Customer Education: The Cure to Closing Delays for Lenders

More burden is being placed on lenders to provide accurate, timely closings. Closing delays are just as much a nightmare for lenders as homebuyers. It could even mean noncompliance if not handled properly.

Closing delays for lenders add extra work and stress to the closing process. Therefore, they must be avoided at all times, but often the causes of delays are out of the hands of lenders. The trick is to provide the customer with a better overview of the closing process.

Here’s what lenders can do about delays:

Setting Realistic Deadlines

Be realistic. After the purchase is accepted, most home closings take between 45 to 60 days. A property bought with a FHA mortgage would probably not be feasible to close in just 21 days.

It’s important that lenders choose a real estate and title insurance agent that understand the limitations that go into home buying purchases.

Accurate Loan Estimate

Make sure everyone is on the same page. Before the sale takes place, both the lender and buyer must be given and have agreed-upon the figures. This entails providing the homebuyer with a Loan Estimate initially and Closing Disclosure just before closing day.

The Loan Estimate form and Closing Disclosure must be accurate and delivered in a timely manner. The Loan Estimate must be delivered three days after the application and the Closing Disclosure three business days prior to closing according to CFPB regulations).

Getting this step wrong is one of the top reasons closings are delayed.

Approve Mortgage Application

Don’t waste time on rejected mortgage applications. Preapproval is one way to avoid a rejected mortgage application that delays the sale of a home by up to 60 days or even years if no other buyers are in sight!

Even if your home buyer is preapproved, the mortgage can still be rejected. This sometimes happens when an unexpected mark on your customer’s credit report shows up, his/her debt has increased, or employment and income has changed after the pre-approval process.

It’s up to you as a lender to inform your customers that credit, debt, and income status must be maintained (as it is during the pre-approval stage) until the final close is made.

Timely Appraisals and Repairs

First, you start with an inspection to assure it’s worth the investment. After the home has been thoroughly inspected and appraised, the agreed-upon repairs must be made before selling the home.

But some real estate agents often forget. It’s up to the lender to communicate whether or not the repairs have been made before closing day. That’s why it would be wise to handle repairs as soon as possible.

Precise Real Estate Survey

Get a precise survey of the property, free from inconsistencies. Before the home is sold, you must be certain that all discrepancies in the property survey have been resolved. This means you should have a clear overview of property boundaries, disputes, and/or potential encroachments (such as the neighbor’s fence crossing the property lines).

Oftentimes, lenders and agents will require the buyer to sign an affidavit stating he/she understands the encroachment or a dispute exists.

Reliable Real Estate or Title Agent

Unreliable real estate and title insurance agents ruin your business. These people can’t seem to deliver the required documents signed and on time. One of the greatest defenses against CFPB regulations (and mortgage lending post-Know Before You Owe) is having a go-to title insurance company that’s fast, accurate, reliable and delivers on-time.

If one of the main causes of real estate closing delays for lenders is lack of communication, then you could use a national title insurance with Bay National Title Company and start with our offer of Same Day Closing Disclosures Guaranteed.

SOURCES:

Top 10 Reasons Why a Real Estate Closing is Delayed

Delayed Closing? Maybe It’s You