Clear Close – Tip #2

Posted: March 12, 2008 in General, Uncategorized, Virtual Assistant
Tags: , , ,

This is kind of a two fold blog post.

#1 – The post is a tip to watch for so that your closings happen on time

#2 – It is kind of an opportunity for me to vent a little about liars…I mean, lenders. Ok, not all lenders are bad – but, seriously, most are.

We all know what a Third Party Financing Addendum is, right? And we all know that if you have the Buyer then whatever the amount of days you have in that first paragraph is how many days you have from the day of execution until you HAVE TO HAVE final approval on your Buyer’s loan.

If you do no have final approval on the Buyer’s loan by whatever date that is, then your Buyer needs to either A) opt out of the contract AND get their earnest money back, or B) you need to draw up an Amendment to extend the amount of days you have to get final approval from the Lender. Because if your Buyer does not get final approval by that deadline, and nothing is said, then they cannot back out after that and they cannot get their earnest money.

But here’s where the problem is.

Lenders are liars If you represent the Buyer and you call the Lender and say, “Hi Pinocchio, I am calling about ______________. Our loan approval deadline is in 2 days and I need to know if we are fully approved,” they will say, “Oh well gosh yes.” At this point you might say, “Are you absolutely and positively sure that the loan is fully approved?” They will assure you with oaths and blood that the loan is approved. Do not be shocked when you are 2 days away from closing and there are ” conditions” that have to be met in order for the loan to be approved.

Huh? I thought we were approved! If you are confused, keep reading. If you are not confused, then keep reading – because you probably already know what I’m going to write.

See, no one holds lenders accountable. So if they tell you that a loan is fully approved then what they mean is that as far as they know the loan is fully approved. But if you ask them to send you a letter of full approval for your client, they will (maybe) send you a letter that says, “From: Pinocchio Lending – Client X is fully approved IF the following conditions are met…” Then there will be a few conditions that the loan is contingent upon. So, really, they aren’t fully approved.

So what’s the point of a Third Party Financing Addendum and the amount of days that you put in there? I’m not really sure, to tell you the truth. Yes, I understand the technical definition and purpose of the form. But in the real world those days mean absolutely nothing.

You MUST MUST MUST stay in contact with the Lender throughout the process. And you absolutely must check with your client to see if they have gotten the Lender everything that they have asked for. And you absolutely must watch that date on the Third Party Financing Addendum.

Now, if you have an assistant who is doing this for you and the date passes for the amount of days placed on the Third Party Financing Addendum; and then you get close to closing and suddenly there are conditions that have to bet by the Buyer, please do not yell at your assistant. They didn’t do anything. “Final” and/or “Full” approval on a loan is a myth. Terms like “golden” and “smooth” for a loan are terms that only exist in a dream world.

I don’t think I’ve ever closed a deal where there wasn’t one snag from the lender right near the closing date. There is always a form that suddenly is needed, a signature that has to be had, a phone call that has to be made, or documents that have to be faxed. There’s always something. Expect it.

Ok – I’m stepping down off of my soap box now. I really would appreciate some feedback on the Third Party Financing Addendum and what its actual function is. So, let’s hear it.

Have a super day,

Dustin  Curlee

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Comments
  1. Violet Zavala says:

    Hi Dustin,

    I had a horrible experience last week on the same subject. My buyer was supposed to close on the purchase of his home 03/04/08. A couple of days before closing the Lender/manager called and said my client was not qualifeid on a conventional loan because he could not get him PMI, so the lender restructured the loan to FHA and assured me via-email that we would close on 3/07/08. My buyer did everything the lender required, and I was on the phone with the lender atleast 2 times a week, the selling agent was in close communication with the lender as well. The closing date came and the Title company did not have any paperwork. I soon get a nice e-mail saying sorry loan denial! (try explaining to the buyer what went wrong!). He lost all his earnest money! Lender has no accountability….

  2. Dustin Curlee says:

    Violet,

    Oh no! That is a horrible, but sadly enough, more of a rule than it is an exception. I’m telling you, the lending situation isn’t getting any better. Holly and I have 33 closings on the board for March. So far we have not had 1 smooth closing. We’ve had to wrestle through a lender situation on EVERY ONE of them.

    I wonder when the authorities will do something?!

    Dustin…

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