Mortgage Company delaying closing

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I went through a local bank for a construction loan at my contractor's request. The bank does this all the time and they use a local mortgage company to transfer the loan to. My problem is that we were supposed to close over a month ago but keep getting put off. My mortgage company (whom I haven't even closed with yet) is selling my mortage to another company and we've had to furnish all the paperwork again! I'm very frustrated at this point as I want to get the closing behind me. We've actually been living in the house for the past 5 weeks and it's not even ours yet! What are our options? Can we go to another mortage company and how would we do this?

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1735 35.94 Dollars($)

Going to a anothe compnay is basically a judgement call.

There is no gurantee that the other compnay will not do the same

so I think you shoudl ask the current compnay to give you somethign in writeen, they cna tell you when exactly the loan can close

jenkin7 · Posted: Fri Oct 09, 2009 11:00 pm Post subject:

Hi Lynn,

You should definitely look for some other mortgage company. It is not clear why they have been putting off the closing. If you qualify for the loan and submitted all the required paperwork, it should not take much time to close on the loan. If your experience with them has been frustrating even before the closing is done, what will happen when you close on the loan and sign a legal agreement with them?

You need to check out with other lenders if they can offer you the loan without much of delay. You can also look for an FHA 203k loan. This will eliminate your need for two separate loans, a construction loan and a permanent loan. A single FHA 203k loan can help you finance the construction of the house and you will not be required to refinance the loan into a long term permanent loan.

Posted: Sun Oct 11, 2009 5:16 pm Post subject:

I’d be a bit skeptical of advice given so far. Going to another mortgage company is likely to increase your cost – new ALTA and a worth of hurt running down mechanic lien releases. Not that you don’t have a world or hurt right now but I’d try working through your current broker and/or lender but perhaps with a lawyer.

If in fact you got a construction loan, title is in your name (living in the home for 5 weeks). This is by far the more standard way to go – you buy the lot (own title), get the construction loan with draws to builder as construction progresses. Otherwise the builder owns the lot and gets the construction loan in its name and transfers to you after completion.

Assuming the former, you likely are paying IO under the construction loan flips to a permanent. Question is why the loan hasn’t made this transition for 5 weeks.

Possibilities include a lack of issuance of a certificate of occupancy. In some communities with modestly priced houses this can be a negligible as a crack in the sidewalk. This is a nickel-dime issue.

Other possibility is that contractor hasn’t paid the subcontractors and the difference is not covered by the “hold back” on the construction loan. This could be a major issue.

It’s hard to believe you got anything other than a single-close construction loan but if you did, shame on you – another possible semi-major issue.

The “haven’t closed yet” and the builder sending you to a local bank for a construction loan doesn’t make sense. Perhaps, you went to the bank for a prequalification. Wow, again shame on you. Still you deserve answers and it’s time to start playing hard ball. If the situation is as you describe, it is very, very weird.

gmakerley · Posted: Sun Oct 11, 2009 10:04 pm Post subject:

"shame on you" is rather harsh. unsophisticated borrowers cannot be expected to know every product on the market. yes, they need to become educated, but it's easy to be waylaid. there are far fewer construction lenders than there used to be.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1735 35.94 Dollars($)

Thats ture. EVery one cannot know everything.

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