Do We Really Need a Rocket Mortgage?
Do we really need a “Rocket Mortgage“? “Rocket Approvals” are nice but certainly not “Rocket Closings”. The home buying process is not a race. It’s not Road Runner and Wile E Coyote racing to the closing table. It takes time!
The Need for Speed
How quickly do your buyers and sellers want to close on the home they just bought? Two weeks? Four, six, eight weeks? When you wrote the contract, and filled in the “drop dead dates” how much time did you allow for the Title deadlines, the Owners’ Association deadlines, the Seller’s Property Disclosure deadlines, the Loan and Credit deadlines, Appraisal deadlines, Survey deadlines, Inspection and Due Diligence deadlines, Acceptance deadline, and Possession deadlines? BTW: Did you wait for the results of the inspection to come in before you gave the “go ahead” to order the appraisal? What about counter proposals? Repairs? Add it all up. How much total time did you plan on to get from the date your contract was accepted to the closing date?
My point here is that buying a home is not like buying a pair of shoes or even like buying a car. The home buying process is not a race. It’s not Road Runner and Wile E Coyote racing to the closing table. It takes time! Home inspectors and appraisers may be booked out a week or more. Title searches take time, credit reports and loans take time. TRID takes time. Your drop dead dates in the contract probably factored all that in, recognizing of course, that not only does it take time to produce and deliver all that information but it also takes time for buyers and sellers to receive information, assimilate it and react prudently to it. Moving companies, PODS and rental trucks take time too.
How many buyers and sellers react positively to being rushed? Not many. People don’t like to be pushed into doing anything quickly, especially the sale or purchase of a home.
So, do we really need a “Rocket Mortgage“? “Rocket Approvals” are nice but certainly not “Rocket Closings”. Another lender in town touts 10 day closings!
Why the “need for speed“? Let me explain. It’s because, and only because, lenders think it takes too long to process a loan. In their mind, time is money and they would make more money if it took less time to process a loan for your buyers. Lenders want to get buyers in and out of the door as quickly as possible. If processing took less time, they could process more loans … and make more money. If processing took less time they could employ fewer people and make more money. So, lenders are looking at ways to be “more efficient”. I have no problem with efficiency but I do have a problem with how lenders in the future plan to be “more efficient” … so they can do 10 day closings.
How will 10 day closings impact your buyers and sellers? Will buyers and sellers really feel comfortable buying and selling a home if the appraisal is waived? Will they accept some hokey AVM value or a hybrid appraisal instead of the time honored standard appraisal developed by a professional appraiser?
Before we allow rocket lenders to rush us into 10 day closings, let’s ask Realtors and consumers if that’s what they really want. Let’s find out if that kind of speed would really be practical. If not, Realtors need to let NAR and their favorite lenders know about it.
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Two steps forward only to go three steps back. Remember it is the biggest purchase of most people’s lives. Why the rush is right.
What’s that quote? Doomed, history repeating itself, not studying?
The AMC’s are about fast turn over and forget about quality.
The average marriage lasts less than 8 years. The average mortgage lasts more than 22 years. How much time is spent looking for the perfect mate vs the perfect mortgage? I couldn’t agree more with this blog post. thank you!
Totally agree. There has been a push for making buying a house like buying a car….move in the same day you see it. This idea started in the 1990’s and the advent of computers enabled the idea. One needs to have time for buyer’s remorse. #no common sense
It’s nothing but a selling point for the AMC’s who are actually causing the delays due to excessive “shopping”. I often get “revisions requests” 3-4 weeks AFTER turning in a report. Keep “crying wolf” you punks. I’m already hitting the ignore button
Sounds like a bank that can no longer compete. Loyalty over efficiency – Not sure I agree.
Might be the most successful and profitable marketing campaign in the history of mortgage finance.
Detroit-based Quicken Loans, America’s largest mortgage lender, announced it closed $40 billion in home loans in the third quarter of 2019, the highest quarterly volume in the company’s 34-year history. Additionally, mortgage volume hit its record high in September 2019 with $15 billion of closed loan volume – which will likely be surpassed in the coming months.
As a result of significant growth in 2019, the company has already outpaced its total mortgage volume from 2018, $83 billion, and has surpassed Quicken Loans’ highest-ever full-year mortgage volume, $96 billion in home loans, which it attained in 2016.
Don’t be surprised if they take those gargantuan profits and buy Fannie Mae/Freddie Mac.
Quicken is so awesome and fast, even their own people don’t know what is happening.
It’s always best to cut straight to the complaints so no matter if you are a consumer, vendor or employee, you can see it coming if it does indeed come your way.
These people get away with it. That’s nothing to them. It’s highly improbable such activity was limited to the FHA program. Notice how they framed the story? Predictable.
This is rich. Employees not so happy with the speedy environment. Ha!
I read an article more to the point of your comment years ago but could not find it. How they had a high volume of millennial younger people participating, they were soliciting ‘the mobile crowd.’ So yeah, mobile one button is a big deal, a lot of young people go for that. Until they try the approach with mortgages, then there is reportedly a high regret level. The price of convenience and they don’t know what happened until it’s already too late. Quicken is synonymous with TSI. They also request rocket appraisal service, fyi if you’re into that sort of thing.
