Underwriters can cause biggest closing delays

Like Santa in one respect, lenders like to check their list at least twice.  (Click to expand.)

Like Santa in one respect, obsessive-compulsive lenders like to check their list at least twice.

Three obstacles can be attributed to 80 percent of closing snafus, according to Dirk Zeller, CEO of Real Estate Champions, in Realty Times.  I’m not sure the source of his statistic, but he certainly ought to know how troublesome those impediments can be.

Dirk Zeller

One big one is borrowers’ failures to provide all the verifications that lenders require — documents, letters, statements.  In other words, lenders demand that every “i” be dotted and every “t” be crossed.  And they’re not above asking again.

Second, repairs often cause problems.  There needs to be a clear understanding — that in writing — who will assume what responsibility for what maximum amount of money.

The biggest issues arise from underwriting.  As Zeller puts it:

Underwriters check to make sure that the loan meets guidelines for debt ratio, loan-to-value ratio, credit score, employment history, and other qualifications. They also evaluate the loan based on whether it can be bundled with others in a big loan package that can be sold to Fannie Mae, Freddie Mac, or another entity that buys mortgages.

Remember, underwriters are responsible for protecting their employer from losing hundreds of thousands of dollars on every loan they approve.  You hardly can blame them for acting as though their jobs are more important than your prompt closing.

By understanding why underwriters’ slavish attention to detail is critical to them and then by giving them everything that they request promptly and completely, buyers can minimize the likelihood of a botched closing.

Notice, please, that I wrote “minimize.”  If anything can go wrong, you can be sure that a closing is where that mostly likely will happen.

Tomorrow: Now hear this

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

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