CLOSING TRENDS - What We Lack in Volume, We are Making Up for with Success
by Michael H. Wasserman
Our April stay-at-home order ends tonight,
and the May stay-at-home-order starts at midnight. The sequester is dead. Long
live the sequester. Here’s what you need to know about the closing real estate contracts
in Chicago right now.
Contract Activity: We are still open for business and
taking in some new really solid purchase and sale transactions (more on that in
a moment). But, as is the case for most of the colleagues I talk to, the numbers
fall far below seasonally appropriate levels. I don’t want to say that its
slow, but birds are building nests on our office printers. (They outgrew their
perches on the typewriter and fax). I’m the new Maytag repairman. Our numbers
are not statistically significant right now, but some intel is available on
Gary Lucido’s blog and at CribChatter. Both are on my regular reading list. Good
stuff.
About those new contracts. I am taken by the fact that they are pretty “normal” deals. No short sales. No fire sales. No crazy investors. Fewer ill prepared first-time buyers. The pandemic’s first weeks brought a lot of panic into the market. Contracts cancelled left and right. That panic gave way to a secondary wave of contracts falling apart due to buyer layoffs and job eliminations. Buyers going under contract now are showing confidence in stable employment situations and have made peace with the current situation. Sellers are showing good judgement in price and inspection-related negotiations. We are closing out attorney review and inspection contingencies on the new deals coming into the office without too much drama and little delay. We consider this a good sign for increasing market stability and increased activity in the coming months.
There are some other storm clouds forming on the lending horizon
but lenders, for now, are still processing loan applications and funding approved
loans.
Closings: Even under the best of circumstances closers work hard and
live with enormous stress. The working conditions have changed dramatically but
they are still showing up for work every day and getting our client deals done.
I cannot fully express my personal appreciation for their collective efforts.
Know that they are working harder than ever before, almost always with a smile
and in good cheer. Really amazing people. Public displays of affection, thank yous and other tokens of appreciation are being rightfully directed towards for hospital workers (my daughter, Jenna among them), grocery store employees and the deliverymen who are helping us get by.
The title companies – and most specifically – their closers are doing yeoman's work that is being grossly unrecognized. They really deserve our thanks and appreciation.
Different title companies have taken different approaches to
keeping their staffs, us attorneys and home buyers and sellers safe. Some have closed their physical offices
altogether and make buyers and sellers sign in advance or out on the street (OK,
in their cars, out on the street). Some are developing robust arrangements for
remote signings. Others not so much. Some still allow table closings. At least
a couple of the smaller agencies have stopped handling closings altogether and
are contracting to their underwriters to handle settlements.
Many recent closings have gone decidedly well. Quick, efficient,
pleasant. Still, too many closings going roughly. There are a lot of things that
can – and do – go wrong. Lawyers and lenders who do not answer their phones or
watch for closing related emails slow things down. Lenders deliver too many loan
packages at the last minute. Everything stalls while buyers try to review loan
documents via phone or video with their lawyers. We waste too much time waiting
for lenders to review signed documents and issue funding authorizations.
Lenders are still resisting the use of any of the several
emerging “flavors” of remote signings. The state, the title industry, the
lawyers and public at large all want to see this. The lenders are still
dragging their feet here. It is their money. They get to make the rules. I get
to grouse.
We expect closing processes to improve in the coming weeks. The
slow-down in new transactions will allow everyone more time to develop their
work-flows and everyone is gaining experience in the new working environment
and many are getting better. Title companies are holding up their end of the closing
bargain.
One notable disturbing trend in the closing process – while lenders
continue to prevent borrowers from signing loan documents remotely, at least one
national lender is actively discouraging borrowers giving powers of attorney to
let their lawyers sign loan documents for them. We like this approach as our
clients stay safe, at home, tasking actual document signings to us. We stay
closer to the title company officers and lenders to assure proper supervision
of the closing process. We think these closings are going the easiest and
clients are having the best experiences.
Instead, this lender is advocating curbside closings as its preferred
mode of operation. I don’t know about you, but I don’t treat my client’s loans
like fast food cheeseburgers and I just don’t like drive-through closings. At 6’2”
and 220 pounds, my Accord is great for transportation, but no place to sit and
comfortably sign 110 pages of lender paperwork. These may be necessary evils, but
they should be used only when absolutely necessary. Lenders who care about the customer
experience should really reconsider which is the lesser of the two evils here. Of
course, remote online notary would solve both these problems, but as we know,
this is not in the cards. At least now.
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