Lenders Sound Off

Lenders are a crucial part of any real estate transaction, and they’ve been in the spotlight recently, with the addition of new technologies and the new TILA-RESPA Integrated Disclosure requirements. We sat down with a few of our lender friends to get the scoop on the technologies they use to ease the transaction, the financial assistance programs they love, the stumbling blocks they encounter along the way, and how TRID is going to affect the process moving forward. 

What types of technology are you using to keep REALTOR® parties informed?

Coby Hakalir (CH): We are constantly looking for tools to enable us to communicate information as broadly and rapidly as possible. Our CRM program, which is linked to our loan origination software, enables us to update REALTORS® and customers of events relating to the loan process in real time. Bernie Miller (BM): We launched a true mortgage app recently, which helps track the loan through the process and keep all parties informed up front. Once we pre-approve a client, REALTORS® can use the app to track clients and print their own pre-approval letters for different offers, as long as the client is in the correct price range and qualifies for that home. It also syncs to our loan origination software. Colleen G. Bara (CB): Maintaining strong working relationships with REALTORS® is critically important to us. Our monthly Real Estate Connections Market Outlook e-newsletter keeps agents informed about the economy and U.S. housing market, developments at Chase and resources to help them win. We’ve also developed a market-leading microsite – Chase.com/agentresources. Jorge Flores (JF): Our customized loan operating system was designed to keep the client, REALTORS® and attorneys updated with major milestones in real-time.  These updates are sent via email and push notifications from our phone app. Ryan Mecum (RM): We offer a free platform that provides many different tools for REALTORS® called Partner Xchange. It not only sends out automated alerts, but REALTORS® can also sign in and track the status of real estate transactions in their pipeline. There will never again be that feeling of not knowing; we pride ourselves on how Partner Xchange keeps us in constant communication with our real estate agents so they stay informed at all times. It also includes co-branded marketing material, a host of training and informational videos and articles, and a free monthly branded magazine that you can use to help market yourself.

What tools are you offering clients to ease the burden on the REALTOR®?

CH: In one word: education. We pride ourselves on educating our customers throughout the process. Empowering customers in this way eases the stress of the transaction, and provides a much more relaxed deal process. BM: Our app. If the client gets the app as well, they can run numbers themselves, and their banker is only a text or phone call away for more advanced questions. CB: Today’s REALTOR® faces a fast-paced, competitive market with customers on tight deadlines.  Our My New Home learning page – Chase.com/mynewhome/learn – gives customers easy-to-understand, click and view materials that will raise their awareness of what it will take to close on a home fast. Our My New Home Workshops help REALTORS® guide their clients on the critical steps needed before entering the homebuying process. JF: We have reimagined the mortgage process with our virtual mortgage online application. This helps to streamline and expedite the lending process while keeping the communication lines open. RM: Our Digital Mortgage, featuring TransferSafe and DocuSign, allows clients to complete an online application and be issued a prequalification letter in minutes. Because everything is handled electronically, we can work efficiently and expedite pre approvals. Through this system, we are able to gather documents, have them signed, and stay in constant communication with borrowers and REALTORS®. By completing most of the mortgage process electronically, it helps mitigate any possible delays.

What can a REALTOR® do to make the lending process as smooth as possible?

CH: I think the most important thing I can stress is make sure your clients are pre-qualified properly. When I see deals start to go sideways, it’s usually because the loan officer failed to uncover an important detail during the pre-qualification process. Work with a loan officer you trust, and make sure expectations are set properly from the onset of the deal. BM: Help the client understand that they need to get documents to the lender ASAP! Right now we find that the client themselves (qualified clients) are the main cause of delay and stress because sometimes they are not urgent enough in fulfilling the lender requests.  They will listen to their REALTOR® if given another “nudge.” CB: With bank regulations on the rise, lenders have more rules to follow than ever before. We have worked hard to communicate regularly with agents and customers about required loan application documents. To make the lending process as smooth as possible, it’s critically important for customers to submit completed materials as quickly as possible. JF: Start by referring their client to a local Mortgage Lender with in-house underwriting and closing departments locally, then, of course, any assistance with obtaining needed information regarding any area of the transaction is invaluable. RM: Make sure that you provide a complete sales contract, including all contact information for both agents and both attorneys, as well as the HOA if it’s a condo. The REALTOR® should also keep the loan officer well informed about any closing cost credits being provided by the seller. Also important is to not delay the property inspection. Finally, REALTORS® can help coach buyers to provide their documents as quickly as possible, especially considering the tighter time frames in the new TRID world.

