Reality Mortgage Episode: When The Right Hand Doesn’t Know What The Left Hand Is Doing!

As crazy as it seems, in the Banking world this seems to be the norm.
Let me give you some real life mortgage examples; I was working on a mortgage for clients purchasing short-sale and we had already had a commitment. I, and my client think, that we will be closing in 2 to 3 days. My client’s attorney gets an email from the seller’s attorney that the house was foreclosed on the day before and the deal is off!! It seems that the loss mitigation department didn't notify the attorney handling the foreclosure to cancel the auction!! Scary!!

Then I had a client purchasing a foreclosure. We were all set up to close and the documents had already been sent to the closing escrow agent, but when the bank tried to order the wire, the warehouse bank (this is how mortgages are funded, there is a wire from a lenders warehouse line of credit) the warehouse line bank said that this particular lender was not approved by this warehouse bank for FHA loans, so the lender had to scramble to get the approval they needed. They had to change fraud scan companies, provide the resume of their underwriters and electronically send the file to the warehouse bank for their review. What a mess!! Well it took one week and then we finally closed.

The worst was back in 2008, when I did a condo purchase mortgage through Chase. The night before the closing at 4:45 pm, I get a call from my AE that the file cannot close with 3% down as committed, but with 5% down since they couldn’t get PMI because their score was under 620. This is the night before closing. Then they said that the clients don’t have enough funds to close anymore. This one took more ingenuity to solve. 3% programs had already been deleted from the available programs; the clients didn’t have more money. I re ran credit and got a 6:40 score, I had Chase send it to another PMI company (Thank You RMIC for saving the day) and we closed 3 days later. I asked Chase, how do you issue a commitment and clear a file to close without finalizing the PMI? They said, that they usually do this before issuing the commitment and for some reason on this file they didn’t.

Well there you have it, incompetence at work.

This is why you need to deal with experienced, knowledgeable and tenacious professionals on the street level. Going to “Brand Name Bank” isn’t the answer all the time. The three banks in the 3 stories above were large well-known banks, Countrywide, BOA and Chase. A personal observation: I have found that the larger the bank and the stronger their “brand” the less likely they are to work for the average Joe and Jane homeowner. I really feel the people that you work with on the front-line is the key to a positive and successful home financing.