Notes and Opinions from one of Arizona's Most Trusted Loan Teams

There is something a little odd going on in our industry that borrowers and real estate agents need to be aware of.

The downturn in mortgage markets has caused many lenders to lay off behind-the-scenes personnel like underwriters, document preparation clerks, and funders. These are the folks responsible for final loan approval, getting the closing documents to escrow, and getting the loan funded when the escrow company has completed the signing.

As everyone is aware, there are also a lot fewer mortgage companies in business this year than was the case last year.

Even in a slower market, these two factors are actually causing "turn times" to rise. It is frequently (not always) taking longer for final approval, longer for clearance on addtional items the underwriter requires, and longer to get documents and funds to the escrow agent.

One of our banks is currently quoting 5-6 business days for loan approval, 2-3 days for clearing any additional requirements, 2-3 days for document creation and delivery, and 2 days for funding the loan. On an average transaction their "turn time" averages 10-14 business days. This equates to 3 weeks to finalize the loan after all the processing is completed. Not only that, they are claiming that  one of their competitors is requiring 30 days to finish a file that has been completely processed and submitted to them. We don't know if that is accurate or not since we don't deal with the lender they named. If it is accurate, it's a sign of the times and drives home this point. The remaining lenders are busy.

Many deals today also involve the resale of a home that has been foreclosed. The banks that own these homes are not always quick to respond on required repairs or signing a final contract.

All of these issues add up to longer closings than you might expect given the "slow" market. It is very wise to talk to your lender about how these issues might affect your closing date BEFORE you establish the close of escrow date on the contract.

Please note that the turn times shown here do not apply to all of the lenders we use. Some are still performing these functions very, very quickly. However, it is important to know whether you are likely to be affected before becoming obligated to close your transaction on a particular date. It's easy, just call and talk to your broker or lender about what you can expect.