A pre-approval letter is not the same thing as a loan commitment.

Yes, of course it is not. But being able to present one with the offer means at least some financial institutution has run prospective buyer's credit and evaluated assets and presumes based on info at hand that buyer might be qualified. Without at least that, one would have no way of knowing that the buyer was qualified and believe me, agents will bring completely unqualified buyers. It has happened to me which is why I am now diligent in staying on top of the financial aspect of the transaction and not leaving it to anyone else. The closer keeps me apprised (in my title company state).

I did not see the backstory. Maybe this Seller is not using an agent. She(he?) will still need help anyway. But if there is an agent, no way should this happen.

This has been going on for months.

http://ths.gardenweb.com/discussions/3479134/we-got-our-first-offer?n=190

The seller seems cursed.

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midcentury, agents have no control over the banks issuing a commitment letter. And, a Pre Approval letter does not guarantee that a loan commitment will be forth coming.

The buyer's agent should be in communication with the lender and be able to determine what the hold up is.

My son went through this recently with a large down payment and a large bank too. He had to get extensions on the escrow period because the bank kept messing up and losing his records.

I told my sister who told her best friend who was a bank officer. She laughed and said that these extensions are so common these days because banks/mortgage companies are taking so long with loan paper work. She says that a lot of the problem is that the mortgage departments often have rather new employees. But it sounds so unprofessional. She said that with all the bank and mortgage company consolidations in recent years that the employees just do not have the experience they once had. Over and over, my son's account was passed on to yet someone else new, and yet the paperwork was not. So over and over, he had to fill out or mail them copies of all the papers he had already filled out and copied and mailed over and over.

We are getting jerked around by Bank of America Mortgage as I type. We're on our 4th extension.

and we are repeat customers with them, credit scores 800, last mortgage was paid off 7 yrs early.

Banks are enforcing very tight standards and this is a result of 2007/2008.

Our buyer got the loan commitment in about 30 days.

Banks are not giving out mortgages like they used to. When we sold our house in 2013, our closing date was moved three times due to the buyer getting a mortgage. The wife was pregnant and had to have a letter stating she was working full time to qualify for the loan. It was crazy! Although with putting down over half the mortgage, you would think they could get a loan for the rest!

Our sale did eventually go through, although we were biting nails in the meantime with it off the market during the shenanigans. At least this is a good time to be off the market. I hope it goes through for you. The good news is, these buyers seem determined!

New federal rules since 0ctober have extended the time it takes to get a mortgage. There are mandatory waiting periods between preliminary fee and final fee disclosure notices. If any fees change beyond strict tolerances the waiting periods begin again. An appraisal may cost more, title insurance too. Change the loan amoun, you have another waiting period. Also, title companies are taking longer to issue title commitments since they are carrying more responsibilities for errors since 2008. If the title work is required, the bank has to wait. The incomes have to be verified the twice, at beginning, and two weeks before closing to make certain nothing has changed.

My bank used to do routine 30 day turnarounds for closings. Now, with the new rules it is 45-60 days. And if any fee changes too much, there can be another 6-10 day mandatory wait.

There's also the end-of-year closings that might have the bank backed up. Here in FL, folks need to close by Dec 31st to get the homestead exemption on taxes so there's always a big rush at the end of the year to get closings done.

The TILA changes won't make a bit of difference on approval times. If someone is using that as an excuse, they're blowing smoke. The new rules mean that it takes (potentially) three more days from the time the house would have been able to close under the old rules (which just required an estimate of the costs rather than the actuals).

There's no reason why a qualified buyer won't get relatively quick approval. If it's taking a long time it's because either they are completely unqualified for what they're trying to shop around or there's some specific blot that they're having a hard time clearing to get the approval.

Getting a closing scheduled is one thing, getting a commitment is quite another.

Our buyers did have a pre approval from Wells Fargo and that is the bank they are using. The appraisal was done 19 days ago and we have fulfilled the contingencies-septic inspection, radon etc. We think they are in good financial shape because their first, too low offer was a cash offer. $50,000 later they needed a mortgage. I don't think our agent can approach the bank. They did only ask for 10 days. I hope they didn't do that to scare us when they really need more and will be asking in little bits.

