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Setting The Right Expectations Will Reduce Stress
By C. J. Coury
Today, more than ever, setting the right expectations up front is paramount. This is easier said than done in the current environment with its proliferation of short sales and foreclosures that have placed the servicing bank or lender in the position of seller. This dynamic has made setting a realistic closing date extremely difficult at the time of presenting an offer. Unlike setting a short deadline to a homeowner for a response, the submission of an offer to a lender/servicer could take several weeks to be accepted. How much time is enough time to give them? The answer to that question will vary widely from one transaction to another but it is always better to over estimate the time line. I have always found it better to under promise and over deliver in every aspect of my business and personal life.
Now that your offer is accepted it is time for the buyer to finalize their financing, if any, in time to meet the agreed upon closing date. As the leader of a high volume mortgage lending team I have the unique opportunity to observe hundreds of closings each month. By far, the most frequent cause of a stressful transaction is the dreaded quick closing. During a normal market the average turn time on a new loan application is 14 – 21 days for a smooth closing. However, the market we currently find ourselves in is anything but normal and is unlikely to slow down anytime soon. A number of factors are contributing to the current phenomena we are experiencing today: Low rates, extremely attractive housing prices, payment modifications, short sale negotiations, foreclosure action and prevention, refinance demand, etc. Add to that the need to fully document every aspect of the loan application and you create a level of demand on lenders that is causing them to work well above capacity. That coupled with the fact that staffs have been significantly reduced over the past 2 years is causing a back log in the processing of loans for closing. This is being felt not only by lenders but by title agents and appraisers as well.
For the above reasons lenders have seen their average turn-times increase to 30 or 45 days from the time they are presented with a contract to purchase. What can you do to help set the right expectations in this market? When submitting your offer to purchase, make sure that you are leaving ample time to meet the demands of the current environment. Perhaps a closing date set as “30 days from acceptance” or “45 days from acceptance” would be the best approach at this time. I understand that this may not be possible all of the time but it will make for a much more pleasant and less stressful transaction for all parties involved. With the recent passing of the Homeowner Affordability and Stability Plan (HASP) the demands on lender/servicers will become even greater in the weeks ahead. Help eliminate a stressful situation by setting the right expectations up front and grow your business with happy customers!
C. J. Coury is a Senior Vice President with Bank of America and oversees their residential mortgage division serving Sarasota, Manatee and Charlotte Counties. Prior to joining Bank of America in 1995, C. J. was President of Mortgage Brokers of America in Birmingham, MI for 7 years. He has been an active mortgage finance professional since 1983. C. J. may be reached at (941) 952-2888 or by email at charles.j.coury@bankofamerica.com [2].
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