Wait For The Clear

Written By: John Hoxsey
Certified Master Loan Processor (CMLP)

How many times has this happened to you? The loan officer hands you their last condition and states, “This loan needs to close tomorrow.” Which is then followed up by my favorite comment of all time; “The borrower is going out of town for a week and if we do not close tomorrow I will lose my lock.” How is it that 75% of all borrowers miraculously schedule a vacation the week of their loan settlement?

Scheduling a closing without a clear-to-close is a bad habit to get into. Even a clean loan that was easy to underwrite should not be rushed through at the final moment. Doing so risks throwing a wrench into the system.

Somehow, loan officers have got it into their heads that, once the underwriter receives the final condition, everything is done and waiting at the title company. They do not realize that the loan still has a few final steps to take before it makes its way from the lender to the title company. In fact, it still needs to go through one more department.

Some lenders will allow the loan to be scheduled before it is clear-to-close. However, I have found that it is still better to wait. What if the underwriter does not sign off on all of the stips? What if you receive additional conditions?

We all want the loan to close quickly but, more often than not, the borrower ends up with false expectations. If something happens, and the loan needs to be rescheduled, then the borrower may start to wonder what is wrong and, therefore, many unnecessary questions may arise.

I make it a point to not schedule any loans until after I receive the clear-to-close. This ensures that the lender’s closing department has ample time to coordinate and prepare the docs. Typically, I like my docs to go out at least a day before closing. That way the HUD can be prepared a day in advance and make sure that everything is correct. On a purchase, I like to get the HUD two days in advance so the LO can give the borrower a very accurate number for funds to close.

Waiting for the clear-to-close avoids mistakes in the 11th hour. This also gives the loan officer the ability to provide excellent service by going over the HUD well in advance of closing, which will ensure there are no surprises at the table. It can also foster any realtor or referral business they might be trying to develop. It is highly recognized, and, in fact expected, that things are not being rushed at the last minute.

Remember - Your reputation is your business.

Happy Processing!!!

About the Writer. As one of NAMP's volunteer writers, John Hoxsey is currently a NAMP member in good standing and is a NAMP Certified Master Loan Processor (CMLP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.