Mortgage Closing Process Leading To Clear-To-Close - Great Content Authority (GCA) Forums

This guide covers the mortgage closing process leading to a clear-to-close. The pre-approval stage of the mortgage process is the most important part of the overall mortgage process. A mortgage closing can get delayed for many reasons. Not providing complete docs to the mortgage underwriter is probably the biggest reason mortgage closings are delayed.

The number one reason for mortgage loans to have stress or delays in getting a clear-to-close is because the loan officer did not properly qualify the borrower.

A loan officer should take the time to qualify the borrower and ensure the pre-approval letter is solid. In this article, we will discuss and cover the mortgage closing process and the steps leading to a CTC. The mortgage process is much shorter and easier today than a few years ago. Every lender has their mortgage process.

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The Mortgage Closing Loan Process

Experienced mortgage processors will not submit the application package to underwriting if it lacks pertinent information. All documents should be complete. Examples of documents that needed to be scrubbed and prepped are the following:

bank statements
recent paycheck stubs
tax returns
copies of bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale documents
copies of divorce decrees
copies of alimony or child support documents
letters of explanations

Submitting copies of the above means complete copies, not partial paperwork. For example, lenders want to see all pages of bank statements, including blank pages, not just the page where the balance is stated. Most lenders have the same tasks they need to accomplish to lead every file to mortgage closing. The mortgage process timeline depends on how complete the application package is when it is submitted to underwriting.

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Mortgage Processing Leading To Mortgage Closing

Experienced processors should also review the 60 days of bank statements and see if the mortgage loan applicant has no overdrafts. If the underwriter catches a bank overdraft in the prior 60 days of bank statements, it can be a loan denial.

On bank overdrafts, the mortgage process either needs to wait until that overdraft has a 60-day seasoning or that bank account having the overdraft needs to be pulled out and not used.

There are creative ways of dealing with bank statements with overdrafts. It needs to be addressed before being submitted to underwriting. This is because once an underwriter sees something, it is too late. The ultimate goal is to get a clear to close and get to the mortgage closing. The more complete the mortgage application is, the sooner we can get to the mortgage closing and fund the loan.

How Long Does From Loan Application To Mortgage Closing

I have closed mortgage loans in 12 days. However, most mortgage closings take at least 30 days. It can go beyond the 30-day mark if the borrower is slow in providing conditions and documents requested by underwriters. Statistics from Ellie Mae states that the average mortgage lender in the United States takes 40 days to close a home loan.

Mortgage Closing

Every lender works at different speeds, from when the mortgage loan application is submitted to the time of the closing. It is extremely rare for me to have a mortgage closing go beyond 30 days from the time I get the signed mortgage loan application unless they request a delayed mortgage closing due to moving arrangements or the home being a new construction home.

Most banks average 45 days or longer due to the turn times of mortgage underwriters reviewing re-submitted conditions.

For example, a full mortgage loan application gets submitted to underwriting, and the applicant gets conditional approval. Conditional approval is a mortgage approval if and only if the mortgage loan underwriter’s requested conditions can be provided. Say there is a list of 20 conditions. An experienced, seasoned processor’s mission is to have as few and possibly no conditions as possible.

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Conditions on Conditional Loan Approval

There are mortgage conditions due to not submitting all the documents the mortgage underwriter can need simultaneously. The mortgage originator and processor must ensure the application is processed and all possible documents or letters of explanation are provided to eliminate as few conditions as possible.

Almost all mortgage approvals come back with conditions the first time around. Even if the processor were to submit a complete file, the mortgage approval would return as a conditional loan approval.

This is because the appraisal, title, and insurance are conditions that the processor could not have when the loan application is submitted to underwriting. When the underwriter issues a conditional approval and says there are 20 conditions, the processor will wait until all of those 20 conditions are provided by the borrower or others and submit it all at once.

Submitting Mortgage Conditions For CTC

It takes 48 hours and 72 hours for an underwriter to review conditions. The underwriter will either get a clear to close or kick the file back to the processor, stating that he or she is still missing conditions.

If the underwriter kicks the file back, stating that all conditions are not met, then the processor needs to gather the additional conditions and documents that are still missing and need to be re-submitted.

This again takes another 48 to 72 hours, which is why a mortgage closing can get delayed. It is not always the processor’s fault why the first go-around of conditions is not cleared. Many times, mortgage underwriters will add more conditions that were not listed on the first mortgage conditions list. Mortgage closing delays happen; a mortgage closing extension is often required.

Why Do Mortgage Closings Get Delayed?

Appraisals are another reason for a mortgage closing delay. If the appraisal comes back at a lower value or the appraiser requests that certain items be fixed due to hazard or not meeting HUD’s or Fannie Mae’s guidelines, then extra time is needed. Repairs can take a week or more, and appraisal rebuttals can, too.

A home buyer may get a home inspection done, and certain items might need to be corrected for the real estate purchase contract to be in full force.

This, again, may take a week or weeks to get corrected. The title is another issue. The title search performed by the title insurance company may take longer than normal, or there may be a cloud on the title, and it may take time to get it corrected. This, again, may cause a delay in mortgage closing. Insurance is another barrier that can affect mortgage closing delays. The insurance provider may need time or request that certain items, such as an alarm system, be corrected or added. This, again, can cause a delay in closing.