What constitutes a "mortgage commitment"?

[Phitor]

I have a mortgage commitment deadline of April 30, 7 days from now. I was preapproved, and last week sent the signed Purchase and Sales agreement and the closing date amendment forms to the particular credit union I selected as my lender. They have not asked for any additional paperwork besides those 2 documents.

This morning I called to see what the status of my loan was, and they said my loan had been "approved" on 4/21. They emailed me a letter to that effect, with the property listed and terms of the loan, including origination fees, etc.

Is this a "mortgage commitment"?. Should I just pass this letter along to the agents to satisfy the mortgage commitment and the April 30 deadline?

Thanks,

[StartingOver10]

Have you provided all of your documentation to apply for the loan? Did you supply the loan applicaton fee and provide anything else like paystubs, tax returns etc to the lender?

I can't figure out from your post if you have made "official" application by signing the 1003 or not.

If you have then the mortgage commitment would read exactly that: I have seen them with several pages (generally 2 to 3 pages) listing your approval, your rate and terms and the conditional items that are required prior to funding. Such conditional items would be not only items from you, but also clear title and items to be supplied by the title company as well.

Is the letter that was sent to you just a one page general letter or is it a very detailed letter? Have you had any contact with the loan processor or the underwriter? The official approval comes from the underwriter. Many lenders will not let you speak directly with the underwriter at all. Your contact person is the processor and the loan officer. Do you have a copy of your appraisal yet?

[Phitor]

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@StartingOver10 wrote:

Have you provided all of your documentation to apply for the loan? Did you supply the loan application fee and provide anything else like paystubs, tax returns etc to the lender?

I can't figure out from your post if you have made "official" application by signing the 1003 or not.

If you have then the mortgage commitment would read exactly that: I have seen them with several pages (generally 2 to 3 pages) listing your approval, your rate and terms and the conditional items that are required prior to funding. Such conditional items would be not only items from you, but also clear title and items to be supplied by the title company as well.

Is the letter that was sent to you just a one page general letter or is it a very detailed letter? Have you had any contact with the loan processor or the underwriter? The official approval comes from the underwriter. Many lenders will not let you speak directly with the underwriter at all. Your contact person is the processor and the loan officer. Do you have a copy of your appraisal yet?

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Here is the status on this. On Tues, I met with the LO, submitted tons of paperwork and stubs, gave a deposit for appraisal and other things, and received a large packet including a formal loan approval letter with conditions, GFE, tax return authorization, etc. I specifically asked my LO if the formal approval letter was sufficient to satisfy the "mortgage commitment" deadline of April 30th. She said yes. So I sent it.

My realtor, on the other hand, was nervous on a few of the conditions in the approval letter, especially the one about "PMI approval". She wants to extend the commitment date. The PMI condition I can't really do anything about, but the other 2 she was concerned about I can take of today. I asked my LO is I could clear just those two conditions with LOEs, and her comment was that conditions are settled all at one time, over mail, and then the attorney contacts me when we are cleared to close.

So I am stumped here. I have a lender that says I have a mortgage commitment, and a realtor that says I don't, and a deadline in 4 days.  I have two sides seemingly claiming 2 things, my realtor wants specific conditions satisfied ASAP, and my LO says I can't just settle specific claims. Shouldn't there be just one definition of a mortgage commitment? Is it a formal loan approval letter? Or a formal loan approval letter with no conditions or all conditions satisfied? What is going on here?

[203bravo]

write your LOE's and get them to the UW asap.. that will take care of those conditions -- is your loan borderline??? If not then them shopping your PMI shouldn't be an issue and should be done within a day or so.

[Phitor]

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@203bravo wrote:

write your LOE's and get them to the UW asap.. that will take care of those conditions -- is your loan borderline??? If not then them shopping your PMI shouldn't be an issue and should be done within a day or so.

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I have the letters, and I can email them to the UW immediately, but it would be against the advice given to me by the LO. Should I still do it?

Loan is not borderline. About 87.8% LTV, conventional, 30-yr fixed

[Phitor]

I spoke with my realtor again to get clarification on her concerns. Her explanation is that, while I do have a valid mortgage commitment, it is a conditioned commitment, which puts me, the buyer, at risk to lose deposits, etc. She is concerned, and wants to extend the mortgage commitment deadline in protection of me to get these conditions satisfied. She also says that these deadlines are extended often by 1-2 weeks, and 99 out of 100 times, the sellers are ok with it considering the alternative for them, relisting.

She instructed me to get a timeframe from the lenders on when underwriting would be complete and PMI approved, so she could propose an extension date. This seems odd to me. I can understand wanted to get conditions satisfied, but I wasn't under the impression that UW had to be completed before the mortgage commitment date? Is the realtor being too cautious? Here are the conditions:

1) Must become a member of the credit union (will be doing tomorrow)
2) Copy of most recent YTD paystubs for all borrowers (I have another 2 stubs from 4/1 and 4/15 to provide)
3) Satisfactory verification of employment will be verified within 10 days of closing
4) Copy of recent retirement account statement with all pages (already provided)
5) Copy of most recent bank statements to prove sufficient funds for closing (already provided Feb and Mar, April is not published yet. Will supply when its available)
6) Copy of earnest money deposit checks, and proof they have cleared (have and can provide)
7) This loan is subject to FNMA price adjustments for added risk
8) Private mortgage insurance approval is required
9) Letter from employer stating move will not impact employment (have and can provide)
10) Letter from employee stating how he will retain current employment after move (have and can provide)

Honestly, I'm not all that concerned with any of the conditions and this seems much ado about nothing, but assuming it doesn't pose a risk to closing the house, I'll go along with the extension.

[Phitor]

Just an update on this, for anyone interested, in regards to my mortgage commitment deadline of April 30, and whether or not to request an extension.

On Friday I met with the lender to supply the remaining documentation to satisfy all the conditions that I could. I asked them when these conditions could be "crossed off", specifically the "PMI approval" condition, as this was one of the outstanding "alarming" conditions remaining. They said the PMI approval would happen when the appraisal came in, and that they would be working on my package over the weekend, and would have something for me today (have not heard from them yet, but have a call in).

I asked when the appraisal might happen (I had put a deposit in for the appraisal and other things 3 days earlier - now six days ago - check has not cleared yet). They said they could not estimate when the appraisal would take place, but they claimed it could be as far away as "a couple of weeks". I guess they are extremely backlogged right now with purchases and refis due to the low rates. But I guess this news was sort of a bombshell to the attorneys and realtors, and they said "At a minimum I would advise against waiving your contingency until the appraisal is in." Seems like everyone agrees the appraisal should have happened by now. So we have decided to extend the commitment deadline 11 days, at the risk of rocking the boat with the selling party.

Another update: Just received revised package from the lender, looks like many of the conditions have, indeed, been "crossed off" as hoped. They did add a new one about verification of company percentage ownership - am working on that now.

They said they ordered the appraisal, asked for it to be expedited, but that the average turnaround was two weeks. They also said they sent a copy of the purchase and sales agreement to the appraiser. This seems odd, as I though appraisers worked independent of knowing the purchase price. Isn't this like giving them the answer key?

[webhopper]

If there aren't comparable sales in the area, then an an appraiser may need the purchase contract...