Dear Readers -
John Meussner's thorough explanation of the TRUTH about time needed for Mortgages POST-TRID is a welcome addition to our AR Blogsphere.
If it seems I tend to re-blog John's posts often - that is a very correct assumption. Why? Because of the high quality of the information John shares with us.
ActiveRain membership includes access to so many amazing posts. I love learning new ideas and following good suggestions! Being able to increase my knowledge as often as I choose is so important to me.
All the best - Lynn
PS If I haven't thanked you personally for reading my Blog, let me do so right now! I really appreciate your stopping by and (perhaps) commenting! L.
Say Goodbye to 30 Day Escrows
We close loans in 14 days! You've seen the ads. A lot of lenders in the post-TRID world are attempting to attract new business by focusing on super fast turn times. A lot of real estate agents are seeing this. With the implementation of TRID last October, one thing the industry seemed certain of was that escrow periods (or for non-California states, the time between execution of purchase contract & settlement) were going to increase.
Pre-TRID, 14 days was moving at lightning speed. Post-TRID, it just isn't happening. At least not as the norm. So what's changed? Little more than lender advertising, really. "14 day closings!" should really read "14 day closings***"
***from time of underwriting submission, with a complete package, title & appraisal returned with no issues, borrowers available to send in any conditions within 24 hours, absolutely no holidays/long weekends, and totally inaccurate CD being issued in advance for the sake of our advertised turntimes***
Before it appears I'm just sipping on haterade, I need to state that our loans here at Mason McDuffie are getting done in less than 30 days. In fact, several of our branches average below 30 days (and the averages include 45 day escrows/settlements so you can imagine how quickly some things move), but industry-wide, it's a case not of '"if we could" but "if we should".
Look, 30 days is great. You get paid, I get paid, clients are happy, onto the next one, right? But I've noticed a trend that goes far beyond coincidence in that 45 day contract periods tend to be pretty smooth sailing, everyone's relaxed, and things are generally wrapped up on schedule or in advance. The process is good. The 30 day contracts? Not so much. In our current market? LOL!
Let's list some of the things that can go wrong, all the time:
- In a busy market, appraisal turntimes get extra long. If any corrections, updates, or disputes need to be made to the appraisal, you're out of contract. We just had a 28 day turn time on an appraisal report. On another file, we tried several local appraisers AND AMCs, with the best quoted turn time of 22 days, and NO rush requests possible.
- Buyer is on vacation/isn't perfect/needs documents from someone else on vacation, etc. Things come up. Everyone is busy. YES, buying a house once under contract should come as a top priority, but rarely is it #1 on people's lists. There are going to be 24-48 hour delays just trying to get things from a borrower.
- Underwriting issues. All the time, underwriters ask for explanations on items that pop up on DataVerify reports or title, or the listing agent marked a condo as a PUD in their listing and now we have to alter the process. Again...not always the longest delays, but usually long enough to hurt a 30 day contract.
- Holidays. Most months have a holiday. Many have a few. How about months like the one we're currently in, where there are 8 weekend days, and tack on a couple holidays - 30 days can disappear quickly.
- State variances. In CA, for example, you could have clients sign closing docs on a Thursday and technically not have escrow close til the following Monday. That's 5 days of your 30 AFTER the loan process is basically completed. Don't forget you're tacking those 5 onto our last little TRID issue...
- CD waiting period. For 3 days after we send a closing disclosure, we can legally do nothing. There's 10% of the contract period, gone.
Issues like this come up on many transactions with even the best agents, loan officers, and prudent buyers. It doesn't take much at all to get in the way of a 30 day settlement. But 45 days? That extra 2 weeks gives plenty of time for an irresponsive appraiser to finally get around to returning a report, or a title issue to be sorted out, or for a borrower to (heaven forbid!!) have a vacation planned, and for everyone to still be happy and still be on time.
Sure, there are going to be times when a seller needs to sell or a buyer is on a tight time line, but 30 days or less should be the exception, not the rule. We have 2 jobs in our industry if we want to have any longevity in the real estate industry. One, help our clients through a consummated real estate tranaction, and two, to have them happy when they get there. Setting the expectation of a 45 day timeline is a tremendous help with the latter. And there's always the "...or before, if agreed upon" verbiage that fits so nicely into a contract or addendum after the 45 day expectation is set.
Sure, we can close a loan in well under 30 days. But should we set that precedent? With the current process, I'd argue that we should not. 45 days is the way to go for stress-free transactions and happy clients.
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