Do We Really Need a Rocket Mortgage?
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.