Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
Many of the articles that I’ve been writing have typically followed the same format. I try to impart real life stories and examples about some of the experiences that my clients have endured working with me – or in some cases – catastrophes, by not working with me. Very often, which I am most proud about, I am able to adjust a loan scenario, or come in at the last second, and hopefully save a deal, or prevent a disaster. Obviously I write about these success stories in hopes that people who are in similar situations will learn from these cases, and/or hopefully call me in the first place to avoid the mishap altogether.
One particular transaction that I’ve been working on started almost one year ago. Note: I know that these clients occasionally read my articles in the paper or on our blog, so I will try to change some non-critical parts of this story, so that they might not realize that it is them who I am talking about. Mind you, it’s not that I’m saying anything embarrassing or offensive; in fact, it is quite the opposite. It is they who are the protagonist of this article. This week, it’s not about me!
It was almost a year ago that I pre-approved these well qualified applicants – and a few months after that, that they found their home. To put it in perspective, these people have been in contract for about a half-a-year. I can’t say that such a long contract period is unheard-of, but it’s certainly the exceptions to the norm. One of the contingencies of the sale required that the seller was allowed to delay the closing, at the seller’s expense, if they were not able to close in a timely manner. More specifically, the seller agreed to pay all the extension costs of their mortgage, and all applicable Interest Rate-Lock extensions that would be required to preserve the low interest rate for the buyers.
These buyers were pretty much “ready to close” the minute their paperwork was submitted to me. Everything that I asked for, I received immediately. It was as organized and as straightforward as I could ever have hoped or dreamed for all my clients. In this particular case, my clients wanted to mitigate the expense of the sellers, so were willing to wait to lock in the rate until it was absolutely necessary as not to lose the low prevailing rate we offered them.
“Locking a Rate” happens in different ways at different mortgage companies. Some banks require you to lock in the loan immediately upon application – and it becomes incumbent upon the applicant, and the bank, to close within the deadline. If the date lapses, the client needs to pay for a rate extension. Conversely, some brokers don’t require, or insist that a loan is locked – but then the interest rate exposure becomes the onus of the mortgage applicant – and they pay the price accordingly. More often than not, the intransigence of this aspect of the process would make this situation an impossibility to manage, but I agreed to accommodate. The sellers of course were optimistic that not much deferment would be needed.
But of course, the inevitable happened. One by one, all of our targeted “closing dates” were postponed by the sellers. Every few days the client would consult with me to see where the market was, and if I would advise about locking in the rate. Naturally, my clients had many critical market events that put us on high-alert throughout the past few months! We had many late evening conferences to strategize for market-sensitive events that might force our hand to lock the rate if need be. Each discussion ended with my clients saying, if we could avoid having the sellers pay the extension fees, we should opt for that.
On the one hand, over the many months that I was able to skillfully balance all of the additional mental and emotional capacity needed to – approve the loan, maintain updates of all the necessary documentation, manage the interest-rate movement, watch and anticipate market activities, preserve the loan approval, juggle ‘attempted’ closing dates, etc – made me feel like a big champion. Then I realized, it was not me who was the hero … it was my clients! They could have avoided the headaches and emotional rollercoaster of the entire transaction by locking in the rate the first time there was a threat, and sending the bill to the sellers. They opted to be altruistic, and in the end, they benefited by getting the best rates and terms – and a tremendous life lesson for us all to learn on top of it all. Special shout out to Myna Shvester for actually reading my entire article last week.
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