June is National Homeownership Month, a time to celebrate the benefits that homeownership brings to families, neighborhoods, and communities across America. It’s also an opportune time for you to educate prospective borrowers on the value of homeownership. We’re discussing topics like the housing market, the benefits of homeownership, the challenges first-time homebuyers face, and how different mortgage structures can help your borrowers.
What does clean vs. chaotic mean in mortgage closing?
The mortgage closing process can be stressful, intense, and well… chaotic. In this post, we will discuss what the process looks like, how to keep things clean and tidy, and why you and your borrowers should be proactive to stay ahead of the chaos.
A widely held view of the difference between a clean and chaotic closing might look as follows:
|Occurs on the date and time agreed upon||Delayed, time and date changes, sometimes more than once|
|No last-minute surprises, hurdles||Request for last minute documentation, changes in cash to close, mistakes or changes to what the customer wants|
|A “delighted” customer||A stressed, unhappy, angry customer|
But in relation to how this translates to helping out your borrowers, what does this mean for you as their lender?
It takes a lot of people to originate a loan that makes it to the closing table. So it’s wise to consider each player’s perspective before you can successfully streamline the process and arrive at a “clean closing”. You may quickly find that perspectives and opinions differ based each player’s role — human nature shines through, after all!
Consider the following subjective views around what a “clean closing” means to key players in the origination process
- Realtor – “As long as it closes on time and my buyer/seller are happy”
- Loan Officer – “As long as the loan closes on time and any delays are not our fault”
- Borrower – “I don’t want any changes or surprises while heading to the closing table”
- Secondary – “As long as the pricing is consistent with how the loan was locked and meets program guidelines”
- Loan Processor – “No file or document requests AFTER it has been released to closing”
- Underwriter – “No additional touches after the file has been issued a Clear to Close”
- Closer – “Receiving a COMPLETE loan file with a sufficient number of days prior to the closing date to be able to carry out my closing tasks”
- Closing Agent / Title Company – “Lenders need to comply with our policies and timelines around scheduling, funding, CD issuance, etc.”
- Post Closer – “Receiving a closed loan package that is not missing signatures or loan documents and requires minimal corrections to be made prior to shipping to the investor”
You can see how we have gone from a simple and generic definition of what a “clean closing” is to a much more robust one which includes different perspectives from many of the key functions involved in the entire origination process. As a lender, it’s important to be able to acknowledge this distinction so you can begin to understand how to create the ultimate experience for ALL borrowers.
Connecting the dots: translating subjective views into organizational effectiveness.
Too often we try to explain or point out in singular fashion “why” there was an issue at closing and “who” it impacted or was to blame. But there is always a much bigger story behind these events.
If you look back at the example views listed, you can start the drill down process of finding ways to improve organizational effectiveness by making key discoveries on common shared needs. Creating a list based on comprehensive feedback can help guide where you focus your efforts with consideration on what’s potentially lacking in your process.
In this example, we see statements supporting 2 important process variables shared by most of the roles involved. They include:
- Cycle time – Supports needs of Borrower/Realtor/Loan Officer/Secondary/Closer/Closing Agent
- File Quality – Supports needs of Borrower/Loan Officer/Processor/UW/Closer/Post Closer
Remember: To ensure your process can consistently deliver a clean closing, it is imperative that the “entire” process be examined and designed to support all of Closing’s customers and their critical requirements.
Source: Ben DiMeo is Enact’s Senior Sales Consultant. He spends his time helping customers solve business problems by maximizing efficiencies, improving quality, and enhancing the customer experience.
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