by Lorrie Bryan, The Suburban Group Loan Processing Center
Ms. Bryan shares her knowledge and expertise by providing these practical
tips for closing loans and minimizing funding delays. These seventeen key points
address the fundamental concerns of the probate practitioner when obtaining
a loan for a client when working within strict time limits.
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- Establish what is the timing deadline and communicate this information
to all parties concerned. - Determine if a loan will fix the problem. Will obtaining a loan only delay
an inevitable situation further (i.e., the need to sell)? - Don’t trade problems! Is the borrower prepared and capable to make monthly
payments? Do the borrowers limited resources require funds for future payments? - Prioritize your objectives for time, amount needed, and be prepared to
make tradeoffs (i.e., rates, costs and loan term in exchange for a shorter
funding commitment response time) - Keep client involved with the solution by establishing progressive deadlines
for client’s actions. If the client is part of the problem, make certain that
they understand how their actions or inaction will potentially affect the
outcome of the loan request. - Make certain client has realistic expectations for their situation and
circumstances. A borrower who is unemployed, has never paid a creditor and
cannot sign personally for a loan will not receive as attractive terms as
a borrower who has sufficient income and “squeaky clean” credit and the ability
to sign personally. - Band-Aid or tourniquet? Determine the severity of the exposure to the client
and the estate asset(s). - Can you do anything to gain more time (and will that help)?
- Select lender with experience in the kind of loan transaction you seek
for your client. This is not the time to shop the “liar’s list” (industry
jargon for the lender rates list published in the local newspaper). - Order preliminary (title) report immediately. Don’t loose valuable time
fixing problems that could have been resolved early. Title related problems
can sometimes take weeks or months to resolve! - Get appraisal immediately. If a valuation problem or a property defect
exists, you want to know about it soon enough to have time for the problem
to be resolved. - Order demand for payoff form all lenders early (you can update later).
Lenders can seem drag their feet when providing payoff figures. Always allow
several weeks or more for a written payoff demand. - Get credit approval of borrower (subject to certain conditions to be met
prior to funding). This can assure lots of people (sellers, prior lenders
and others) that this loan is likely to fund. - If in foreclosure, know what avenues are available to delay or stop the
foreclosure sale. - Use the following as reasonable mortgage processing timetables (from loan application to closing):
- Allow 45-60 for FHA or VA loans to close
- Allow 30-45 for conventional loans to close
- Allow 15-30 days for equity loans to close
- Establish what is the timing deadline and communicate this information
- Terms and costs are relative. When a crises occurs, most patients don’t
shop emergency rooms on price. Nowadays, borrowers (not unlike patients) are
often fortunate to obtain financing at any rate as lenders are refining their
loan underwriting practices.