Thirty Days is Long Enough for Mortgage Closing
For as long as I can remember – and I expect much longer than that – contracts for the purchase of residential real estate in Georgia have been written for 30 days as a normal practice. Today, we are seeing many real estate professionals writing extended contracts, for 45 to 60 days, and even longer in some cases.
It seems as though real estate professionals are being conditioned to think that the standard term of 30 days is not sufficient to get financing in place. This most likely has been proliferated by the lack of service available in the lending industry today.
Not only has there been a huge decrease in the number of mortgage lenders, as we pointed out in a recent column, but many of the ones that are left do not have the operational systems or personnel to handle the volume that is being delivered. And we are just beginning to see signs of a recovering real estate market. Based on the huge depreciation in value and the pent-up demand caused by the length and depth of the recession, more real estate contracts will be written and the delays in mortgage loan processing time are about to increase across the board.
“The lender today is out of step with the transaction,” said Charlie Ragonesi of All Mountain Realty in Jasper, Georgia. “I would say that this happens about 50 percent of the time. We do work with good lenders who come through. But until lenders get back to loaning where they were pre bubble we will never see a housing rebound. When we bought our first house in New York City, it took 60 days to close. When we moved to Georgia the lenders laughed that it took so long in New York. Well guess what? Georgia is now 45-60 days even for loans that are 100 percent no problem.”
It is very arrogant of the mortgage industry to think that it should be able to dictate the timeframe of a real estate contract rather than doing whatever it takes to meet the terms provided in the contract. It is commonplace today to hear a real estate professional’s cynical view of the closing date. If you ask many of them, I bet that they will tell you they miss closing dates more often than they make them because the lender was not able to deliver a loan package in the timeframe set by the contract.
At Southeast Mortgage we have always delivered on our promise to close within the terms of the contract and it is our goal in every instance to be ready to close in eight days, whether that is needed or not. Real estate professionals need to know that there are still mortgage companies that understand how this industry should operate — that the client comes first and that service is still paramount.
As Brad Feiman, Team Leader Keller Williams Atlanta Perimeter, said, “Thirty day closings are pretty standard in our industry and that is what many buyers want. If a mortgage company can’t get it done in 30 days, buyers and agents will move on to a mortgage company that can.”
(To read more on major delays for refinancing mortgages as well, see this article from the Wall Street Journal.)
— J.D. Crowe is Senior Vice President of Southeast Mortgage