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Why’s It So Hard to “Fund” A Loan? Salability & Cash to Close

We often have borrowers and Realtors wonder why it takes lenders so long to fund a loan after all the documents are signed.

First, the entire funding package has to be returned to the lender. Upon receipt of the package, the “funder” has to review the entire package with a fine toothed comb to ensure every document is signed with the correct names (that match the typed names) and dates. She also needs to make sure all final loan conditions are met, including “cash to close” paper-trails.

“Cash to close” is a significant issue for lenders, as every dollar that comes into escrow for final down payment and closing cost funds needs to come from verified accounts that match the loan application exactly. There is no variance allowed. Many borrowers end up moving funds around or getting extra gift funds at the 11th hour, requiring additional underwriting work that slows down the funding process substantially.

If a file is not “perfect” before it funds, lenders are often stuck with loans they cannot sell on the secondary market. If they cannot sell the loan, they don’t get paid for all their work. They also end up with a clogged warehouse line and many other significant expenses.

Making sure a file is perfect and ready to fund is a very serious matter with extremely high stakes.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646