Lenders killing deals with eleventh-hour demands

Lenders killing deals with eleventh-hour demands

Lenders killing deals with eleventh-hour demands A growing number of files are being sent back by lenders with demands for additional information but with too little time to meet closing, argues one industry veteran.

Lenders are sometimes informing brokers of issues with files after it’s too late, according to one industry player who has lost deals as a result.

“I don’t mind if I’m told by the lender two weeks before closing if there is an issue with a file, but they sometimes tell you the day of closing that the application needs something changed,” Ross Taylor of Mortgage Intelligence told MortgageBrokerNews.ca. “In one case they raised an issue at the closing about a problem.”

In one case, Taylor had worked on a client file for two months only to have the deal fall apart at or near closing – something that took all parties by surprise.

According to Taylor, the lender informed him on the day the property was meant to close that the lawyer who had signed off on the deal was on their “do not work with” list.

“It was a refinance deal and I lost a $5,000 commission on a $480,000 mortgage,” he said.

Taylor suspects the fulfillment specialist didn’t read the documents closely enough and only caught it when it was too late.

And although the BDM tried to get an exception to allow the deal to go through, nothing could be done.

It could be a case of high volumes forcing underwriters to spend less time on each file, according to Taylor.

Another reason for the uptick in last-minute requests could be the mortgage rule and underwriting changes that brokers – and lenders – have grappled with over the past few years. They have underwriters crossing their Ts and dotting all there I’s, especially in light of recent broker fraud allegations by a leading monoline.

But losing a deal in the home stretch, for whatever reason, is something players can guard themselves against, argues one broker.

“You have to have a checklist and you have to review your documents before sending them to the lender,” John Panagakos of Dominion Lending Centres Home Financial told MortgageBrokerNews.ca.. “Scrutinize everything because we shoot ourselves in the foot by not reading every single line of a document.”
  • Claire Drage 2015-08-27 9:43:03 AM
    I read and review every single document before it goes to the lender to be pro-active and mitigate any potential concerns they have. BUT in the last few months I have had three files go south with massive scrambling at the last minute - it is frustrating and most recently it appeared that every time someone different looked at the file - or a last minute supervisor reviewed it - they found something of concern. It is frustrating and I try so hard to be polite and professional as we work thru the issues - but how do you explain to your client that their income was fine a month ago when the condition was met but now it isn't and freak them about day before closing! Or a random audit the day before closings requires more documentation! Not sure what the solution is because some of our poor underwriters are torn between a rock (changing guidelines, internal audits, investors changing their minds about what they want to fund) and a hard place (the relationship with the mortgage broker that is jeopardised with the bad news they have to pass on!).
    Post a reply
  • KBowles 2015-08-27 10:13:10 AM
    It is easy to pick out which lenders this article is talking about. I think they need to change their process or give the underwriters the authority to actually satisfy a condition or make it mandatory that an audit be done 1 or 2 weeks prior to close and send us a confirmation that the final review of the file has been complete. This why we have it on our check list to be looking for the final audit and not assuming everything is ok. I have had files complete 2 months prior to close and 2 days before close completely new docs are requested. My solution, limit the amount of deals sent . If closing is a nightmare all the great service given prior is forgotten.
    Post a reply
  • John Greenlee 2015-08-27 10:26:51 AM
    I am wondering if there is more to the story about the loss of the refinance deal due to the lawyer being on the "do not deal with list".

    The payout statement would have been ordered, wouldn't it have made sense to send the deal to another lawyer to have it close a couple of days later?

    Not to detract from the fact that, if the above is true, the deal should never have been instructed to that lawyer in the first place.
    Post a reply