I was talking to a Realtor friend of mine the other day about what she referred to as “the closing from Hell” that she recently survived. Of course, from a Realtor’s standpoint, any closing is a good closing, especially now that the market is slow. Still, I asked her what made the closing so bad. She said that things were going along well, and the lender for the new mortgage had said that the appraisal was fine for the loan, and all was set for a successful closing. Then, a day before the closing, the company that was to provide the PMI (Private Mortgage Insurance required if the loan is for more than 80% of the cost of the home) decided that they wanted to have their own appraisal done based on concerns about the specific market activity in the neighborhood. Needless to say, the closing was delayed, and the buyer and seller both were stressed by this. My friend, the agent, had never heard of it, and neither had I. I asked a couple of experienced lender reps I happened to be talking to later if they’d seen this happen, and their weary response was that they’ve come to expect most anything from lenders lately.
I guess the lesson here is that since mortgage lending had gone way toward too loose in their underwriting requirements, it is reasonable to expect that the reaction will be too far in the other direction for awhile. We’ll eventually come back toward a middle ground, but it will be some time before we get there. In the meantime, home selling and mortgage lending will have to have some frustrating closings like my friend’s closing from hell.