There's no reason why a qualified buyer won't get relatively quick approval. If it's taking a long time it's because either they are completely unqualified for what they're trying to shop around or there's some specific blot that they're having a hard time clearing to get the approval. -

While this may generally be true, and always true at certain institutions, I think to say it is the norm is a bit of a stretch. It took almost 7 weeks to do my refinance, with a spotless credit report and liquid assets well over 20 times the amount financed.

Agents and buyers that are using lenders that take 45 days or more to close a loan because of the new TRID format need to shop around for more reliable lenders. My preferred lender is still doing 30 day turn arounds and even less when we really have to.

Don't forget that the Appraisal is part of the Loan Commitment and Lenders always seem to drag their feet in ordering these and we are at least 2 weeks out from time of Appraisal order. Lenders can give a pre-approval letter very quickly but they are subject to...subject to...subject to.....

And for some mysterious reason, loans always take longer to go thru when rates are expected to go up. And they go thru extra fast when rates are projected to go lower. Gee whiz, I wonder why....

Oh, come on.... you've seen it if you've completed more that a couple of deals during times when rates are fluctuating, even if very small amounts.

sushipup1.....what you are suggesting may be common in your area but certainly not in mine.... at loan application the Buyer can lock in their rate for a period of time anyway.

Rate locks, Sushi, rate locks...

The couple of times I have had closings delayed beyond a clients rate lock, the lenders opted to honor the initial rate. Just the opposite of what you are saying.

OK, there is my proof, where is yours?

The appraisal holds things up, oops, we need more paperwork, all sorts of things can cause rate-lock to expire, and the lender does NOT honor an extension of the the rate lock. There's my "proof".

Silly, of course there is no "proof" but I've had personal experience, and so have many realtor friends of mine.

I have no idea if this happens, it doesn't really seem reasonable that banks would slow down loans when rates are increasing. In fact, it seems more reasonable from a financial standpoint that executives at banks push loans through when rates are increasing. Rate locks are not free for the bank, it takes some understanding of the way loans are sold and/or securitized to understand why they are not free, but the idea is that when they sell the loan they get less for a 4% loan when the going rate is 4.5%. That amount can be pretty significant, the present value of a $100,000 4% loan when rates are 4.5% is a bit over $94,000.

This would happen in reverse when rates are going down and overall, they should be somewhat offsetting. Of course, if you can hold the loan long enough that customers refinance that might work, but as a general policy I would think enough customers would make the loan in a time under the lock period or pay to extend the lock that it would be dangerous.

sushipup1.....Just curious as to what state your are in?

I am in Missouri and as I said, this is not common at all in my area.

Most of the properties I sell are second/third homes or condos so many Buyers are not from the area and I am frequently asked about local lenders. I tell my Buyers that there are quite a few very good lenders in my area and if you would like contact information on several whom my Clients have used I will be glad to provide you with that information. If a lender does not provide top quality service or was given a bad reference by a Client the lender "might" be dropped from the list or at least move towards the bottom. Some lenders are just inept at their job/practices and cause delays and I have definitely saw this.

If you are so sure that lenders do this on purpose why not tell your Buyers that this could happen if they use them? I know a lender would not be in business long around here with that practice because word gets around fast.

Even if the rate lock date expires an extension does not cost very much depending on the loan amount...could be up to .125% to .25% of loan amount depending on number of days of extension.

Rates just went up and we got a rate lock right before it went up.

No advice. Just commiseration.

In 2000 our buyers wanted to do extensive renovations, and we were building a new home. The closing was nine months out. Come the day, we'd moved out... and they didn't have their financing. Our realtor called to tell us and said, "Never mind; if we put the house back on the market, you'll get more."

I wish that had happened, but they did come up with the funds before 5 p.m. If we had put the house back on the market, we could have lived there instead of in skanky temporary housing when our build was delayed two months!

The Seller should be in contact with the closing agent to see where the transaction is and what is lacking. You have to stay on top of every single step and every single deadline. The Buyer should be providing regular assessments to Seller regarding progress, anyway. Everybody knows you avoid certain big banks like the plague because they do not have efficient mortgage underwriting departments. Don't use them.

The "it takes longer because of the new TRID rules" is nonsense they are telling you, loonlake. Ron Natalie and NC are correct. Personally, I closed in 3 weeks from documentation to closing table in November, and 4 weeks on a sale the same post-TRID time (that I had to prod through). It works only if you use competent people.

mcml - do you mean the seller or the seller's agent? Do you mean the buyer or the buyer's agent?

