LET'S DANCE!
Monday, February 9, 2009 at 1:58PM 
C.A.R. Treasurer Mabel GuzmanI recently had a closing that did not close. As I looked at my client, who showed up with moving boxes, my heart sank. The problem? The property had liens, mechanics liens to be exact. Though the lender, whom shall remain nameless – play hangman _ _ U_ _R_ _ I _ _ - closed more than 15 units in this development and the Title Company would insure over the liens, they would not close. I learned a valuable lesson; a clear to close is not a guaranteed closing. Conditional closing requirements will continue to manifest until the very scheduled day.
Another important lesson is to call all preferred partners and find out what else is new. Because there will be something new and something that will impact your ability to get folks approved, and closed. The impact to the seller is just as great. Their willingness to be FLEXIBLE will be a necessity in today’s game. Perhaps a little bit of exercise, like the mortgagee clause. A little heavy lifting and it may work out in the end plus build your own strength.
Some other changes in conventional lending have been in the past two weeks, projects have to be over 50% sold for the property to qualify, no first in. There is a risk adjustment by FNMA and Freddie Mac for credit scores vs. interest rates. They now require 740 credit score. In 2007 a 620 score would be the same rate as a 740 score today.The bar has been raised 120 points. The mechanics liens, can pose problems for new construction and conversions.
My advice is, learn to cha cha, rhumba, disco, foxtrut, or get that cardboard box out to break dance, and any other of your favorites as we facilitate clients through the buying and selling process today. Facilitation will not be enough. We need to educate the client and most importantly Ourselves. WE have the tools to be prepared or rather over prepared. With DATALYNX we have access to tax records, assessed values and to the recorder of deeds office where we can find out if there are any liens. Additionally, this is the time to strengthen and build relationships with credible and reliable vendors. Create strategies to stay on top and ahead of the changes. Get your tap shoes on and be ready to use those fancy footsteps you’ve just learned and don’t follow, LEAD.
WE can Educate, Facilitate and Adjust our game plan to ensure a closing is a closing.
Tell us your challenges, and feel free to VENT!
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Reader Comments (7)
Where is your client's attorney in this picture? Your role is to bring the buyer and seller together. It is the attorney's role to make sure that all parties are ready to close and to ruffle some feathers if they fail to do so.
This happened in our office Friday. The lender refused to close even though the title company would insure over the mechanic leans. The initial lender was selling the loan and the end lender after all paper work was submitted refused to issue approval to disperse the funds. The lender is funding the loan this week themselves at the same price as the buyer was getting from the other lender and it was not the same lender as yours. This is new construction and the mechanic liens have been there for many other closings. This seems to be a new wrinkle we need to deal with and cha cha cha!
a 740 FICO score, guaranteed title committments to close, conventional lending @ 50% occupancy to commit - hurry up and sign the stimulus package!
In response to John Vranas the attorneys were aware. Again this was nothing new to the project or this lender. They have history with this project. All previous commitments had same language and Title company willing to insure over it. Lender guidelines changed. The attorney's did their part, the wrinkle as Susan Cooney called was the lender having a problem with this 2 weeks later.
Mabel, I have been in similar situations. What I learned is that the buyer's lawyers nowadays have to check the seller's lawyer work to make sure everything is done so the client can close. The lawyer I use has a higher fee for my clients but he checks everything in both sides........I am also learning to dance... :)
I believe your message is about team work, Learning to dance. It is so crucial that we reduce the amount of time it takes for our deals to close. I have had a few cases where lenders sit on a deal too long then something happens to the property (vandelism ) and we are starting all over again. When your dealing with an entity that does not know our community, the personal anguish and suffering of our clients, and has no real loss, they get paid either way for whatever time they put in. There is no motivation to get things (Short Sales) done. The lenders are being bailed out by the government, and in some cases buying the propery back at a fraction and eliminating the 2nd mortgages. We need to hold these lenders accountable. If they do not modify their customers mortgage, at the very least allow a short sale to proceed in a timely manner. It is amazing the level of beauracracy that exist when a short sale is in motion. Things get lost in the shuffle, sometimes even the buyer finds a less expensive property on the same block and the process starts all over again. We must all look ourselves in the mirror and see whether or not we are part of the solution or are we part of the problem. We must commit or recommit to raise the level of our own professionalism. We can make the difference 1 agent at a time. Every professional related to Real Estate, needs to guard the integrity of our industry. We are the Back bone of the economy. We are the last line of defense. If we dont rescue our industry who will?
It's more and more important for attorney's to pull title as soon as the contract comes in. When I first got into the business (7 years ago) I never understood why we waited until the last minute to do this. There are so many expenses and great amounts of time spent between contract and closing. Why should the buyers, sellers, agents and attorneys risk that without knowing that the title is clear? This should be standard practice.