Tampa home buyers and Tampa Realtors can avoid last minute surprises at the closing table by triple checking all the details in advance. Bob Saltzman, one of our go-to-lenders @ Home Financing Network, recently had this timely observation in his weekly newsletter:
It’s Always Something!
We have noticed lately that underwriters that previously would allow certain loan approval conditions to be met at the closing table now require them to be signed off on prior to closing. Maybe a simple initial on a contract, a pay-stub or escrow check that seems relatively unimportant may delay a closing at worst, or inconvenience buyers and/or sellers at best. We all know that there is a credit crisis, so it makes some sense that there are more hoops to jump through, but there is a more specific reason for more caution on behalf of lenders that provide FHA or Fannie/Freddie financing – which is practically all the lending going on now.
The challenge for lenders is that with no other investors buying loans, the cost of even the simplest of errors is catastrophic. Where previously a “scratch and dent” loan that is performing (perhaps it is 6 months old and the borrower has been making timely payments) would be snapped up for perhaps a 1 to 3 percent discount to the market, now the slightest error or missing document makes this otherwise valuable loan a tremendous liability to the lender who is lucky to sell it for a 40% or more loss. That means for every single error a lender makes in following agency requirements, they now must close 40 or so flawlessly to make up for the one fumble. All the more reason for all of us to pay attention to detail and manage expectation accordingly with our customers. Thought you may appreciate knowing the reason for any additional scrutiny you experience.
