GUEST POST: “All Right! The Deadline Has Been Extended!”
by Tim Manni
Over the last few weeks or so, we (the blog) have been encouraging readers to elaborate on their comments by offering them the opportunity to write a guest post. Recently, many readers have been leaving great comments — some with unique situations, others with interesting perspectives — that we felt would translate nicely into guest blog post.
We received a blitz of comments from readers who complained that loan servicers were “dragging their feet” and would not close their deal in time to take advantage of the homebuyer tax credit (this was before we knew the president would extend it until September 30). The hundreds of comments we’ve received and the votes on our poll have made it clear that borrowers were really depending on the credit’s closing extension and would be outraged if factors beyond their control would not allow them to close in time.
Just as we’ve done in the past, we wanted to let mortgage professionals tell their side of the story. Reader “Morticia” works in the mortgage banking industry and has been working “nights and weekends” to close loans in time for the tax credit. The pressure on the mortgage industry to close these loans in time was tremendous:
All right! The deadline has been extended to September 30! I work in mortgage banking and have been working nights and weekends since early April to try and get the loans done so customers can get the tax credit. We have been slap-dashing through the files and are exhausted. There is pressure from customers and realtors to approve loans that we shouldn’t, and that makes things harder. What makes things more complicated is that after the mortgage loan crisis that followed the bubble of 2003-2008, a lot of regulations have been placed on mortgage bankers to protect the customers. While the protection certainly was needed, most of the real estate agents and mortgage brokers don’t understand how to do the paperwork, and so that has slowed things down even more.
The calls from mortgage brokers can be very original as to why their customer’s loan must be approved immediately. After sending a list of corrections to a loan file to a particular mortgage loan officer, I received a phone call imploring us to waive the requirements because ”My customer is in the ER on a heart monitor because she is so afraid she won’t get the $8000 tax credit, and they won’t let me in (because they only let in family members) to have her sign the papers that I forgot to have her sign earlier!”
I would like to be able to spend more time on the mortgage loans and make sure that only people who can really afford a house are getting a loan. I sympathize with homebuyers whose loan approvals are delayed due to bottlenecks on the part of the mortgage bankers. These are not instances of us being overly particular, we do not keep the loans, we sell them off to investors who have their own requirements. Plus, we are doing FHA loans so we are always subject to audits by HUD (which is a serious matter).
I still have loan files on my desk that include sales contracts signed prior to April 30 that haven’t closed yet. Now I can take my time and make sure that everything is done correctly so that everyone, the homebuyer, the real estate agents, the mortgage loan officer and the investor is happy.
Readers: We encourage everyone to leave a comment in reaction to Morticia’s guest post!
(this article was first published on 07/03/10)
