Long Wait To Refinance

May 22nd, 2012

long line of people

Mortgage pipelines are backlogged thanks to record low rates. And rates simply keep breaking new records. This has created delays for many consumers trying to take advantage of low mortgage rates by refinancing. Customers of big banks report that they are unable to get a call back. One bank told a client that they would return the client’s call in 2-3 months! Not that they would close the loan in 2-3 months, and not that they would get started on the process in 2-3 months. But that they would return the call in 2-3 months. There are stories of refinancing taking 4-6 months even!

We as a direct lender are closing refinance loans on average within 60 days. Doesn’t that even sound slow? There is a research company called Accenture Credit Services that does mortgage research. They say it currently takes the country’s biggest mortgage lenders an average of 70+ days to complete a refinance. This is up from 45 days a year ago. The longest “lock-in” for a refinance is 60 days. That means these banks are having to extend the lock-ins. I imagine they are doing this for free as opposed to charging the consumer, on every single refinance transaction. So maybe going to closing on a refinance within 60 days with a direct lender like us is not so bad after all.

Accenture also reports that the big banks have raised their rates to hold down loan volumes. But for some unknown reason millions of clients across the country insist on getting a mortgage from these big banks. Big banks may charge higher rates, take longer to refinance, and have poor customer service. It is beyond me what these people are thinking. Is it just that they perceive that it is easier, because the bank already has the loan? The bank will need the exact same paperwork as any other lender! It is no easier at a big bank, it is harder. Big banks have worse appraisers who come from greater distances, and are more inaccurate. Big banks are, well, big. And that always seems to yield poor service. So I am unsure what the draw is.

These people would be better served by going to a local, direct lender. We as direct lenders are able to staff up more quickly, offer better rates, and push things through the system more quickly. We also have a vested interest in keeping the clients happy and making things happen on time, since we are local in the community. Bad press hurts us way more than a big bank.

So please do not give your business to the bailout hungry big banks, who won’t return your calls quickly. It is senseless. The research company, Accenture Credit Services, said we have a problem in that this country now has more loans going through a pipeline that is too small. The country’s four largest banks currently account for 55% of all loans. This is up from 38% in 2004. We need more choice. And right now your best choice is going through a local, direct lender.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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