What’s wrong with the banks now?
Last week, we closed a transaction on a “normal” purchase (not short sale) of an average home in Waikoloa Village. The buyer’s lender did not order a full appraisal, but instead used form 2075, whichÂ is usedÂ when a report is being reviewed and a lender wants anÂ appraiser,Â other than the original appraiser, to verify the property existence after aÂ regular appraisal is done. Except this time, there was no “regular” appraisal, only the form 2075. The buyer actually had to go back to their loan officer and insist they conduct a regular appraisal. Ummmmm…what year is it again? For a second, I was back in 2006 with the drive-by appraisal crowd.
Two weeks ago, we had a short sale that was down to the wire in terms of foreclosure dateâ€”and the buyer’s loan officer almost completely killed the deal for us because of sheer incompetence. We had to ask the area manager for a favor so we could close instead of being foreclosed upon because the bank holding the note insisted they would not extend the foreclosure date for any reason.
Why is this important? Because in today’s market, I am stunned to realize, the big banks continue to staff their loan departments with people who are inadequately trained. Isn’t that one of the reasons we got into so much trouble to start withâ€”mortgage brokers who didn’t know what they were doing??
A client of ours is buying a condo unit at the Mauna Kea. He has over an 800 credit score, has provided every doc the bank has requested within three hours of the request, and is putting down more than 50%. The amount of hassle and hoops he has had to jump through to buy this property has been asinine.
For weeks the underwriter insisted that this project is a condo-tel and they couldn’t lend on it, despite the fact that it has never in over 15 years been a condo-tel, and has no desk or management company that books vacation rentals. After many hours and money spent with lawyers and the homeowner’s association, we managed to convince the bank they were wrong. But our buyer still has to wait another two weeks to closeâ€”because of incompetence on the part of the bank. Why didn’t this buyer have the luxury of a drive-by appraisal?
All across the U.K. banks are calling for strict restrictions this year on big year-end bonuses. While here at home in the U.S., many banks were scrambling prior to the tax bill signed last week, to give their employee bonuses prior to the end of the year, just in case the money was to be taxed at a higher rate in 2011.
So, let me get this straightâ€”the banks are hiring incompetent loan officers and doing drive-by appraisals, and meanwhile, it can still take up to 18 months to close a short sale…and forget about extending foreclosure dates even when one of the bank’s own employees is too incompetent to execute a buy-side loan correctly. The banks are apparently more interested in scrambling to give as much money possible to their own employees in year-end bonuses than they are in actually helping people, or offering customer service.
What’s wrong with the banks now? From where I sit, just about everything.