Can the ten day close be trusted?
Recently an agent asked a very good question about our 10 day close program for Arizona home buyers?
“Are you sure that a ten day loan can be trusted? One of the things about loans is that they have to be done right, and someone who is trying to close you in ten days might be rushing through the important parts and costing you more money.”
Here are some points to consider:
Does closing a loan in 10 days require “rushing through the important parts”?
No, it doesn’t.
With every loan that we close we
- obtain and review supporting documentation,
- independently verify income, employment and assets,
- review credit for compliance with conventional or FHA guidelines,
- obtain written statements that no new credit has been obtained that is not on the credit report,
- obtain an independent appraisal according to HVCC or FHA standards,
- obtain copies of tax transcripts directly from the IRS
- and compare to documents provided, and review the purchase contract for nuances and pitfalls.
Then it is submitted to a DE underwriter who carefully reviews and recalculates the information in detail.
So, how long should it take to close a loan?
It doesn’t take more than a few days to actually perform the review as listed above. Therefore, the question is how efficient are a company’s logistics and communication related to gathering the required information to underwrite the file, move the file from processing to underwriting, and then move the file from underwriting to closing?
I can tell you that it makes it a lot easier and faster when my processor sits across the hall and my underwriter and closer are down the hall.
How we close loans in ten days?
- Our bank has a clean record with its investors, so we have limited “investor overlays”. This is very important and is a result of a history of “not rushing through the important parts”.
- My bank does not have problems obtaining the funds needed to actually close the loan.
- We have senior management that will accept nothing less than excellence and hold each person accountable for achieving the goal of a ten day close each and every time.
- My entire office has a sense of urgency from start to finish.
- My processor, underwriter and closer is all located under one roof – in my office.
- We have the best technology to speed up logistics and communication.
Will closing a loan in ten days put the borrower at risk?
If I overlook something and close a loan that should not have closed, what are the consequences?
- The loan becomes uninsurable by FHA (if an FHA loan)
- The loan becomes unsalable to an investor
- I am not compensated for my work
- My company incurs losses from the unsalable or non-performing loan.
- I lose my job and/or my credibility.
So, we are at risk, not the borrower.
Steve Lines
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