How would "everybody know", the average buyer has little or no mortgage shopping experience, its not helpful to paint with too broad a brush.

On Monday we are going to put pressure on our realtor to find out from their agent exactly what's going on. Maybe the buyers need to be told that they have to try and be aggressive. We are the people most affected by delays. This is a weekend home for the buyers, so they are comfortable. We are living in a big mess and I need to get out.

Why wait until Monday? RE agents work on weekends.

Apparently there are some new federal regulations that are slowing mortgage loans down. I was told this by a couple different loan officers. They seemed pretty frustrated. It may not be the sellers fault.

Baloney. The federal rules are not slowing them down. The failure to anticipate and know and plan to incorporate the new rules are slowing them down. Everyone blames someone else for their own failure to abide by rules they should know.

@ midcentury - You're are tilting at windmills, by the time the problem comes to light, there is little you can do. Consumers simply don't know and many would not care how efficiently mortgage companies are at getting loans wrapped up. I am one of them, if you give me a quarter point off, then take a few extra weeks, I don't care.

No one goes to Walmart for the efficient and outstanding customer experience yet they are currently the world's largest company. Many crappy banks do a booming business because they have the right mix of price, products and advertising.

cmarlin... well I would presume that this forum educates people on what is customary and what to do. Many ask questions here regarding all forms of work regarding trades, including me (over on kitchen and bath forums, for example). Realtors should know this stuff and be informing their unknowledgeable buyers. Some do, but I think it is far too few. Hence, all the confusion.

bry911: That may well be true, but I certainly don't overpay for good service, with my above-800 scores here. I get the lowest rate always (and yes, I check with multiple sources). But I do care if they drag it on for months. That takes you out of contract, as a Buyer. Not everyone will extend. One actually can find a good mortgage broker (usually) or lender (occasionally) who will actually perform efficiently. You don't know what to look for if no one tells you.

@ midcentury - That may well be true, but I certainly don't overpay for good service, with my above-800 scores here. - This thread has nothing to do with credit scores, the point isn't about what you got, the point is what the average buyer cares about when he picks a lender.

But I do care if they drag it on for months. - Again this thread isn't about taking months. Why stop at months, go for years or decades if you want to be extreme.

That takes you out of contract, as a Buyer. Not everyone will extend. - I thought that most contracts had a reasonable financing extension built in, I certainly require one.

One actually can find a good mortgage broker (usually) or lender (occasionally) who will actually perform efficiently. You don't know what to look for if no one tells you. - Please tell me what exactly to look for. I have a PhD in accounting, I am Dean of Accounting and Finance at a university, and, I daresay, I have a much better understanding of both banking and finance than the average person. Even though I often read bank financial statements, I have no idea how long their underwriting takes without some form of recommendation or anecdotal evidence. Realtors who deal with it every day will often alert you about lenders they have had persistent problems with, but realtors are not unbiased. Realtors will tend to favor banks that can get deals done promptly over lenders with better products who take longer. Moreover to expect the average person to know all this at the beginning of the process is unreasonable. While I agree there may be ways to find out this information it simply isn't worth the trouble for the average buyer. Most will simply accept the excuses along with reasonable extensions and not be too mad about it.

Bry, no Seller is obligated to extend a contract. Here the standard form the Realtors use says if an agreement is not made for an extension for financing that the Purchase Agreement terminates. You have to get it done. Extensions are considered on a case to case basis. I strike those provisions. but will give a reasonable time frame to close. No automatic extensions though.

Some closings do indeed take months. There are several examples even on this forum. This should never happen.

I use a broker that is fantastic when I am buying. Last time I saw him, I dropped documents off on a Monday and had keys 3 weeks later. He gets it done. I wish every buyer used someone like that.

Of course. Recommendations, from knowledgeable people in your area who do a good deal of this kind of business. Investor types, not the random homeowner who buys once in 15 year and tells you he liked the broker/lender rep. Does that lender have efficient underwriting and is he at the right rate or not? That's all that matters to you as a Buyer and to a lesser degree, a Seller. Sure, Realtors can make representations but those are much less valuable to me than an investor recommendation, because he bought 10 houses last year and understands the process from the inside of a transaction, not from just the outside as an intermediary, as you say.

