What is taking my FHA loan so long (loan officer, interest rate, approval)

[arual1]

Originally my offer was accepted the end of june, with a set closing date a month later on july 25. Then my social security needed to be verified so it was pushed back to july 31. I have already done my preapproval, appraisal, inspection. My broker tells me that it is in underwriting, and we may not hear from the bank til next week. Its been in underwriting since the last week of july. I had given my 30 day notice to my landlord telling her I was moving out of my apartment since I was buying a home. I told her what my expected closing date was and that it was a short sale. Now my 30 days is up tomorrow, she has told me she wants to rent my apartment so I need to be out of my apartment at midnight. I am debating getting into the whole legal process that needs to be carried out, if my loan will still not be approved for a much longer period of time. Does anyone know what the average closing time of an FHA loan is? Is it taking mine longer since its a short sale? I am dreading hearing that it could be several more months since I don't know where I'm going to be living.

[renriq02]

Approval varies with the lender.
Some lenders may take 24-48 hours with all docs in, and some may take 10 business days minimum.

Since it's a short sale then it will take long because the bank has to approve your offer, and the HUD. The shortsale may also have to be approved with Fannie Mae/Freddie Mac, and that can take minimum of 2 weeks from when it's submitted.

[michael krotchie]

It sounds like the issue may be on the seller's side because of it being a short sale. What exactly is the status of the contact between the seller and their bank? Has the bank accepted the short sale?

[rcarrillo]

We are getting approvals in 24-48 hours, same thing to clear conditions... but some lenders are taking 20-25 DAYS in underwriting for initial approval. Some lenders just do not have the staff or training to handle the "boom" in FHA loans.

As your broker what conditions remain on the loan and what underwriting is working on. If it does have to do with the short sale and working things out with the seller's lender, it may take some time. If it has to do with simple conditions on your end the broker may be able to request a rush (sometimes at a small fee) to get it to the top of the pile.

A short sale will usually take longer, but the broker is in the best position to explain the delay and what is being reviewed.

[arual1]

My broker has told me that my offer was accepted by the sellers bank. I have also seen the letter addressed to the seller from his lending bank confirming this for me. What could be some of the conditions that would remain on the loan?

[Modification Specialist]

Originally Posted by arual1

Originally my offer was accepted the end of june, with a set closing date a month later on july 25. Then my social security needed to be verified so it was pushed back to july 31. I have already done my preapproval, appraisal, inspection. My broker tells me that it is in underwriting, and we may not hear from the bank til next week. Its been in underwriting since the last week of july. I had given my 30 day notice to my landlord telling her I was moving out of my apartment since I was buying a home. I told her what my expected closing date was and that it was a short sale. Now my 30 days is up tomorrow, she has told me she wants to rent my apartment so I need to be out of my apartment at midnight. I am debating getting into the whole legal process that needs to be carried out, if my loan will still not be approved for a much longer period of time. Does anyone know what the average closing time of an FHA loan is? Is it taking mine longer since its a short sale? I am dreading hearing that it could be several more months since I don't know where I'm going to be living.

Do you live in a different state then the broker who's doing your loan? This sounds like he is co brokering your loan because he is not licensed in you state. Getting the information from and to the underwriting department is taking too long.

As for your condition verifying your SS income, this is done through an award letter and two months of checking account statements showing the deposits. It sounds like he is making stuff up, the way your explaining it.

The fastest FHA loan I put into underwriting and got an approval back is three days. It averages three weeks to do a loan from start to finish (that is submitting docs and ordering & receiving the appraisal).

I know the information doesn't help your situation, but this tip might.

Talk to the owner of the property and offer to do a rent back. What you're doing is paying rent to the seller until your closing can take place.

Another tip - if your FHA interest rate is higher than 6.5%, you are being over charged on your loan. Source bankrate.com

Good Luck......

[renriq02]

bankrate is one of the worst sources for rates.

All those lenders always lowballs their rates to get borrowers to submit applications.

Originally Posted by Modification Specialist

Do you live in a different state then the broker who's doing your loan? This sounds like he is co brokering your loan because he is not licensed in you state. Getting the information from and to the underwriting department is taking too long.

As for your condition verifying your SS income, this is done through an award letter and two months of checking account statements showing the deposits. It sounds like he is making stuff up, the way your explaining it.

The fastest FHA loan I put into underwriting and got an approval back is three days. It averages three weeks to do a loan from start to finish (that is submitting docs and ordering & receiving the appraisal).

I know the information doesn't help your situation, but this tip might.

Talk to the owner of the property and offer to do a rent back. What you're doing is paying rent to the seller until your closing can take place.

Another tip - if your FHA interest rate is higher than 6.5%, you are being over charged on your loan. Source bankrate.com

Good Luck......

[rcarrillo]

Originally Posted by Modification Specialist

Talk to the owner of the property and offer to do a rent back. What you're doing is paying rent to the seller until your closing can take place.

Another tip - if your FHA interest rate is higher than 6.5%, you are being over charged on your loan. Source bankrate.com

Good Luck......

The first tip is a decent idea... renting the property from the owner might be a valid option. Ask you Realtor and mortgage broker if this might work.

As for the bankrate tip.... whoa, talk about prescribing things without diagnosing a problem!

First of all, rates will vary depending on costs you pay. So saying 6.5% is too high is like saying meet me at noon. You are missing a key piece of data, like WHERE do you want to meet. I can tell you 6.5% is too high too... it all depends on points, origination fees and other costs that you are willing to pay. That is why it is ILLEGAL to advertise interest rate alone, you have to include corresponding APRs. A 6.5% rate may be a great deal at one lender, but a horrible one at another if that one is charging you 2 points for it.

Second of all, bankrate is not a source of unbiased information.... they are selling ads. Many reports have shown that some of the rates on there are false, but no one cares. Lenders pay bankrate to advertise, bankrate sells ads to other companies based on the # of page views. What incentive do lenders have to advertise honest rates on bankrate?? They pretty much have to print a rate lower than the next guy if they want anyone to call... and that is the point, its marketing.

[arual1]

I have asked my realtor if I could rent the property from the owner, he said it wasn't possible due to the sale being a short sale, so it was bank owned and the owner couldn't rent it to me. That would be the perfect option for me tho. Do you know if that is true?

[rcarrillo]

Originally Posted by arual1

I have asked my realtor if I could rent the property from the owner, he said it wasn't possible due to the sale being a short sale, so it was bank owned and the owner couldn't rent it to me. That would be the perfect option for me tho. Do you know if that is true?

Good point, the owner likely would not be able to without the banks permission. The bank might be open to it, but more than likely they won't like it as they are not in the landlord business and may not like the possibility of the loan falling through (enough do).

Have you spoken to the broker and have they told you what exactly is left to clear on this loan? Is it something simple like a paystub or termite inspection form... or is it a large number of conditions?

The loan officer should have gotten a "conditional committment" when he first submitted the loan to undweriting (again, some lenders take weeks to do this... some just 1-2 days). That tells the LO what conditions he needs to meet to clear the loan for closing (such as get a paystub, bank statement, signed document). The loan officer and processor then work to clear these conditions and get a "clear to close" or a "loan committment". At that point they send the documents to the attorney so they can prepare for the closing.

If the loan officer has received a conditional committment and been working to clear conditions (as they should have been) they can let you know what is left and how big of an issue it is. If they are small, easy items then request they rush it and explain the urgency. If it's some major issues then you might have a while to wait.

Interest rates and fees are important, but communication, honesty and service are even more valuable.