handing out a commitment letter, all we do is get yelled at, called names, and threatened...  but it won't hurt us when it comes to money... well, we could lose business, but we don't lose the deposit, the buyer could.  Excellent point. Overall, I think most commenting, will state the same as you have said, that the realtor should speak to the loan officer to make sure. I will always call the borrower and then the realtor, if I see something, before I am asked... unless they beat me to it.  But yes, communication... thanks for the feedback & for your input.

CHRIS.... . wow, 100% of the time?  That is pathetic.  I know someone wrote a comment that if a lender misses a commitment date, just find another lender. I semi disagree, because things happen.  Pointing the finger could drag out any solution that could be obtain.. delaying a solution. What's that, calmer heads prevail?  And yes, 3 weeks is not acceptable... I would love to know their reasons though, because I hate passing judgment, until I know all facts.  thanks for your input and for the polite compliment.

Communication is Key !

... right out of the gates !

Of course we dont want to hound or badger the loan officer, but communication to see what they still need and remind of the deadlines and any other date changes keeps everyone on the same page.

The commitment letter is crucial, and often underrated.

Great  post ...and great to speak with you today :o)

Cheers mate !

Sheldon

This is good dude.  Not only on time....but how bout a commtment letter of value.  If you don't have  one with no bullet holes, that's great, but most have too many bullet holes.  Timeliness is the least of my issues. Goodness of the letter is the greatest.

REALTY DOT COM...... okay, that was short, but sweat.  I think unacceptable is a harsh word if you are saying that 1 day would be unacceptable.  Because I have had realtors put on contracts just 2 weeks or less, and if it's a tough deal, that could delay things right then. Hey, don't get me wrong, I am a stickler for things, but you also have to be flexible, understanding, and never jump to conclusions too quickly.  thanks for stopping by.

SHELDON..... yes it is...  ;o)   I don't care if the realtor or the borrower thinks it's hounding me and such. I will not hide and answer my phone. As many of us agree, just being on the same page is key, which is part of communication.

On another note, yes, it was great catching up some today. Hopefully we'll meet sooner or later.

LARRY.... .  of value, you mean that it would be accurate and real?  Not just a piece of paper to meet a deadline, when it might not have ever been received by the underwriter at first? And yes, I have seen that were very basic with many holes, that you knew it was going to blow up at settlement. And thanks for the polite compliment.

I think advising realtors of turn times could make a big difference so that they know how things are looking from the lending side.

It is essential to work with good mortgage lenders that you know and trust.  It can make or break the deal.

The same big banks that are taking for ever on the loans are the same ones that when selling an REO want it to close in 30 days.

Of course REALTOR should communicate with lender to determine time required.  However, lender's also need to know that this is a competitive market and when we are up against so much CASH and short closing time frames, then our clients suffer.  A bank that requires 60 days to close a purchase loan is not in the market.  Simple as that, no matter how good the reasons are for the time required.

CHRISTINE......  I would agree 110%... and if I get an agreement of sale that has a commitment date or a closing date that might be in question, that might be cutting it close, I will bring this to everyones attention. But as I mentioned, it should start with the buyer's agent, calling up the loan officer (if they don't know each other), to see if the dates would be okay before they put the dates in the contract.  thanks

MARIAN..... I would agree with that statement, but 97% of my clients, and even some realtors, don't know me.  So trust is important, but most in this business can get you to trust them just by making promises or guarantees.  And by doing this, it makes others feel comfortable.. then the problems happen.  But I agree, many things can make or break a deal.

GENE..... well, that doesn't make sense... but how many REO's that you know settle in 30 days even if the lender is ready to settle. I am finding many have problems at the end, because the bank forgot to do this or forgot to do that. So what happens then is you have people rushing for something that has a great chance of being delayed.  Just my opinion.

ERNIE..... yes, many of us agree that the realtor should communicate with the lender also... and vise versa.  But I will somewhat disgree and or stick up for lenders in general, that we should realize it's a competitive market. First off, you as a realtor should express to your sellers that this is the reality of it, that many lenders are in major delays.  But define major...??? Some would say 30 days and some would say 60 days. It should start with the clients expectations, no matter if they are the seller, the buyer, the realtor, or the bank that owns the property. 

In my honest opinion, in today's market, putting a commitment date on the contracts that are less than 3 weeks, maybe closer to 4 weeks, is just adding pressure to all... and possibly more mistakes. You have to take in account on how quickly an appraisal can be done and given back to the lender.  You have to account for the time when the actual application is taken or if the buyers delay this... and account for weekends. If I took an application right now, on Friday at 2 pm...  and then turned it in, you already just lost 2 1/2 days.  I might not get it back from underwriting now until May 27th or so... keep in mind, Monday the 25th is a holiday.  These are things that need to be recognized by everyone involved. So I have a slight problem with your comment that banks should know that it's a competitive market. To me, that's common sense. I think the listing agent needs to make all of this clear to the seller. But here is my thought process.  I bet you more than 50% of all realtors don't really talk about this... because they are afraid to give bad or negative news, which means that they are afraid to potentially lose that deal. Just like 50% or more of the loan officers don't really pay attention to the commitment date.

I will say this, I will agree that 60 days is rediculous.  But to have a normal closing, that time period should be set at 35 days, possibly to 40 days. Me?  Sure I can do them in 25 to 30 days, but it also depends on the deal, if it's a mess or not from the borrower's side of things.  And someone wants a 8 to 12 day closing, it can be done, but there is a small price and I will have to get people to drop what they are doing, which can delay other closings.  See the pattern and what can happen?  It all comes back to setting everyone's expectations to a certain level.  Thanks for your feedback.

Interesting and though provoking. 

The process is differently out of whack and communication between all the team members is required.  Realtors, loan officers, inspectors and title. 

When I find great team member I treat them like gold.  On the other hand I don't hand onto anything that smells.

I think that people (buyer,realtor,LO) are just saying what the other party wants to hear.  3 weeks no problem, when in fact they know at inception that it can't be done.  Just wondered since when is a 4 week closing a problem with someone that's preapproved?  I guess NOW.  Lately, all LO's are saying it's taking longer because of re'fi's.  Personally, I don't care - can you get it done or not?  In the dead of winter I had a LO tell me she couldn't close in 2 weeks because they were too busy.  Well, how about we make you 'unbusy' and take the loan to someone that wants business.

In the past I have worked with one or two very good mortgage people...both of which has been "downsized" during the current "crisis."   Recently during a transaction my buyers were having trouble getting a straight answer from the mortgage "professional" they were working with.  Ultimately we had to delay closing because the lender could not provide necessary documentation in a timely fashion.  After the second delay I advised my buyers to speak with a different lender I had been referred to.  What a difference!   This new lender did in 3 days what the previous lender could not do in over five weeks.   Sometimes going with a smaller lender is exactly what you need.

Thanks for your post, good information.

Very good information on this post. It's horrific to think that major lenders are taking 60+ days to close.

Mortgage co. told me two closing dates, we summited all the paper work, they said everything looking good, the seller (bank, house was on foreclosure) gave the mortgage co. an extension, mortgage co. too slow on the commiment letter, remember our credit very good, put money down but seller put house on market again, somebody came with a higher offer and after 4 months I lost the deal, what happened?