The Importance of Using a Local Lender

I recently experienced a few transactions that really helped in clarifying why it is so important to have a local lender who you can trust. These situations were so troubling to me that I feel it would be against my ethical code not to share this information with others. 

First, let me say that I have closed multiple transactions with small local mortgage companies where I am able to communicate with the loan officer anytime I have a question. These small companies also have a process in place to notify me through email (as the real estate agent) every step of the way in the process. This system of communication allows me to step in and help if things do not appear to be progressing as they should for an on-time close. 

When we enter into a contract on the buyers side we are obligated to close within 7 days of the contracted settlement date to avoid being in breach of contract. As someone who holds a fiduciary responsibility to my client, it is imperative to never let this occur. I also have respect and care for the other parties involved in the contract and never want to see the agreed upon date past, let alone go into breach. 

My most recent experience with one of the largest banks in the country, has me flabbergasted at the contrast in experience against a local lender. Firstly, this bank did not contact me at all during the loan process with updates. It was my responsibility to seek the information every step of the way. Many times my calls and emails were not responded to for over 2 business days. They also did not communicate with my client (the buyer) regarding basic items in the process, including the appraisal. This was physically mailed to my client and a phone call or email to either of us with the results, was never completed. 

The largest issue I experienced though came 2 days before closing was scheduled to take place. I received an email from the loan officer that the underwriter was requiring certain repairs to be made prior to giving the clear to close. What repairs, I wondered? The loan officer didn’t know either and it took her over 24 hours to get the information to me from the underwriter. She admitted that they had a copy of the inspection report on file for over 2 weeks prior to anyone reviewing it and making this request for repairs. Basically the left hand wasn’t communicating with the right hand within this giant bank. 

So now we are at the evening before our initial expected close date and I get a list of 10+ items that have to be repaired. These items range in seriousness of replacing air filters to evaluating the foundation by a structural engineer. Fortunately, I have a generous network of professionals who were able to quickly respond and assist with the needed repairs and inspections. This work included a handyman, general contractor, structural engineer, HVAC technician and roofer. The importance of relationships in my business was never illustrated more colorfully than in this moment of need. 

Which circles us back to the importance of a trustworthy relationship with your lender. It is not necessary for me as the agent to know and trust your lender, but in my professional opinion, you sure need to. With the market the way it is, buyers are putting up big money in due diligence and you can’t risk losing it because your financing doesn’t come through. A small local lender will pick up the phone, communicate and help find solutions to prevent issues like the one I faced above. 

Ultimately, this transaction did end up closing 28 days past the original contracted settlement date. The big bank continued to move at a snails pace through the end of the underwriting process with reluctant and minimal communication. Had it not been for the generosity and circumstances of the seller, and a great relationship between brokers – my client could have lost their due diligence and the home of their dreams. 

So think twice before financing your mortgage through just any bank, do your homework, and consider the risk. 

Candice Babusiak