Are there any financial assistance programs that you feel REALTORS® need to know more about, and/or that are underutilized?

CH: Since most financial assistance programs are provided by municipal, county, and state agencies, the scope and breadth of the programs are almost constantly in flux. REALTORS® should make sure they’re working with someone who does a good job of staying on top of this kind of information and communicating it regularly. BM: We help a lot of first time buyers get enrolled in “Tax Smart” instead of some of the down payment assistance programs that come with other down sides.  Tax Smart has some restrictions (similar to DPA programs, income limits, etc.), but in general it pays a home buyer back every year that they own their home as a primary residence, up to 20% of the interest paid that year in a tax benefit. CB: There are a number of programs out there and the majority of them are sponsored at the local city and state level.  We would encourage REALTORS® to work with their mortgage banker and local community housing partners to gain a better understanding of these valuable resources. JF: Down payment assistance programs, such as those offered by Illinois Housing, as well as many counties and municipalities, can offer a borrower up to $7500.00 in down payment and closing cost assistance. These quite often provide a buyer the leg up they need to fulfill the dream of homeownership. RM: We recently closed a loan using Chicago’s TaxSmart program, a Mortgage Credit Certificate that offers sizable tax credit annually to first-time homebuyers, and purchases in certain areas of Chicago. IDHA, FHA, VA… there are a lot of programs, and many can be used together. Our job is to find exactly what program a borrower may or may not qualify for. Additionally, we also offer renovation loans through our 203K and HomePossible programs. This program is perfect for your clients looking into a “fixer-upper,” by financing not only the home, but the planned renovation as well.

What’s the biggest hurdle you are seeing that prevents/delays getting to the closing table?

CH: As I mentioned earlier, it’s customers who haven’t been pre-qualified correctly. Nothing will derail a process more than an uncovered issue midway through the loan process. BM: Lenders don’t do a proper qualification up front, and the loan lingers and never closes.  Agents should do their best to only let their buyers work with bankers that they know, that are qualified, and that deliver great service (and a local banker is a good idea, too). CB: When it comes to financing a mortgage, we often run into difficulty validating the income and assets that provided by a customer or challenges sourcing a down payment. We also commonly encounter setbacks surrounding appraisal disagreements, title and deed obstacles and home inspections that uncover concerns about the condition of the home. JF: Buyers unable or unwilling to provide required documentation in a timely manner. RM: The number one hurdle is getting trailing documents, especially contract disclosures, and any addendums and seller credits stemming from attorney review, in a timely fashion. Many of these items take additional steps on our end. Especially with TRID now being in effect, it is very important that all documentation on these items is received ASAP. 

What do REALTORS® need to know about TRID?

CH: Because of the added compliance costs and legal liabilities for lenders, both the cost of loans and the time it takes to close a loan could potentially increase. Lenders are more likely to offer longer lock periods, which tend to be more expensive and, by their nature, imply longer closing cycles. I think the long-term impact of this rule will be a positive for the customers, but the implementation and transition period might be a little painful. BM: More than ever, REALTORS® should be aligning clients with preferred partners, bankers, attorneys, and title companies. Further, brokers need to make sure their bankers work for tech-savvy institutions!  If these new disclosures are mailed and not “e-disclosed” on some level, closings can be delayed for more than a week, just based on the lender that the client choose. CB: These rules apply to all mortgage loans except Home Equity Lines of Credit. Lenders will now consolidate multiple old forms to reduce paperwork and customer confusion. The regulation is very prescriptive regarding the items that define an application for the purposes of receiving a Loan Estimate. This is more defined than today’s rules. JF: Choose a partnership with a mortgage lender that is well prepared for TRID compliance. The lender should have a practical plan for compliance with the regulation as well as a sensitivity to the importance of meeting the dates in the contract. Lastly; COMMUNICATION, COMMUNICATION, COMMUNICATION! This is paramount in the process of transactions completed under TRID. RM: TRID creates more certainty at the time of closing, but more time needs to be budgeted for finalizing mortgage financing. The most important thing that TRID changes is that we all need to have very strong communication from the beginning of the process; this includes not only the mortgage lender and the REALTOR®, but also any attorneys, the title company, HOA, and insurance agent(s). If we are to comfortably meet TRID’s timelines, we are going to have to make sure that we start this process on day one. The good news is that not only are we aware of the changes, but Guaranteed Rate has created an online platform, called CD Xchange, to enable a swift and simple way to gather needed TRID documents from all parties.