Blog of the Mortgage

First I would direct you to my Education Station where I’ve posted a column from Tanta @ Calculated Risk regarding the definitions of REO & Foreclosure. We’ve seen a significant uptick in purchase business in the last couple of weeks. This is a complete about-face from the Refi only business we were running on in January-February. I would first like to compliment you on adapting and going and getting that purchase business and second thank you for choosing me as your lending partner for it.

We all know what the majority of that purchase business is driven by: Foreclosure and more importantly REO. As you’ll learn REO comes out of failed foreclosures. These sales are defining entire markets (Modesto/Stockton; Brentwood/Antioch et. al.) and causing those with refinance opportunity all kinds of heartache (see: declining markets). None the less we’re able to find actually affordable homes for people that can fully document their incomes. This is great news. Until you get into the transaction.

The REO companies (mostly management middle men that are put in place to extract maximum return from their portfolio of scratch & dent loans/properties) are being less than accommodating in helping these transactions along (ironic considering their purpose). Add to that the title companies they have hired to handle this business. These outfits (not YOUR title partners to be sure) are so flooded with business that they could care less the quality of their work at this point. Oddly we were working with many of these same outfits in 2003-04 and their quality was significantly higher.

In any case we’ve been getting many a rush funding due to the REO “drop-deadline” and lock expirations.

This is exasperated by the title companies that they’ve (REO) chosen. The packages they are sending back are nothing short of disastrous. You’ve noticed it, your Realtors have noticed it and my Funder(s) has to deal with them. To be sure you’re doing everything to get all your conditions in advance.

So, to help mitigate many of the problems that arise by using these firms remember: your customer, the buyer (not seller), gets to direct where the Title/Escrow portion of the transaction is handled.

I would highly recommend that you a). Give Your title partners an opportunity to support you b). Do whatever you can to drop the REO companies Title/Escrow service like it’s hot.

From there it’s basically a management of the situation. Being proactive will help all of us meet our “drop-deadlines” on time.

1. be certain to pull your funding conditions from our website on the loan status page.
2. turn your funding conditions into our conditions fax/e-mail as early as possible
3. make sure that the title/escrow company is well aware of your time frames and goals as well with respect to lock expiration/REO “drop-deadline”.
4. be sure that your title company is using a competent third party signing agent if necessary (for some reason the notaries are missing pages/documents etc).
5. The California per diem interim interest disclosure: make sure the proper boxes are checked.
6. make sure that escrow sends us Correct Wiring Instructions
7. Make sure that the sellers docs are completed and returned with the funding package.
8. Hazard insurance information is complete as well.