Q There has been a lot of discussion recently about lenders who are unable to meet the "lock-in" deadline, and thus are attempting to increase the loan points and the interest rate because of these delays. We have about 30 more days before our lock-in expires, and would like to know what, if anything, we can do to assist the lender so that we can all meet the deadline.
A Preventive law is always very important. Your question is timely and here are some suggestions for making the loan possible.
There are a number of players on the loan stage. Some of these players may take the position that since they were hired by the lender -- and not the borrower -- they will only respond to the lender. This is partially true, but since the services being performed by these players have direct impact on you, most of the actors can be convinced that it is in everyone's best interest to be responsive. Ultimately, however, you may have to resort to the philosophy described best by President Theodore Roosevelt, "Speak softly and carry a big stick."
When you refinance, you have to start all over again and actually get to a new settlement. The players, in no particular order of priority, include: Appraisers. Every lender requires a new appraisal of the property. Because of some of the scandals involving Maryland savings and loan associations where appraisers did not do an accurate job, the appraisal industry is under significant pressure now to get its act together. Appraisers are more cautious in trying to ascertain the market value of the properties they are investigating. Thus, this appraisal process is now taking somewhat longer than in the past. This problem is compounded with the fact that literally hundreds of thousands of people are refinancing their homes now, since interest rates are considerably lower than they have been in the past five years.
Appraisers tell me that they are literally swamped with work. While this is true, it should not be an excuse. Any professional who takes on more work than he or she can handle risks a malpractice claim. Appraisers should inform the lenders that they just cannot handle all of the work, and lenders should be required to go elsewhere, in order to meet their own deadlines.
You should find out from the lender who is doing the appraisal. If the lender refuses to give you this information, I suggest that you contact your local consumer regulatory agency or contact your own lawyer to get involved at this early stage. Once you learn the name of the appraiser, make contact and try to determine exactly when the appraisal will be available. Although I do not recommend that you make a nuisance of yourself, it is a good idea to periodically call the appraiser to determine your status. Credit bureau. Lenders claim that they also want an updated credit report on all potential borrowers. The credit bureau prepares a written report, which is submitted directly to the lender. The credit bureaus have always been less than responsive to the American consumer, but here, too, I suggest that you determine which credit bureau is doing the analysis on you, and indeed, if necessary, make a trip to the credit bureau office to try to expedite your report. Experience in recent weeks has suggested that if you camp on the doorstep of the credit bureau, you may be able to expedite the report.
* Termite inspector. The lender wants a termite report at settlement. This is not difficult to accomplish, since most of the pest-inspection companies in the Washington metropolitan area will be responsive to your request. This is arranged directly by you, the borrower, and the lender should not have to get involved in this issue.
* Insurance. Again, before you complete settlement, you will need to show the lender evidence of fire and hazard insurance. If you are taking out new money from the transaction, you will have to increase the amount of your insurance to cover the amount of your new loan. Make sure to contact the lender to find out exactly how it wants its name to appear on the insurance policy.
* Title search. You will have to use the services of either a title attorney or a title company for settlement. The lender wants to make sure that you still own the house and that you have not put on numerous liens or judgments since you first purchased the property. The new lender insists on being in first trust position on the land records. Accordingly, you will need to have an updated title search in order to complete the settlement process.
* Survey. Normally, the title attorney or title company that will conduct your settlement will make the arrangements for obtaining a new survey. The lender will want a new survey, to make sure that your house -- and any additions -- are within your property lines and are not encroaching on your next door neighbor. For both the survey and the title report, it is suggested that you contact the provider of services as soon as possible and periodically contact their offices to make sure they are moving forward with their task. Surveys and title reports are also running far behind, and thus can be a potential problem unless the work is completed before the deadline.
These are the principal players. It is important for you to make personal contact with a representative of each of the companies involved, and try to go as high in the company as possible. While it is not necessary to make a complete pest of yourself, if these companies realize that you are serious, and that you want to meet your deadline, you may get a better response.
And, of course, you also have to keep in touch with the lender to make sure he is coordinating his side of the job. These are hectic times for everyone in the real estate business. I suspect (and hope) that the lenders and the other providers of settlement services will appreciate any assistance that you can give to help smooth the path toward settlement.
Benny L. Kass is a Washington attorney. For a free copy of the booklet, "A Guide to Settlement on your New Home," send a self-addressed, stamped envelope to Benny L. Kass, Suite 1100, 1050 17th St. NW, Washington D.C. 20036. Readers may also write to him at that address.