April 2008

Yesterday in Part 1 of this series, I told you about one of the bumpy closings that I had this week due to problems with a lender.

Today, I want to tell you about the worst lender experience I have ever had while representing buyers.

I have been working with a very nice couple over the last few months while they searched for a home in the St. Louis area. We finally found a great house, made an offer, and got it accepted even though there was another contract offer on the property.

My buyers told me that they were planning to get a VA loan and wanted to use a mortgage broker that had come highly recommended from a trusted friend. My experience with out of state mortgage brokers has been rocky, but they wanted to go with their lender and I wasn’t going to tell them that they couldn’t use the lender of their choice.

In the beginning, the mortgage broker seemed to be on top of everything. She was immediately emailing and calling requesting contract and title information. I let her know our appraisal deadline and she got everything completed in plenty of time. We had our loan commitment before the deadline, and everything seemed to be on track.

Last Friday, only 3 business days before closing, I got a phone call from the mortgage broker that we might have a problem.

She informed me that even though she had given us a loan commitment, they were actually still waiting on a signature from the VA to finalize the loan. She said it was a sure thing, but she just had no idea when they would actually sign off on the loan and wasn’t positive if we would be able to close as scheduled on Wednesday. She asked us to try to get a week or two extension. I won’t go into the back and forth and extensive frustration that followed (including my buyer digging through boxes in search of transcripts), but the bottom line was that we spent the next week on pins and needles every day hoping that we would finally get VA approval and dealing with forgotten and lost paperwork.

Yesterday, 2 days late, it finally came through.

The mortgage broker had told us that once the VA signed off, she could turn it around in an hour. We were told we had VA approval at 10 AM yesterday. At 3:30 PM, we finally got a call from the title company that the lender had just emailed over the loan package and we should come sign the closing documents.

But, the lender STILL didn’t seem to understand how the process works in Missouri. As a result, the money wasn’t wired first thing this morning as I had requested multiple times and it still hasn’t arrived. So even though everyone has signed the closing paperwork, the deal technically hasn’t closed yet because the house hasn’t been paid for (which happens when the loan is funded and the sales proceeds are forwarded to the seller).

Amazingly, the sellers have been very understanding. They agreed to delays without complaint, and Mr. Seller even signed over Power of Attorney to Mrs. Seller since he had to leave town before we were totally closed. But due to all of the delays, the sellers ended up with mortgage late fees that were completely the result of us not being able to close on time. Everyone including my buyers agreed that they should reimburse the sellers for fees that were incurred as a result of the delays caused by our lender.

So my buyers still don’t have possession of the house. When the money finally arrives on Monday, they’ll get the keys and the sellers will get their money. All of this could have been prevented if the lender had done her job and understood what is involved with a VA loan.

We were actually lucky. When we couldn’t close on time, the buyers were in breach of contract. Had the sellers wanted to terminate the contract or ask for ridiculously large fees to compensate them for the frustration, we wouldn’t have had much recourse. Thanks to the other agent involved in this deal, the sellers stayed calm and everyone focused on a mutual goal – to get the deal closed. All agents wouldn’t have done the same. Thank you Susan Brewer for keeping a bumpy closing civilized and professional!

Unfortunately, there isn’t a good way to determine if a loan officer knows what needs to be done behind the scenes in order to have a loan close on time. The best way to find a good loan officer is to ask your real estate agent for recommendations. Even if you are simply thinking of refinancing, call an agent that you know and ask for a couple of lender names.

Agents don’t like deals that go awry as this one did. We surround ourselves with talented lenders, inspectors, and title professionals. Ask us who we suggest. You’ll still get competitive rates, but you’ll also get good service too.

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