Magazine article American Banker

Remember the Three-Day Close? 15 Days Sounds Fast Today

Magazine article American Banker

Remember the Three-Day Close? 15 Days Sounds Fast Today

Article excerpt

Byline: Bonnie Sinnock

New regulations and tighter underwriting since the financial crisis have slowed down the mortgage process so much that closing a loan within 15 days is something lenders can brag about.

Carrington's wholesale unit is promising lenders to be "ready to close" qualifying loans within 15 business days of it receiving an appraisal. It's a far cry from where the industry once imagined it was heading.

At the height of the boom in 2006, Doug Duncan, then-chief economist at the Mortgage Bankers Association, predicted that process engineering could add enough efficiency that by 2016 the industry would be able to close a loan within three days. Others at the time thought it could happen even sooner.

Efficiencies had indeed improved between 1993 and 2003 when overall loan processing times had been cut by one-third, but 2006 was a time of notoriously loose underwriting and the subsequent crash and reform that followed have since served to lengthen closing times back out.

In one regard, Carrington is setting a high bar for itself. Historically, the time it takes to close was measured against when a loan was approved, after the underwriting department had signed off, says David Lykken, managing partner at consultancy Mortgage Banking Solutions. The appraisal is usually the last document submitted before underwriting commences, he notes. So Carrington is starting the clock earlier than lenders usually do.

"This is really due to making sure we deliver a consistent process each time, starting from appraisal receipt allows us to remove any variability in timing of appraisal (especially full appraisals) with regards to scheduling, etc. …

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