Category Archive: Closing the Deal

Sep 09

Mortgage Update – Sept 9 2012

Sorry, haven’t posted in a long time, been crushed at work.  Long days, even weekends in the office trying to get ahead of the game.  The local real estate market has improved a little but not as much as we would like to see.  However, last month we posted an all-time company funding record for a single month!

Most of my closed transactions last month were purchase transactions instead of refi’s.  I believe part of the spike in closings can be explained by two things, less competition and the fact that we hired some very good staff that was laid off by other lenders.

It has been a learning period, the mortgage industry continues to change and the timeline to close a loan has increased for many lenders, even us.  Our timeline has stretched about an extra week, better than most lenders that are taking 45 to 90 days to close one.

Something odd, I have been approached a couple of times a week for the last quarter by recruiters, something that hasn’t been the case for a couple of years.  Sounds like other lenders do not have the necessary staffing requirements to move the pipeline.  Too bad for them, we increased the number of people over the last two years while other lenders laid off.   We picked up some real talent that were let go because of downsizing or going out of business entirely.

Mortgage Turn Times Slowing Down

 

What is causing the slowdown?

I have already mentioned the lack of staff that is plaguing other lenders.

In addition, the mandatory SAR’s initiative is clogging the system. Volume is up, so are closing conditions.  SAR stands for Suspicious Activity Report.  Until last week these reports were voluntary, now they are mandatory.  They are causing the underwriters to be super careful.   When an underwriter reviews the loan application they post-closing conditions, items that must be addressed prior to the closing.

I am receiving almost DOUBLE the number of closing conditions that must be cleared before closing!  Think about this for a moment, I am focused like never before on doing the absolute best application possible and receiving twice the number of conditions.  What?

Items that would not have been a big issue in the past are derailing loan applications.  DE underwriters will not sign off on anything that is questionable, PERIOD!

They are not willing to risk losing their DE Certification over a missing page on a bank statement or something equally silly.

Helpful Hints

The primary purpose of this web site is to offer helpful information to anyone that is buying or selling a home including the Realtors that represent them.  I have started collecting a list of helpful hints that I email to my clients when they apply for a loan.  I will begin to post a copy here and create pages in the Buyer’s section that elaborate and address as many issues as possible.

 

Aug 05

Power of Attorney Epidemic

POAs in Louisville Kentucky

Just for fun I searched the Jefferson County Clerk’s online database to see how many Power of Attorney documents there are in the public record.  Okay, I can’t count that high, but it is easy to get an idea by searching for a particular time period.  This is how I searched, first, selected to search by Party Name but left the name boxes blank, selected date(s) to search and in the Doc Type box scrolled down to POA.

If you are searching a large time line there are five listings per page, so just add 5 for every click on the Next Page link.  I looked at a recent random week, Monday to Friday and drum roll, there were 214 document tabs.  Each document will have at least two names, so the 214 listings probably represents 107 Power of Attorneys.  It is possible for one individual to name more than one Attorney-in-Fact but most do not.  Now that I think about it, naming more than one individual and requiring both to sign is a good safety measure.

Let’s go with 107 POAs filed in one week.  That means that slightly over 21 people per day signed away some of their rights to another individual.  Many of these were elderly individuals handing over their assets to the care of a child.  Some of them will be ripped off by their own children.  Ask any bank teller, adult children frequently steal money from their parents, it is a dirty little banking secret.  Why don’t you see it in the news every day?  Because the parents refuse to prosecute their children.

That Mushroom Cloud is not a Nuke, it’s POAs

I have been writing about this a lot lately because almost every deal I close one side or the other tries to use a Power of Attorney instead of attending the closing themselves.  It is a very strange phenomenon, why the explosion of POAs this year?  Something has shifted, I have been asked about using a POA more times in the last six months than the previous 20 years combined!

I do not want the mortgage and note signed with a POA, period. With all of the trouble in the last couple of years with the validity of mortgage documents no lender in their right mind wants the borrower to skip signing the note.  That is crazy!

What I think is going on is a combination of several factors that have never coincided in the recent past if ever.  A decrease in property values in some areas, a decrease in the number of qualified buyers, cash flow problems on both sides all add stress to a real estate transaction. Add to that a very high unemployment rate and some people that have jobs are simply scared to miss even an hour of work for something as important as buying a home.

May 23

Attend Your Closing

Recently had another closing when one of the sellers did not attend.    The closing attorney was kind enough to have the deed and closing statement prepared a day in advance so the missing seller could come by and sign off.  At the real closing the next day the seller made a $5 change to the closing figures! FIVE DOLLARS!!!

What a pain in the neck stuff like this is when the lender is trying to meet all of the federal regulations regarding the closing.  The closing was delayed because of the seller and then one of them decided they had something more important to do at the time they choose, we showed up on time.  What could possibly be more important than closing a half million dollar deal?  Couldn’t get a baby sitter? Had to water the lawn? I never did catch the conflict; it was glossed over by the attending side of the couple.  But it didn’t make sense to anyone that was in attendance.

If you lose money because you do not attend the closing there is no one to blame but yourself.  This little incident could easily have caused everything to go back to the underwriter.  It took the seller six months to find a buyer, another month to get to the closing table, it was not a surprise.

Compare the stacks.  How much was the stack worth that the missing seller had to attend to compared to the stack of money the buyer and I brought to the closing table, $50 versus $500,000? That doesn’t sound right does it?

A change to the figures could have required a change to the closing statement, thus requiring the missing spouse’s signature on the new numbers, therefore no closing that day.  The closing attorney accommodated the problem by issuing a refund check for the $5.

I have no idea why so many buyers and sellers are trying to not attend the closing.  It has happened to me more times this year than the previous 20 years combined; I would say that is a major change.

Ramifications

Could be many problems if the closing is delayed because one of the parties does not attend.  A closing late on a Friday afternoon might require rolling over to the following Monday.  That might require switching dates on movers, three extra days of interest on the seller’s mortgage.  Or how about this one, the buyer walks!  I have seen it happen for a lot less.

Attend your closing!