It is up to YOU as the Buyer to do the work to get the best product. Anyone with an internet connection can do that today. Call 5 lenders and ask them a list of questions regarding costs and time frames and compare apples to apples. Someone will come out on top. Then research reviews, whether Yelp, Angie's List, consumer rip-off reports, or whatever is specific to your area.

Well, the "average buyer" is also in massive debt and makes many poor financial decisions. It's worth doing the work to save thousands over a lifetime and it is darn easy today with the internet. Back in the day, I spent hours on the phone and I don't have to do that anymore.

It is financially worth it to learn this stuff before entering transactions. That's all I am saying. Maybe if you are a couple of anesthesiologists who make millions, you don't care. But I live in the real world where every financial savings adds up.

Our buyers have a mortgage commitment, but are not clear to close. I guess that means that there is still some paperwork necessary. Our lawyer is not told why it isn't clear to close, but she says that frequently happens and it usually just takes a week or two. What we are being told is that our lawyer is not privy to whatever the bank needs. She is just told by the buyers lawyer that there is a commitment document in the buyer's lawyer's hand. Once they are clear to close we can make moving arrangements.

Are you able to continue showing the home? This seems a bit crazy...

You last said that your agent was going to discuss with the buyer's agent what, in detail, was the hold up. The buyer's agent knows. Your agent should be on the phone demanding what in the heck it is that the lender still needs.

OMG-we are clear to close-Feb 1. Thank you for all your support! Laura

Why so far away? That seems odd to me. If cleared to close, they are cleared NOW.

midcentury...so with your limited knowledge of the Sales Contract and Lender/Buyer discussions (actually no knowledge) you came to the conclusion that if the Buyers are approved to close on Feb 1st then they can close now as in immediately?

Why so far away? That seems odd to me. If cleared to close, they are cleared NOW

Congrats, sixtyohno! I know every setback seems monumental when so much hinges on this deal going through and anyone would be anxious when that happens. I'm glad you have added assurance that it will soon be completed.

Congrats! Now it's off to Florida? How exciting!

We need to book the movers. They need a week's notice. So they load Saturday. We clean Sunday and close on Monday. I still have some packing and there are details like filling the oil tank and the gas tank, and getting my kids to finish taking stuff. It's all getting to be real.

Summers, I know enough to know what "cleared to close" means to a lender. It does not mean cleared to close at some future date.

Just curious what the delay is. You have no knowledge of this transaction either.

Perhaps we will never know, but I do hope it works out for this Seller.

midcentury...you are correct in that I have no knowledge of this transaction but I am not acting as if I can know what the lender "means" by that statement...of course you flip flop around and might change your advice tomorrow:

midcentury said "I use a broker that is fantastic when I am buying" on last Tuesday.

midcentury said " I buy direct through listing agent, or at auctions, or FSBO. Why obligate myself contractually for a long period of time to someone I don't know?" on last Wednesday.

Or maybe you just forgot which name you logged in under.

Don't see flip flopping and discrepancies in Midcentury's postings. Over the time from his many postings, it seems he is not only familiar with real estate transactions, but also knowledgeable and experienced in remodeling, real estate marketing and sales.

there are details like filling the oil tank and the gas tank,

Um why would you need to fill the tanks? That is normally done by the buyers after they move in unless you're on empty. If you fill the tanks, then you are entitled to a credit at closing for the amounts left in the tanks.

I merely mistyped on first posting you quoted, Summers. Complete accident ( I was probably interrupted and failed to read back). I use a broker to LIST only (so to sell, not buy). I do buy direct, and my second post is accurate. My listings are indeed short. Again, why obligate myself to someone for a long period of time, and of course, if we are in a transaction when the listing ends or if the broker was the procuring cause, I am on the hook anyway. So there is no reason to enter long listings or equivalently, enter long relationships with Buyer brokers. You can always renew. That was the point of that post in which you caught my inadvertent use of the wrong word.

My error, and I can see how that caused confusion. I apologize for stating the word "buying" when I meant "listing". I have one user name only, by the way.

That said, I stand by what I said in this post regarding the strange delays. And I do hope it works out for this poster.