I am writing this post as a response to this question I hear so very often.  When my clients call or email so frustrated with the system and the amount of time it is taking to close on a house, I feel awful for them and for myself. Being a mortgage broker for over 20 years, I have seen it go from a lengthy process because everything was done manually, to an expedited time because everything was done via computers, and back again.  We have come full circle with processing time, due to the many more disclosures and time constraints that lenders are facing. The problem is that 20 years ago, people assumed that a loan would take 60-90 days to close. However, now everyone is simply used to closing within 30 days, so these 60 plus days are well– hell!

I have thought of five common reasons why a mortgage can take so long to close. Listed below, think of this as a catch all of reasons…

1- The lender forgot to have you sign the Good Faith Estimate, Truth-in-Lending or some other disclosure that must be done prior to the closing. The Administration completely revamped these two documents, among others, and created a calendar of signing event before the closing. If they forgot to send it out, have no record of sending it out or just didn’t know- they have to show proof before you close.

2- The appraisal is still in review. Now the appraisal is ordered through an appraisal management system and gets farmed out to different companies. Sometimes the company is a good distance from the property or inexperienced in that area so it takes more time. More often we are finding that the appraisal needs to go through several departments at the lenders to simply get signed off on. This can add several weeks to the process, through no fault of anyone other than the lender.

3- The Homeowner’s insurance policy is unacceptable. In order to get the property homeowner’s insurance, the agent needs to see the appraisal (to get the “replacement value” figure). This amount can only be found in the appraisal and most banks won’t release the appraisal until it has been signed off on. Thus, the broker does not get it until the last minute. To boot, most lenders do not review the insurance until the loan is in the closing department to prepare documents. This is often the day before the closing…so need I say more?

4- The Good Faith Estimate does not match the Closing statement (HUD-1) and the papers need to be redone and sent out for disclosure. The new GFE has to list every single closing cost- some to the penny and some to a 10% tolerance. If the numbers are wrong, the lender needs to eat the difference or must be redisclosed. So, you can assume they are going to be redisclosed.

5- The rate lock expired, someone forgot to order a title report, the survey does not list the lender of record or the seller disappeared. Lately, not one closing goes well or even slightly smoothly. Why do the lawyers and lenders always wait until the last minute? Because, they always did, we just never noticed it before….because, the house appraised out, the insurance was purchased early in the process and they closed quickly!

Fortunately, those that qualify for mortgages are still getting them and at very good interest rates. Those that should not get mortgages are being rejected which might be clogging the system a bit. Unfortunately, the system is clogged and needs to be revamped. This will only come in time- a long time. So, it is OK to freak out on your lawyer, realtor and mortgage loan officer. We are numb already……