I was at a closing yesterday and we get to the end and the attorney says, "We won't be funded today, so you guys (the buyers) won't be able to move in until Monday."
Usually, when an attorney lets us know that something won't be funded, there are a bunch of calls made and a lot of waiting. He then made a comment about Homebanc and how he doesn't trust the mortgage industry. Frankly I don't trust too many of them either, so I understand.
I immediately call the loan officer, Theresa Laine, and she was furious. A certified check was cut to fund the deal. It was done especially for this particular deal because it was one that wasn't even going to close less than 24 hours before. The check was done for a convenience of everyone involved so we wouldn't have to wait!
In this market there are two questions I now have to ask:
To the attorney - Can we close with a check?
To the loan officer - How sure ARE you about the program you have my client on being available?
Hello Joshua,
I can understand your frustration. What happened to you and your client is quite common now with the volitility in the market and so many lenders going out of business. As for asking your loan officers, regardless of who they may be, about HOW sure they are about a program will not help you any. No one knows what lender will be in business long enough to close a loan nor do they know if a program will be cancelled midway through the transaction. The lender won't even know. That may sound odd that the Lender won't even know, but the ones in control are the investors who buy the loans from the lender. The investor can call the lender at any time and say, "we are no longer buying a specific type of loan". The lender then has to stop doing that program until they find a new investor to buy them. Plus, if a lender is having financial issues, like any good business, they don't disclose it for fear of loosing future business.
Just my two cents worth.
Sean Allen
The Mortgage Professionals
Professional Credit Consulting & Repair
www.TheMortgageProfessionals.biz
Sean - Actually, that question works well for L.O.s who, while not violating their client's (and my client's) privacy, can tell me what level of approval they have. If they are going Fannie Mae which many of my borrowers are going now, then I know we have a better shot at the top then say Expanded Level III.
Also, although you can't plan for everything, some lenders are more "jittery" and likely to pull funding than others.
I do agree that nothing is certain. Used to be that if this stuff was happening it was a bad L.O. but now it's common.
My wife was an AE for two of the biggest lenders in the nation: New Century and First Magnus. They were adamant that they weren't going out of business until the bitter end. If they don't know, how can a loan officer know? There's no way to tell for sure.
The only thing that I can recommend is to make sure that the loan officer is dealing with a wholesale lender who is a bank - I think the chances of them going under are a lot smaller, but there's still no guarantee that the loan program will be there tomorrow. If you stick with full doc, conforming deals that are slam dunks, and the loans are sent to banks, you should be fine. Good luck with that! =)