You Have Options if Your Lender Delayed Closing – Learn What Those Options Are
Nothing is more upsetting for a seller than expecting to close escrow on a certain day and then being informed that a lender delay is moving the date back. It’s especially annoying if that “far out” date hasn’t been established yet. But why do closings take so long, and what can you do to speed things up?
Delay factors
Regrettably, lender delays happen frequently. Loan-related transactions rarely close on time or ahead of schedule. As they get closer to financing the loan, the loan underwriter will often ask buyers for more paperwork and specific requirements for evidence of income. The underwriter will now request any extra information or supporting documentation that is necessary.
The purchaser might be required to:
- Send along a paper trail demonstrating the source of the $5,215 deposited on July 2 into their checking account.
- Get a letter from their uncle claiming that he did not anticipate return for the $5,000 he gave them last year.
- Provide more tax returns for the 2014 fiscal year.
It may take some time to comply with these last-minute lender requests. You must wait for the lender to analyze the materials after the buyer provides them. But how can you quicken the procedure?
What’s next?
If the lender postpones the closing, you have two choices:
- Don’t take any action.
- Serve a Notice to Perform or ask to close escrow.
You should generally avoid taking any action since you don’t want to run the danger of having to start over with a new buyer. If you enter into escrow with a new buyer in California, it is likely that their California residential purchase agreement, or its equivalent in another state, will also give them two to three weeks to work on getting their loan. Additionally, they can experience bank delays.
Although we advise patience, we don’t advise you to do nothing. You have every right to request that the lender give you a full list of everything necessary for the loan to close. After receiving the requested items, you can assess their nature and decide if it makes sense to continue working with the existing buyer or whether you would be better off serving a Notice to Perform and looking elsewhere.
Accelerate the procedure
You can even demand that they pay you a fee for each day the deal is delayed past the closing date in order to encourage buyers to respond as soon as possible. But keep in mind that neither the residential purchase agreement for California nor any other state that we are aware of includes this payment. Therefore, you will need to prepare an amendment along with escrow or your transaction coordinator. Ensure that both parties sign the addendum containing this requirement. When there is strong interest in your property and the buyer is concerned that you might cancel the sale, this strategy frequently succeeds.
