As published in Scotsman Guide's Commercial Edition, October 2005.
How important is it to pay attention to the request for detailed information when filling out your loan application? Extremely.
It can determine whether you will fund your loan before the scheduled close-of-escrow or have to extend beyond to accommodate your lender’s request for pertinent information. It can determine whether you miss the final date to fund a tax-deferred 1031 exchange, thus facing an unwanted tax liability. It can determine whether a seller decides not to extend your escrow because property values have increased while the application was held up.
It is, therefore, in your best interest (as well as the borrower’s) to provide your lender with the requested information in a timely fashion.
Although it may seem that lenders are asking for far too much information, borrowers often don’t realize or care that this information is part of federal regulatory-agency requirements to maintain compliance. Lenders do not require more data than they need. Doing so would slow down the processing time, creating more-expensive borrowers’ fees and preventing the companies from funding more loans. While each lender may have a slightly different process, they all get to the same place and need similar information.
An entire loan will often get pushed aside if just one piece of information is missing. Here’s why: Although most lenders have some form of underwriting/ processing software to assist with the volume of their transactions, real people still make the majority of final decisions. So if underwriters or processors are working on an application and are missing some important data, they generally will stop working on that application until the missing information is provided. They won’t sit at their desks waiting but will pick up another application and process a new loan. Most likely, they will continue that loan through to conclusion because it’s more efficient to follow one loan through without interruption.
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