Here's a great little post by Jim /valentine ... a true sign of the times for our industry! Thanks Jim, great job!
Transactions Today ... It's Never Been Like This
We've recently written about the Home Valuation Code of Conduct, HVCC, and the upcoming new Truth In Lending, TIL, changes and their impact on the real estate industry. Their impact has caused delays and actual cancellations of transactions. In addition to those changes we are seeing lender underwriters asking for things that it seems they invented, and not necessary for the protection of the lender. They appear to be cognitive questions qualifying the Buyer, but most, under scrutiny, are contrived lunacy.
Having gone from ultra leniency to ultra conservatism in evaluating borrowers, the new underwriting experience is a reality that must be dealt with until the proverbial pendulum swings the other way. It takes a lot of time on the part of the agents, lenders and escrow officers to keep up with the ever changing requirements trying to hold an escrow together. This isn't just with marginal borrowers, this is occurring throughout the industry on all financial levels.
There is a natural course of timing in an escrow, things occur at a reasonable time sequence depending on the property, the borrower and other circumstances. The plethora of the unexpected delays is causing escrows to go beyond the deadline for the loan interest rate lock, beyond the contractual close of escrow date, beyond the time provided for a loan commitment, beyond ... etc.
Some examples of the unexpected include a request that the borrower obtain a letter from their employer that they won't be laid off for three years. Three years! It is hard enough for some companies to know three months from now if they'll be in business, no less continuing to employee this individual. Another underwriter requested from a Building Contractor three job contracts for future work ... after already having tax returns ... for a 25% loan to value loan! Where is the risk?
Then there's the couple asked by an underwriter to get proof from an ex-spouse that the payments had recently been made on the house previously owned by one of the spouses in a prior marriage, but now the responsibility of the ex after the divorce. No Notice of Default is filed, no reason to ask other than ultra-conservatism. Yes, though the court awarded the home and the responsibility for its payment to the ex, they are both still responsible for the original payment. Being the secondary borrower, the spouse couldn't get the information from the lender - there was no way to verify that the payments had been made. No way to buy a home with new spouse without cooperation from the old spouse. They lost their purchase even though they are otherwise qualified.
Our advice: If you are going to take advantage of the First Time Home Buyer Credit it is important to understand that escrows are taking longer than they used to, and surprises can crop up in places totally unexpected. For safety, plan on a 60 day escrow which means you should be under offer no later than October 2nd in order to be closed by December 1st. We highly suggest that you take action as soon as possible to realize the benefits of the low prices, low interest rates, and $8,000 Tax Credit.
These are interesting times full of opportunity. Get a good agent to help you navigate these turbulent yet fascinating waters and we are confident that you will be genuinely pleased with the results. When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472. firstname.lastname@example.org, www.carsonvalleyland.com
Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley, Carson City and the tri-county area of Douglas County, Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: www.findhomesincarsoncity.com of visit our website at www.CarsonValleyLand.com