Sacramento Mortgage Lenders Can’t Perform

Why can’t Sacramento mortgage lenders close escrow? Almost every single escrow nowadays has some loan delay that causes a Sacramento home buyer not to close. But just because everybody is doing it doesn’t make it right. Why can’t home buyers close escrow? Because their lenders can’t perform. If you’re looking for a mortgage lender to finance a home in Sacramento, I’d say an important question to ask is can they promise — can they guarantee — that you will be able to close escrow in this century? Get a timeframe and hold them accountable. This is the big white elephant in the room that everybody seems to be ignoring — lenders who can’t perform.

You know what happens when a mortgage lender can’t perform? They come knocking on the door, whimpering like a dog, holding their tails between their legs and begging: Please sir, will you extend our escrow? Sometimes that answer is NO. Especially in a seller’s market like the real estate market we have in Sacramento at the moment. Sellers get tired of waiting for buyers to close. It’s not just seller’s remorse. Sellers can and will cancel your escrow if you can’t close on time. Sellers might decide they’d rather wait until spring, when maybe prices will go up even further.

If you’re trying to close a Sacramento short sale, it’s even worse. It’s not just the seller who might refuse to extend, it’s also the seller’s short sale bank. Banks are refusing to provide a short sale extension. Those short sale approval letters contain an expiration date. If the bank will agree to extend, the bank might charge the buyer $100 or so a day for that extension. It’s a no-win situation for that first-time home buyer. It doesn’t matter what the contract says, that verbiage won’t save you. It matters how long the short sale bank will give a buyer to close, and that timeframe governs your transaction.

Perhaps a bigger question is why can’t mortgage lenders close escrow on time for today’s home buyers? What is the problem? It’s not like the banks are overwhelmed with business because there aren’t that many buyers in escrow. We have very low inventory — we have fewer than 1,600 homes for sale in Sacramento County. Interest rates are low, but they’ve been low for months and months. Yeah, loan restrictions have tightened, but we’ve been jumping through hoops for a long time. Nothing has changed overnight. I propose that banks are swamped because they refuse to hire enough people to get the job done. They’ve made so many cutbacks in personnel during the downturn that they’ve gotten used to thin payrolls. Cheapskates.

Perhaps there is some little old lady sitting in a dark room with a single light bulb dangling from the ceiling over her desk. This little old lady is working on your file. She looks at her watch. Stops working. Oh, my goodness, deary me, it’s time to go to Starbucks. She leaves. And she doesn’t come back for a few days, and nobody cares.

It’s no big secret why home sellers in Sacramento prefer a cash offer over a financed offer. The performance in underwriting is pathetic. Totally sucks. Big banks, little banks, makes no difference.

The solution: If you’ve got a choice in choosing a mortgage lender, stay local. Pick a person you can grab by the shirt collar and shake a little bit. And get that guarantee upfront that your file will be processed in a timely manner or you might not be buying a home in Sacramento.