Why is my loan taking so long to close?

Many people are experiencing longer times from application to closing on their home loans.  Here in Boise, Idaho, it is no different.  This is due to the rapid decrease in interest rates and revisions to existing loan programs that have made refinancing possible for many homeowners who have been prevented from refinancing the last 4 years or so.

The recession caused Banks, Title Companies, Mortgage Brokers and other related companies to lay off most of their people.  The staffing at the beginning of 2012 was probably 25-30% of the 2007 peak.  At Fairway Independent Mortgage Corporation in Meridian Idaho, we started the year with 2 loan processors.  When we had to replace one of them, we decided to hire 3 due to the massive amount of home loans we have in process.  We found that there are not that many current mortgage staff in the labor pool.  Instead, we found there are a lot of former mortgage loan processors, mortgage underwriters, and mortgage loan officers who have been working in other fields since the industry shed 75% of its people.

We were lucky to find 3 great, energetic people with the right attitude who we have been training since June.  There were some growing pains, but it has been worth it.  At our corporate office, we have been hiring additional people in the underwriting and other functions and as a result, our turn around times for loan underwriting is only 3 days on refinance loans and 2 days on purchase loans.  Many times I turn in a loan file and it gets worked on before the expected time frame.

Now many of the big, dinosaur banks have been reluctant to hire more, and I certainly understand their concern that the rates will rise and 80% of the business, refinance loans, will go away.  The result is that those big banks and the mortgage brokers who rely on their underwriting staff are experiencing extremely long turn around times.  Many banks have decided not to take too many of the Home Affordable Refinance Programs 2.0 loans so that they don’t over load their capacity to process the loans.  

Fairway Indpendent Mortgage Corportation decided many years ago that they would put their purchase loan business on a seperate, higher priority track for processing and funding.  Refinances go second and most months we won’t fund refinance loans on the last couple of days of the month so that we can finish up purchase loans that have a firm deadlines to meet.  By doing this, we can assure that our Home Buyers, Sellers, and Realtors can meet their obligations and have a “10” experience.

That doesn’t mean our refinace customers will experince long delays.  I have been getting most refinance loans finished in 3-4 weeks.  My FHA streamline refinance customers and VA Interest Rate Reductions customers have regulary been finished in 3 weeks because the loan program requires no appraisal.  That shaves a week off the typical processing time.

Here is the article that made me think about what people are experiencing in Boise, Idaho and the rest of the country when they apply for a loan.  Now, if you do not want to delay, you can always call me, your Idaho Mortgage Guy.

http://bottomline.nbcnews.com/_news/2012/10/19/14563232-banks-responding-too-slowly-to-mortgage-demand?lite&ocid=msnhp

 

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