After many weeks of searching, my clients had found the perfect home – the quintessential Arcadia rancher with a full update. The Buyers and Seller went under contract on 2/7/23 and were overjoyed with the home during the offer and inspection processes. The appraisal came back at value, and the Seller was a fantastic transaction partner, agreeing to repairs and having the home in move-in-ready condition at a quick closing date of 2/28/23.
And along came one major component that was out of our control. It was February 2023, and midsize banks felt the strain of rising fed rates and underlying stress in the banking community. Three banks (Silicon Valley, Signature Bank, and First Republic) were less than two weeks away from closing their doors. On 2/21/23, with closing just seven days away, we received an email from the lender informing us the Buyer’s mortgage company was immediately ceasing all operations and would not complete the loan process. The mortgage broker was moving to a new company and the recommended path forward was to move the file. He would need 45 days to start the entire process all over.
I couldn’t imagine this happening. The Buyers were A+ borrowers – employed physicians, high savings, zero debt – in the mortgage world, literal slam-dunks. The Buyers had locked in a 5.5% interest rate in a rising rate environment – finding a new bank would cause a slew of issues, including starting over from square one, a higher interest rate and monthly payment, and a significant delay in closing for the Seller.
We had negotiated a great price in exchange for a 3-week close. At best we were looking at a non-refundable earnest money situation in exchange for the additional time, at worst the Seller not agreeing to grant time and take the home back to the market in search of a Buyer who would pay a higher price for his beautiful home.
Looking to pull off a miracle, I called one of my partner mortgage officers, this one specifically knowing they were in a position of loaning their own money and underwriting in-house. We sent the contract documents and title report. Notified all parties we were switching lenders and wrote an addendum to close “on or before 3/10/23”. After several calls with the Seller to reassure him, he agreed to continue our transaction and grant the extension with no other changes.
The Title Company was quick to amend the title report to reflect the new lender, and the Borrowers were quick to forward their financials, which were sitting in an encrypted cloud folder and easy to forward. 24 hours later, on 2/22/23, the Borrowers were issued a new pre-qualification letter at 5.25% – a quarter point lower than the original loan! The new lender worked at lightning speed, was able to authorize an appraisal transfer, and sent the entire file to underwriting on 2/23/23.
Not only did we close “on or before 3/10/23”, but our new lender was able to close a week earlier than expected, on 3/3/23.
What originally looked disastrous, the pivot to someone in my professional circle, along with an all-hands-on-deck attitude, added only a net 3 days to close.