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Why Your Mortgage Lender in Sacramento Matters
Out of the 7 closings this Sacramento real estate agent is working on this week, only 2 transactions, according to the mortgage lenders, are closing are time, which makes closing delays pretty much par for the course for this week. Why? Because of the mortgage lenders. A few of the escrows are delayed because the buyers could not qualify for a conventional loan and were informed at inception that they should choose FHA but instead opted for conventional. Or, at least that their mortgage lender’s story and the guys are sticking to it. In others, everybody else thought somebody else was doing a job that nobody else was doing. Total cluster-you-know-what.
It’s also possible that the buyer’s agent felt the buyer didn’t stand a chance in hell of getting an FHA offer accepted upfront so the agent wrote the purchase contract with conventional terms and obtained the preapproval letter showing conventional financing, figuring who gives a rats if the transaction doesn’t close on time. But most buyer’s agents aren’t that devious. I suspect the truth of why some mortgage lenders can’t perform lies somewhere in between.
When a buyer runs past the closing date, the contract has expired. The seller has the option to cancel the transaction. The seller is not obligated to give the buyer more time to close the escrow. A lawyer might argue on behalf of the buyer and say the buyer invested money for the home inspection, paid for a pest inspection, perhaps other reports, and showed a good faith effort to close. She might say it’s not the buyer’s fault that things were delayed in underwriting or the mortgage lender messed up.
But that’s a tough argument if the contingencies haven’t been released, and the seller might believe the buyer is in breach of contract. The seller might give the buyer a Notice to Perform and then cancel. And let’s face it, many first-time home buyers barely have two nickels to rub together, and they can’t afford to hire a lawyer. So, they better choose a mortgage lender who can properly advise them and then follow that advice.
Here is my advice for home buyers today. For crying out loud, mortgage lenders all have access to pretty much the same ol’ bag of money, and you’re not gonna save 1/2 point here nor there, so pick the mortgage lender in Sacramento who can perform. Pick the company that won’t lead you astray. Pick the loan officer who will have your back. Don’t go with the guy who dishes out apologies when you’ve lost the house.
In all of my years of working with and referring business to Dan Tharp, this mortgage lender in Sacramento has never disappointed.
When Will My Home in Sacramento Close Escrow?
Sellers don’t take kindly to the correct answer when they ask: when will my home in Sacramento close escrow. The correct answer is, of course, when fairies sprinkle pixie dust. If a buyer is lucky enough to be working with one of our preferred mortgage lenders, I can accurately predict a closing date for my sellers, but if it’s some other lender, an exact closing date is difficult to nail.
Oh, sure, there is a closing date specified in the purchase contract on page 1 near the top. It will either indicate an exact date, such as April 30th, or it will give an approximate number of days (usually 30) from the date of the contract to close. The date of the contract is the date the agent (or buyer) received the executed contract, which is usually the date the last buyer signed, not the date the purchase contract was drawn. However, to many mortgage lenders in Sacramento, those closing times are simply estimates and mean little.
If the closing date expires, the mortgage lender will simply expect all parties to extend the purchase contract. That’s because mortgage lenders might not give a crap about whether the loan blows up because the seller refuses to extend. They work in some other financial arena, worlds apart from Sacramento real estate. It happens. Sellers are not obligated to extend the purchase contract upon expiration. Buyers might cry foul under those circumstances but what happens if a seller could sell to another buyer for more?
Big name banks, and you all know who they are, are the most guilty of not closing on time, but so are the itty bitty real estate companies that try to wear two hats and be a mortgage broker plus a real estate agent to some poor fool. The first is because they’re too big to care and often employ salaried employees who don’t give a hoot either. The second is because they’re generally inexperienced and too small to carry any weight.
The fact is we real estate agents can push and shove or be as sweet as sugar all we want to manage escrow closings, but until the underwriter releases the file from underwriting and sends docs to title, we don’t really know for certain when we will close. Once we get the docs, then we can target the date. This is why it’s so important to work with a mortgage lender who can guarantee a closing date. These lenders do exist.
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.
It Takes a Village to Close a Sacramento Escrow
Pia is stressed at the vet.
Welcome to home buying stress. Anybody who is buying a home in Sacramento today is stressed out. I don’t care who you are. There is no way to buy a home and not be stressed about it, so don’t feel alone. Even if you’re lucky enough to have beat out all of the competition and get your purchase offer accepted, you still need to get through underwriting. Lenders are much more strict than they were 5 years ago, more restrictive than a year ago or last month, it seems. Just because your lender says you’re fully approved does not mean you will get a loan.
I’m not trying to give you one more thing to worry about but getting approved by underwriting is a concern. I had one seller cancel an escrow a few months back because the buyer asked for too many extensions. It wasn’t even a short sale, it was a home with equity in Elk Grove. No matter what the buyer did, she could not close her loan. The reason she could not close her loan was because the IRS was backlogged. She needed her tax returns from the IRS. She couldn’t get them. My seller got tired of waiting and canceled. I didn’t blame her.
Another buyer in Lincoln could not close on her approved short sale. Something happened to her financial situation so the USDA loan she was trying to get was no longer a reality. She could not afford the FHA loan under its program terms, so she ended up losing the house. She lost her earnest money deposit, too, if I recall correctly, or maybe they are still fighting over it. My seller sold to another buyer who could perform.
Just last night, a Roseville buyer found out her “fully approved loan” did not pass underwriting. She needs to now haul in her parents to be cosigners, which means escrow will be delayed. All I can say is thank goodness this escrow is not a short sale and we don’t have to beg and plead with a short sale bank for a short sale extension that we may or may not receive. My seller expected to close this week, and now she will have to wait another couple of weeks or start with over with a new buyer. Oy.
My cat Pia is feeling very stressed. In fact, I had to rush her to Davis last night for an emergency vet visit. We are not ruling out a urinary tract infection but it could just be stress. She is stressed for a number of reasons. The vet says my work stress might affect my cat. Working as a Sacramento real estate agent can be stressful, even if it’s suppressed. Who knew stress could transfer to your pets? She is also very upset because I sold the dining room table, not to mention, her buddy, my husband, has been unavailable to her. Her environment has changed. Cats hate environmental changes.
The real estate environment has changed in Sacramento. This is not your mother’s residential resale market. It’s a world with wacky mortgage and appraisal guidelines, extreme competition, not only from other home buyers but from cash investors; and very few homes for sale. Better hope you have a good real estate team on your side. Believe me, it takes a village to close escrow these days. I won’t sugarcoat it for you. But the Elizabeth Weintraub Team will do everything in our power to get your escrow closed.
