FHA loans closed in 15 days - Say it isn't so.... - A FHA loan Rant

Time is $$ Money $$

How many times have we heard that time is money??? One thing that I keep hearing is how long it takes to close FHA loans. Just the other day, Michelle Gibson wrote : FHA loans approved & closed in 15 days? -

I have been doing mortgages since 1992 and my first FHA loan was in 1993. On average, up until this past year, they could easily be done in 30 days or less. The typical time was 3 weeks. There are too many bad rumors that surround how FHA mortgages work and what they are all about.

The main problem is that it's not rocket science and it never was, but that many loan officers never did FHA loans up until the last 12 months.

On another note, it doesn't matter if it's a FHA loan, a conventional loan, a VA loan, or a USDA loan.... it all starts with the loan officer, period. Here are some things to keep in mind....

The loan officer....

• - needs to be on top of today's mortgage related changes on these programs.

• - needs to not only educate the borrower, but the realtor about the different types of mortgage programs.

• - needs to communicate with all parties involved. That means speaking to the borrower, their agent, and possibly the listing agent and the title company. With the new recent changes regarding time of new disclosures, this alone could and will delay some closing in the future. I wrote about the MDIA changes, the Mortgage Disclosure Improvement Act.
  

• - needs a good processor, reliable underwriting staff, and closing staff. Not every company is equipped at this spot, even some of the larger mortgage companies such as B of A or Wells Fargo. Those companies are more volume driven.
  

• - most importantly, needs to take an very good mortgage application. When it comes to qualifying the borrower, that loan officer needs to ask more than just the basic 3 to 5 questions. Questions that should be asked when qualifying a home buyer.

Now my biggest issue…..

The whole real estate and mortgage process should be a team effort. It shouldn't matter if your realtor referred you to your loan officer or if you found them on your own. But when things go bad, people want it now, not tomorrow.

Just the other day I had a closing in which I actually won the loan over Weichert Financial. I was referred by another loan officer, because he couldn't do loans in Long Island, NY. Overall, I was able to reduce this borrowers closing costs by $2,100. We ran into an issue with the appraisal, that had comps with above ground pools. We had to reduce the appraisal by $5,000. The realtors were up in arms and the borrowers lawyer was all over my case, telling me that pools cost money. This is a lawyer who does not understand HUD and FHA loans or appraisal requirements.

Secondly, now all parties involved where yelling at me and bothering me every day, wanting this taken care of now, yet nobody offered suggestions. I told them to schedule the closing for next week. They said they wouldn't until the issue was resolved. I said we could run into problems if a date is not set. Nobody wanted to listen to me. And the lawyer questioned the buyer, asking him how he found me, that I was going to delay this closing until the rate expired, and then raise his rate. He put this in an e-mail.

Conclusion : Let me skip to the end..... the borrower calls me after closing, thanking me up and down. The end result was that we had to reduce the sellers concession by $5,000 because of the appraisal issue. I gave a lender's credit of $1,000, that actually cuts into my commissions. But during this whole process, the realtors never offered a solution, let alone a small piece of their commissions. Hey people, I don't believe in giving up commissions in the beginning, but in order to make a deal work, this is a business decision. Besides, do the math. This was a $390,000 purchase price with both sides receiving 3%. Do you really think $500 from each side would have made them sink and swim?

Lastly, more interesting, which it all makes sense now, to why I was thrown under the bus once the appraisal problem occurred. The realtor referred this borrower to the her lawyer. I just found it unprofessional, especially if you read his e-mail to the borrower. Things happen and we all need to work together. The funny part, Weichert's approval? It expired a month ago and never mentioned any appraisal conditions what so ever. hhhhmmmm... The main question... Who had whose main interest at hand? I always have my buyers best interests. Now I have a client for life who has already referred me to another buyer.

REMINDER : FHA loans can be done in 30 days. I closed one a month ago in 12 business days. So it can be closed in 15 days. But each borrower is different and this won't happen all of the time. And you need a loan officer that is on top of their game and not just an order taker or one that makes promises, but who truly understands communication.

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc