Should it take this long to get a loan?

Question

I have 9 mortgages (my home and 8 rental properties). I put a PA down on a 4-plex back in March. As of today the loan has still not closed with a conventional lender. My loan officer at the bank told me that because my background is so complicated with all the rental properties, it has to take this long to do the due diligence.

The seller is getting fed up with waiting and I may lose the deal. My lender says that no matter who I go to, I will have to go through this length of time to get qualified because I have such a 'large' portfolio of loans.

I'm finding that hard to believe. I was wondering if other people in my situation are experiencing the same length of time to close a loan? I have VERY good credit and am putting 20% down.

Jesse Gonzalez · Answer

Like everybody else has stated here, you're getting jacked around. I'm guessing that they're submitting your loan to multiple investors and keep getting shot down for one reason or another and they just don't want to tell you. From what you've described your situation does not sound complicated. Best of luck.

Michael Smith · Answer

@Hal Cranmer just out of curiosity, did your contract with the seller have a date by which the transaction needed to close? Have you been signing extension after extension?

Hal Cranmer · Answer

Thanks for all the replies. We are over 6 months with no end in sight. I am running out of time so I don't have any other alternatives. But you bet I will NEVER use this lender again for another loan. I am lining up another house to flip that is currently in probate and selling one of my rentals to free up a mortgage (back to 9 total), and I will find someone else. Now how do I get a good recommendation for a lender in Minnesota?

Bill Gulley · Answer

Your loan file probably fell behind the copier against the wall and they lost it :( Won't admit it and gave you a line about owning so many properties.....hog wash, all the underwriting information needed is in your tax returns and credit file, you don't investigate each property or each loan. There is more trouble figuring your ratios after any adjustments if you have adjustable rate loans, and computing equities to determine the down payment required, maybe an hour, hour and a half more in work. It is human nature to put off what takes longer to get something else done quickly that makes money and close deals, but ten weeks is negligence. If you go in yelling, they'll just deny the loan on an excuse, you won't win doing that, like their loan concentration to one customer. Go in and ask to actually see your loan file. Ask him to show you how much has been done and show you how much more is left to do, he'll likely change his tune and get a date for an approval or denial and the basis of the denial. If that is not acceptable, go see another lender and make up with the seller. :).

David Beard · Answer

Utterly incompetent lender (4-5 mths and still no approval??). I assume you are trying to get your 10th and final conventional loan? Or is this a portfolio lender? I'm afraid that you have to get really irate with these people, demand to talk to management, etc. Pay a visit if you can. What, if anything, are they telling you? Usually, if they can just drop the numbers from your Sch. E. into their automated underwriting system, it should not take that long. If tax return adjustments are being requested, or you have lots of newer properties without Sch. E. track record, this all takes a lot more manual underwriting.

Michael Smith · Answer

IMO 4 months is WAY too long for underwriters to perform their due diligence. If I were the seller, I wouldn't still be waiting around for your financing to come through. My advice is to find a more competent lender.

Ali Boone · Answer

Well for one the contract shouldn't let the seller gank the deal from you, but I guess it depends on the verbiage in the contract. What lender are you going through? Is it one of the big banks? You may already be doing this, but I will only go through lenders who specialize in real estate investing transactions because they understand all the investing strategies better and don't typically hold up deals as much. The big banks almost always end up killing deals because they have no idea what's going on and can't get it going.\ But in general, I know the loan process can take forever even without complications. Underwriters have gone insane these days with repeatedly questioning everything they can. I find it can take a good bit of time to collect your left arm and your first born child.