“Why Am I Hearing About This at the Last Minute?!”

Have you ever seen scientist Bruce Banner turn into the Hulk? Banner goes from this nice, tranquil genius into a ballistic monster in a matter of seconds. It’s scary!

In the mortgage lending process, we’ve actually learned how to pull this off. Loan Officers, REALTORS® and Borrowers have all experienced the painful, rabid transformation into one of Marvels most angry characters. It’s relatively easy, just requires one thing: 

A last-minute denial on a loan.

BAM! Instant mayhem. LOs and REALTORS® lose a commission, the poor Borrower loses out on their new home (or lowering the payment on their current one in a refinance). Ouch.

Now, this isn’t a commentary on WHY last-minute denials happen (too many examples, too many words to cover today). Instead, let’s discuss why your lender hates last-minute denials as much as the LO, REALTOR® or Borrower does.  We’ll start with a question: 

How much does it cost a lender to close a mortgage loan?  

I’ve asked this question for years and the answers I’ve heard range from $500 to $5,000. A scale this wide says we’ve done a lousy job of educating people on how important this number is in our industry.

The Mortgage Bankers Association reports the cost to close a mortgage loan is $8,475*. Not $500, not even $5,000. No, over $8,000. When you back out the commissionable part of the cost you are still around $6,000.

So every time a lender has to deny a loan “at the last minute” what they just did was open the window and throw away $6,000+.

Put another way: to say NO that late in the transaction means the lender spent $6,000 to practice a loan closing. (Practice, you talkin’ about practice… comes quickly to mind). You can’t survive doing that. You just can’t.

Ironically, the best way to avoid last-minute closing problems is to be excellent in the first-minutes of the application process. Good questions, proper documentation, thorough dialogue and quality work up front gets the loan on the right track leaving the station - avoiding the wrong destination down the road.

It also keeps Bruce Banner from losing his shirt.

*2019 data

 

 

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"I will be out of the office all day Thursday and possibly part of Friday fixing a few things around the house. As most know, I am a ‘tinkerer’ so you never know what I’m bound to take apart and reassemble once I get going.

In my absence this email box will be monitored carefully by several of our summer interns, a few of which are ‘students’ from the Youth Correctional Training School in Cranston, big shout out to YCTSC – in the house! Love the ankle jewelry, styling!"

Orignally posted June 27, 2019

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