Help! Our Lender Can't Seem to Close. What Can We Do?

[Bonnie Low]

I was contacted by a conventional lender through BP. I checked their recommendations and they seemed legit. The loan officer certainly was very helpful and responsive at first. In retrospect, I think he was eager to sell us his product, but less eager to stay on top of it and make sure it gets funded in a timely manner. We're doing a refi on our primary home to take advantage of super low interest rates. We're also doing a small cash back scenario because we have a lot of equity. We have been sending the lender's underwriter document after document after document. Each time they request something it takes about a week for them to review and get back to us. Every single time at least one of the following has happened: they've either said what we sent them wasn't sufficient and had to be revised in some manner (instead of just providing us the correct instructions in the first place), they've asked for something new, or they've required us to update something we sent previously because it expired (like current bank statements or proof of mortgage payments, for example.) They've even asked that WE call a credit reporting agency to try to get them to expedite their request for information from one of our other creditors because "we might have better luck." Isn't this what the lender gets paid to handle?? I've never heard of such a thing. We didn't even know what we were supposed to be asking of them. It was exactly like playing a game of telephone. I thought we were in the clear because we finally received closing disclosures last week, which we promptly e-signed and returned. We were told we'd be closing in 3 days. Lo and behold, yet ANOTHER request came through just today asking that we update our list of assets because that has now expired since it took so long. I find it hard to believe that a legitimate company is STILL asking for additional documentation AFTER we just signed the closing disclosures. Has anyone ever had this experience? At this point, I don't think they're capable of closing. The loan officer is in Florida. He says he's working with an underwriting office in NY. The right hand doesn't seem to know what the left hand is doing. They have of course used COVID as an excuse. But the excuses are piling up and, frankly, I now don't believe any of them.

My concern is that they can't close or have no intention of closing. At this point, our appraisal is going to age out or no longer be useful if we have to start the process all over with another lender. What recourse do we have? Can we pull the plug and walk away from this company? Can we get them to reimburse us for the $750 appraisal done for this loan which doesn't seem likely it's going to close? Any advice would be much appreciated!

[Chris Mason]

Originally posted by @Bonnie Low:

I was contacted by a conventional lender through BP. I checked their recommendations and they seemed legit. The loan officer certainly was very helpful and responsive at first. In retrospect, I think he was eager to sell us his product, but less eager to stay on top of it and make sure it gets funded in a timely manner. We're doing a refi on our primary home to take advantage of super low interest rates. We're also doing a small cash back scenario because we have a lot of equity. We have been sending the lender's underwriter document after document after document. Each time they request something it takes about a week for them to review and get back to us. Every single time at least one of the following has happened: they've either said what we sent them wasn't sufficient and had to be revised in some manner (instead of just providing us the correct instructions in the first place), they've asked for something new, or they've required us to update something we sent previously because it expired (like current bank statements or proof of mortgage payments, for example.) They've even asked that WE call a credit reporting agency to try to get them to expedite their request for information from one of our other creditors because "we might have better luck." Isn't this what the lender gets paid to handle?? I've never heard of such a thing. We didn't even know what we were supposed to be asking of them. It was exactly like playing a game of telephone. I thought we were in the clear because we finally received closing disclosures last week, which we promptly e-signed and returned. We were told we'd be closing in 3 days. Lo and behold, yet ANOTHER request came through just today asking that we update our list of assets because that has now expired since it took so long. I find it hard to believe that a legitimate company is STILL asking for additional documentation AFTER we just signed the closing disclosures. Has anyone ever had this experience? At this point, I don't think they're capable of closing. The loan officer is in Florida. He says he's working with an underwriting office in NY. The right hand doesn't seem to know what the left hand is doing. They have of course used COVID as an excuse. But the excuses are piling up and, frankly, I now don't believe any of them.

My concern is that they can't close or have no intention of closing. At this point, our appraisal is going to age out or no longer be useful if we have to start the process all over with another lender. What recourse do we have? Can we pull the plug and walk away from this company? Can we get them to reimburse us for the $750 appraisal done for this loan which doesn't seem likely it's going to close? Any advice would be much appreciated!

 This cycle is why I cut off originating loans at lenders that aren't moving fast a few months back, or that got 10x as nitpicky because "omg covid." Everyone says they want the lowest rate and fees, but after a few rounds of what you're going through Bonnie... suddenly everyone sings to a different tune. You are not the first one up against this cycle, and you will not be the last.

Certain things are good for a certain period of time, for example paystubs must be recent at the time of application, and then are said to "Expire" after 2 months. And other paperwork has different expiration dates, so then when your updated paystubs finally get reviewed (which takes 1-2 weeks b/c their turntimes are horrid), oh look your bank statements expired. And then you get those in, sits in line for a week or two, and oh look this OTHER thing expired. 

If the prevailing best market rate for a scenario is X.75%, and a single lender posts X.625% for that scenario, they will instantly attract more volume and more refi applications than they can reasonably handle, and then it becomes a giant mess. It's just supply and demand. If you're selling Happy Meals for $2 when everyone else is at $2.50 to $3, and Happy Meals are a hot product that CNN/MSNBC/Fox/etc are all telling people to "BUY BUY BUY!!!", and there you are at $2 still, when everyone else is $2.50 to $3.... you might run out of Happy Meals, that kitchen can only churn them out so fast. Some of these places are being stupid and continuing to post that $2 price even though they have no Happy Meals left, and haven't for months. The CFPB-required disclosure forms that consumers get (the "initial disclosure package") don't require lenders to disclose typical turntimes, closing percentages, or anything else addressing operational capacity. So when they mis-price their Happy Meals, you just sit in a cycle in the lobby until, maybe, at some point, Happy Meals will show up in future. Or maybe not, there's a cost incurred to start cooking a custom Happy Meal that the customer does not end up buying, and you've got to figure that's happening staggeringly frequently with this COVID pricing model.

What banks and lenders SHOULD do, of course, is look at where the market is at, look at their realistic Happy Meal inventory and production times, and not post a price so low that you can't service the business, in spite of what 100% of consumers would answer on a survey ("do you want the lowest price possible?") if you asked them. Let's be real, if everyone else's happy meals are $2.875, and you're at $2.75, and the food is ready reasonably fast and of high quality, your customers will still be plenty happy, with the price and the service... you absolutely don't need to (& shouldn't) drop to $2.50 and throw service/taste/quality out the window to do well (in fact, you will do worse). 

But, hey, what do I know.