If you want the process to move along real fast there is also the daily ‘we pay cash for your home’ mailers. No appraisal necessary. And don’t’ worry, they don’t want to sell it, they just want to buy it for cash upfront, no appraisal, no hassle, and it’s so easy, you should try it.
…and they pay their staff appraisers $200 for each report
Oh, I see they made it to Gold tier. Lucky! Regular appraisers whom don’t bend on discounted fees are quickly set to bronze and even below that.
I remember trying to appeal to the TSI panel manager in charge of the Quicken panel. When I researched her online and saw the green hair and read the facebook profile, a whole 2 years of working experience as a telecom csr ‘in mortgage related industries’, it was sort of difficult to maintain the illusion of a professional rhythm in the future.
This broken record keeps on skipping.
Great article. Biggest financial decision most people will make in their life.
Whether a purchase or a sale loan officers and agents are concerned with only one thing. Closing the deak quickly so they can collect their commissions faster.
They know that every day that goes by is another day a borrower may shop for a lower loan rate or loan costs. It is one more day that t hey may remember something they forgot to put in the offer.
It is one more day other unscrupulous lenders have to try to steal their customer away.
…and yes, it is one more day that buyers remoarse may arise.
Whenever agents create false sense of urgency, beware.
Real reason is that they have competition and want to close fast so you dont have time to check out other companies
and also why they want the super quick appointment – we are used as the “closer”.
I came from the mortgage side as a loan officer, then wholesale account rep, now appraiser. I can tell you first hand it was not about rate or fees or even speed. It was about customer service. The borrowers wanted someone they trusted and would answer their questions. I personally oversaw each of my loan files addressed every issue up front with the borrower and had the documentation in the file so when the file went through underwriting, it was a smooth process. Repeat business and referrals were the results of this. How many of those Rocket mortgages go back and do it again? Not many.
Ok. Confession, I have a loan with Quicken. They call every few months wanted me to refinance and save $30-40 per month. I turn around and ask, Who is paying the closing costs? Who is paying the additional interest for the next 30 years. Sadly, these loan officers have no clue how the amortization works on a loan. I am not even sure the underwriters and processors know. I do remember having to explain to the processor the difference between a sole proprietor and a corporation. Speed is not a good thing when it comes to mortgages.
It’s all pre scripted telecom instant worker right out the box these days. That’s the difference between the volume guys and the botique lenders, often but not always. I’m constantly talking to borrowers about the importance of refinancing early on if they’re going to do that, because once you’re so many years into it, you really should think about limiting refi’s to a 15 if you are able. Depends on their property interest though, some people like the tax write offs and having that free monthly money, they’ve got retirement covered elsewhere. Most of the time I just don’t talk about it though, people love to refi and it keeps me working even if I may personally think they are just stacking back up time and interest to save a few dollars monthly and the cash equivalent savings is simply not there. Such is lending, the access is extra ordinarily easy and I don’t care what they say on the news, it’s too easy. Vote for 80/20 max for everything conventional. Only fha should offer more and people should be able to eventually drop the mip, but that’s not the way it works anymore, too many program losses so now I believe they pay that for life. Bounce to the credit union, they often will cut down well over half of cc fees and you can tap into way better terms like if you go into default, as long as you get out of it, back to original terms w/ no changes. Also lower late payment and mine even gives me a relief of 1 months payment now and then for chrismas if we want it. Dedicated servicing which is not sold. I had in house but they did flex the disclosure to sell servicing, must have been the volume of mortgages over the past few years, in house did not hold up but that’s balanced w/ dedicated servicing which is not resold every few years. The things consumes are usually unaware of when they get their first mortgage.
Total insanity, this must have come from Russia. I just can not believe we have come to this ridiculous crap! Grow up professionals and step up to the challenge with a smile on your face (get paid) instead of a chip on your shoulder!
Ruskie fever? Are they in charge of those automatic mortgage calculators on the internet? I just knew it. That’s why I never miss a minute of mainstream news, it’s important to know these things.
Completely agree! Everyone needs to just slow their roll, stay in their lane and let the transaction be completed with proper due diligence.
Never understand the 8 day closing for a purchase, when it’s typically 45+-. Who the hell packs and moves out of a house in 8 days???
It’s for refis. “We get you ‘your money’ before you even know you need it’ mentality. Speed is a key to LOs locking down their commissions.
Speed, speed, speed. It’s 2020 and everybody wants everything yesterday. It’s all around us with constant reminders everywhere and everyday. It has been for about 30 years. Online banking……saves you ALL that time from the drudgery of having to spend 7 seconds to write a check and 5 minutes to balance your checkbook every month. Netflix and other online video outlets that helped put Blockbuster out of business. It goes on and on and on and on. Faster, faster, faster, quicker, quicker, quicker. Who needs 30 to 40 days to buy a home. Who needs a real estate agent? No need for an appraiser. Oh yeah……..who needs a local loan officer? Do it ALL ON YOUR PHONE. Buy your next home in an hour……ALL ON YOUR PHONE.
Maybe…….just maybe some of what are parents said was right. Maybe it was better “back in the day”.