Mortgage brokers want to see a home close on time as much as the principals and the Realtors involved in the transaction, but many times, circumstances beyond their control impact closings. Here are a few tips about what you can do as a real estate agent to make things go more smoothly in one area that can make or break the sale - the loan.

More states such as Texas are enacting laws that require loan approval to follow a timeline, or a home purchase can fall out of contract, making it more important than ever that Realtors and loan officers stay in communication during the approval process.

The three critical areas of the loan are application, documentation and verification. If those are done in a timely manner, the loan, barring any unforeseen blips, should close on time.

"Just call me and ask me before you put a two-week closing date on the contract if it's feasible to get it done on time," says Dallas mortgage broker Tim Simko. "I can close a loan in five to seven business days on an 'A' paper loan, but beyond that, I need a heads-up so I'll know what kinds of problems I might likely run into with the underwriter. Then I can give you a reasonable closing date for your contract."

Generally, the further away a buyer's credit or employment strays from 'A' paper guidelines (stable employment, high credit scores, low debt ratio, no bankruptcies, late payments on previous mortgages, etc.) the longer a broker will need to shepherd the loan through underwriting.

So if your buyer is self-employed and has to go "stated income," or has any other credit, documentation or verification issues, then loan officers like Simko might suggest adding a couple of extra weeks to the closing date.

Explains Simko, "In the documentation phase, information has to be gathered and given to the underwriter. There are programs for people who have less than perfect credit, but those require a more detailed and extensive credit analysis than someone who has an employer, good credit, what we call a 'cookie-cutter' loan."

For example, if you have a first-time buyer who has lived in three apartments over the last three years, a verification of rent (VOR) has to sent to all three apartment companies, and that is prior to getting approval. "What if one doesn't respond?" says Simko. "There's verification of deposit (VOD) that have to be obtained in a timely manner, and what if the buyer's previous bank in some sleepy town in another state is slow about getting that information? Then there are minor credit issues, like getting 10-year old tax liens that have long been paid removed from credit reports. That can take a couple of days to a couple of weeks because the buyer has to take off work and get it done."

So the lesson is, how bureaucracy works from town to town and organization to organization means that the lender is in the hands of other people.

"You can push and push but if they aren't going to move, they aren't going to move," says Simko, "You have no way of knowing that the bank manager in Iowa is on vacation. It's things like that you run across all the time. We have to be persistent, and that takes time."

Simko also suggests keeping in touch with the lender. "The real estate agent doesn't need to call often," says Simko, "but let's have a brief discussion about what's going on with the loan and whether there are any issues which might threaten closing on time."

Other factors to bear in mind are the types of market you're in and the role of other service providers. "When the refinance market was at its peak, we were looking at 12-day turnarounds in underwriting. There were only so many underwriters and the files were saturated, and you couldn't push it through faster. It was 12 business days to get it through underwriting. A normal file should take 5-7 business days to underwrite and get to closing, depending on the case load - the amount of business that's being generated."

If all the work has been done - title work, credit issues have been addressed, the appraisal is in, prior to turning it in to underwriting, the file is turned into underwriting. Automated underwriters are meant to expedite the file, and kick out an approval and it gives a small list to get to underwriting such as a copy of the survey, title commitment, copy of the appraisal, employment and deposit verifications. If any of those are missing, you can't close.

Realtors should know that one of the biggest trouble spots in getting loans to closing is the seller's survey, which is often missing in action. "You have to contact the Realtor on the sellers' side to get the survey. We never see it, and we have to call and find out where it is. Sometimes we don't get them. If we don't have it, can we get it through the seller's title company. So you have to find out - has the title company accepted the survey?"

The key is initiating early contact and keeping in touch.

"We are on the same team, we want to get the loan closed," says Simko. "A happy client and good closing is a good referral, so as a loan officer I want to get it closed in a timely manner."

Published: June 14, 2004

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