I’ve Just About Had it with Out of State Lenders

Rarely do we have a closing delayed due to incomplete loan work when the buyer’s lender is an experienced local Austin lender. In fact, we often have closing docs a week or two early (Thank you, Helene!!).

The opposite is true with out of town lenders. We are often chasing down these out of state lenders 5 to 7 days before closing trying to get the loan docs to the Title Company with closing instructions. If we don’t stay on top of them, they drag their feet. Many are so incompetent it boggles the mind (the stories I could tell…), but they attract buyers by promising lower closing costs and loan fees (which often don’t turn out to be what the buyer thought they were getting). You get what you pay for.

I’m doing it again this morning – trying to chase down a deal with a lender from out of state who is non-responsive, MIA. This is one of the many behind-the-scenes things we do as Realtors. Most people may not know how time consuming it can be, trying to keep the loan on track and moving. Closing is set for early next week. Buyers are out of state, so are the Sellers, so it will be a mail-out. We need everything in by tomorrow to allow time for FedEx to and from both the buyer and seller, and nobody had heard from the lender this week.

If this one gets delayed, it may be the straw that breaks the camel’s back and we will seriously consider working only with buyers who use a local lender. Can we legally do that? I’m checking on it, but I think so. It’s for the buyer’s own good. Will it hurt business? Not any more than the damage done to our reputation with other Realtors when we can’t get our buyers to the closing table on time because of loan problems. It’s very embarrassing when that happens, and there is no excuse. We can blame it on the lender, but ultimately, we control that side of the deal and it’s our fault when things don’t go right.

Buyers, use a local lender when you are buying real estate. Just do it. Don’t shop the internet for the best deal and end up with one of these Internet Bozos who don’t know how to push a loan through, don’t control the underwriting process, don’t know Austin real estate, and often pick their appraiser from a phone book or internet search. It’s too important a transaction to not have the best team players you can find, and your lender is a very, very important member of your team.

5 thoughts on “I’ve Just About Had it with Out of State Lenders”

  1. Speaking from an investor’s point of view: sometimes the terms of a lender found on the internet are just plain better. The strategy I tend to use is:
    * shop the internet / out of state lenders to see what rates are
    * negotiate with a local lender to get a rate that is competitive with the non-local quote

    I’ve only done this a few times and every time I ended up using a local lender but under more competitive terms.

  2. I found a logic problem in this article: the competency of a lender has nothing to do with its status as “in-state” or “out-state”. Your characterization of the “out-state” lenders to be slow implies that all “in-state” lenders are faster. This can’t be true because I know some local lenders to be rather slow as well (especially those related to governmental programs.) I believe you can also find examples of some out-state lenders (especially some credit unions) to be just as fast and responsive.

  3. Thanks Bill,

    I’m writing from personal experience and, yes, out of state lenders cause delays much more often than local lenders. Ask any other busy Realtor and this will be confirmed. This is not to say that it holds true every time. But in most instances it is indeed the case, in our experience.

  4. Well, this deal had been delayed. We were supposed to close 2 days ago. Just got the settlement statement today and this lender is charging the buyer THE HIGHEST fees I have ever seen a buyer be charged on any deal ever, bar none.

    The lender says all fees were disclosed to the buyer up front, but I find it hard to believe so I’ve asked the buyer to check the Godd Faith Estimate she was provided by the lender at the start of the loan process. Even if they were disclosed up front, the fees are outrageous.

    We never, ever have this sort of thing happen with the good local Austin lenders we use. We are now in fact strongly encouraging every buyer we work with to use an Austin lender.

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