21-Day Closing Window
21-Day Closing Window
In an era of bloated closing times, some lenders are looking to quicken the pace it takes to get a buyer to the settlement table. Some lenders are retooling operations and aiming to close a loan within 21 days.
For example, national retail lender CrossCountry Mortgage Inc. in Brecksville, Ohio, is committing its staff to aim to close a purchase loan from application to funding within 21 days.
“When you look at contracts, they are typically written for 30 days,” says Chief Operating Officer Jodi Hall. “Many of them have gone out to 45 and 60 day contracts because of the long turn times that have occurred within the industry. If you can deliver well ahead of a 30 day contract it’s very attractive to our REALTOR® partners and customers. That is the best practice.”
In 2016, closing times for purchase loans averaged 47 days, according to Ellie Mae, an information origination system provider.
CrossCountry tries to get its borrowers to commit to a timeline upfront.
“One of the first things that we coach our loan officers on, in terms of their engagement with the borrower, is to explain our loan process and turn times,” Hall says. “If the borrower commits, we can often close their loan in 21 days or less.”
In 2014, one wholesaler vowed to be “ready to close” qualifying loans within 15 business days of appraisal receipt. If they were unable to meet that goal, the lender would even apply a $500 closing cost credit to the loan at closing.
Today’s 21-day-close goal doesn’t include any such promises from lenders, however.
“We don’t guarantee the 21-day turn time because there are so many things that play into a guarantee,” Hall said.
Delays can happen, most notably from appraisals. A growing appraiser shortage threatens to lengthen timelines, says William Fall, chief executive officer of appraisal management company Valuation Partners. Appraisals are “much less predictable than title, credit or other parts of the process,” he says.
Lenders who adopt more technology may help to decrease time spent on certain steps like asset verification, says Jonathan Corr, president and chief executive officer of Ellie Mae.
“Lenders could eventually bring their closing times down under 30 days if they embrace technology and do everything perfectly,” says Corr. “Maybe you could even get it down to a couple of weeks.”
Source: “Why Lenders Are Shooting for a 21-Day Turn Time,” National Mortgage News (Jan. 9, 2017)
