(Just a Few)
Can Go Wrong?
go wrong? Let's
my most recent disaster. The buyer was working with an agent who
(as it turns out) is married to the loan originator. There was a
pre-approval letter, and every conversation with the loan originator
was very encouraging. My sellers wanted to stay in the same
school district until spring, so they put a non-refundable deposit on a
rental house. Per the contract, they removed all the pictures and
mirrors from the walls and touched up the paint. They packed all
morning of the closing, I received a call from the selling agent,
telling me that the loan package had not yet arrived at the attorney's
office. Two weeks later, it never had arrived. The
buyer lost her earnest money. The sellers lost the deposit on the
rental property. The house went back on the market.
buyer has a pre-qualification letter from the lender (the lender his
agent had recommended). Every conversation until a week before
closing indicated that the closing would take place as scheduled.
The sellers prepared for an out-of-state move, which included putting
their mattress and box springs on the curb for the trash pick-up
(charities will not take used
mattresses, no matter how good the condition).
closing never happened. The buyer lost his earnest
The sellers slept on an air mattress for a month, and then purchased
another mattress and box springs.
The Buyer had been working with a small mortgage broker for several months. Neither his agent nor I had ever heard of the mortgage company, but at the time of contract, the loan originator presented us with a "pre-approval" letter, stating that the buyer had been approved for a purchase amount up to $250,000.
In our first telephone conversation, the loan originator assured me that the buyer was "approved" and all that was needed to close was his most recent bank statements and pay stubs, and the house appraisal. In every subsequent conversation, she assured me and the selling agent that the loan was fine.
Five days before closing, we were informed that the buyer could not meet one condition for loan approval - a condition that the loan originator had known about for months. The investor declined the loan. The originator found another investor, but at a significantly higher interest rate.
The Seller, whom I represented in this transaction, had contracted to purchase another home. The closings were to take place the day before Thanksgiving, giving them time to move to their new home and clean the old one. They had scheduled everything from utilities, to telephone, to satellite TV, to professional movers, to schools for their children.
In the meantime, the seller of their new home had come to Atlanta from North Carolina to meet with the professional movers and move his belongings back to North Carolina.
My clients' loan package was complete and waiting to close. The loan originator, processor, underwriter, title examiner, and closing secretary, had all done their jobs. Everything had to be redated and rescheduled. My sellers, whose buyer chose the wrong lender, had to take time off from work to close the following week. That meant that they were unable to take any time off to spend Christmas with their family in Virginia.
least affected? The lender who
The buyers sold and closed their existing home two days before, and their furniture is on the truck. They are buying a new home in a new community, and have planned their closing for a Friday afternoon before a long holiday weekend.
The funds are coming from the
closing department in North Carolina. They do not
The interest rate on the second loan is incorrect. The lender
it cannot wire transfer funds after 4:00 p.m. (this closing has been on
the calendar for at least two weeks). The builder will not allow
the buyers to move in without closing.
This one also before a three
weekend. The buyers have sold and closed their existing home and
are purchasing a resale home. Unfortunately, although they closed
their first loan in Sandy Springs at 9:00 a.m., the funds still had not
arrived for that loan by 12:00. Our closing took place in
and at 5:00 p.m., the wire transfer from their first closing had not
The buyers needed the $50,000 in proceeds for their second
Therefore, they could not close and couldn't move into their home on
The package arrives at the attorney's office approximately 3 hours late for a Friday afternoon closing. The loan amount for the second mortgage is wrong. The closing cannot be completed. Everyone has to return on Tuesday, following the three day holiday weekend, to complete the closing.
The buyer's loan originator has done "desk top underwriting" and is absolutely certain that the loan will be approved. She sends the loan package to the out of state investor where it sits in a stack of loan packages for over a week, waiting to be underwritten.
The seller is planning to move out of state, so he has moved all of his furniture out of the home and stored it. The house has been professionally cleaned and is ready for move-in.
The lender calls and announces that the investor has declined the loan. The buyer had given notice at his apartment, and can't close. The seller has nowhere to go but to move back into the house.
In choosing a lender, ask yourself these questions:
How experienced is your loan originator?
Does your loan originator have a support team?
Does your lender have in-house processing, underwriting, and closing departments? In other words, does your lender have CONTROL?
Is your lender reliant on final loan approval from a third party?
Is your lender quick and flexible, or does the loan package require a two day turnaround after approval?
Where are the funds??? Do they have to come from another state?
If you have a question or problem at closing, is your lender immediately available?
Does your lender have a good
relationship with a closing attorney?
The information contained herein
is believed to be accurate and timely but no warranty as such is
expressed or implied.