Is the loan clear to close?

There is an old saying I heard while playing high school football, “Shoot for perfection and you will catch excellence.” In today’s mortgage lending environment, excellence is not good enough when documenting each and every loan file. Lenders are requiring perfection on every loan file. Why? I attended two industry seminars in the last two weeks. In each seminar I heard that each loan file must “achieve perfection.” Simply put if loans are not perfect they will not be purchased on the secondary market by Fannie Mae, Freddie Mac, VA or HUD. Lenders have no choice but to underwrite, review and audit the file to perfection BEFORE closing. Until this recent change (I saw it start this August) lenders would allow documents to be collected at closing or even after closing. NO MORE…not in today’s mentality that if a loan is not perfect prior to closing that is a risk a lender cannot take. Contracts must be fully executed with all addendums, and every initial must be on it. Cash to close must be verified to the extreme. Gone are the days of “lets close it and we can get outstanding information post closing.” Now keep in mind that requirements have not changed but the attitude toward getting every piece of information in advance has. Simply put lenders must have loans ready to be purchased to earn money. Loans not being purchased cost lenders financial loss that they cannot tolerate or absorb. In an attempt to mix humor with reality, I kid with clients and agents telling them we will ask for everything but a blood sample, or your first born….but it may feel like we are asking for that at some point. So getting loan is still the same- we must verify income, assets, cash to close, and credit. What is required to do that has changed…more is required and just as importantly all information is required before loan package can go to closing. Previously the big question was “Is the loan approved?” Now the BIG question is, “Is the loan clear to close?” We must all work together to supply documentation. Patience, cooperation, and communication are the key getting the loan “clear to close” and achieving perfection.