Written By Courtney Newton
One of the worst calls I get to make to a seller or buyer for a closing is to say it has been delayed. I had one such call this past week. The loan was being pulled for quality control. This caused my seller to go what does that mean? It is a good question. Lenders who are brokers that sell the loan immediately after closing have a process to guarantee that the loan can be sold as part of their lender guidelines. In an effort to control the quality, the run quality control. They will pull and make sure that everything lines up with the lender guidelines. This happens in let’s say 1 out of every 40 loans and is especially common in government loans such as VA and FHA.
How can you avoid quality control? The answer is simply it is luck of the draw and if you are randomly selected it is just your poor luck. How you can avoid the delay of closing is to have the lender work to get the package to the closing department as early as possible. 5 business days or more would be ideal. Lenders are sometimes working with 2-3 day minimums and if you have quality control done then guess what you are going to have to move closing.
What is the worst thing that can happen if your file is pulled for quality control? The worst would be you have to get re underwritten because something wasn’t done properly. This could create a significant delay, as much as a week. If you are working to close another house this could create significant issues.
Ways to avoid or limit exposure to situations like this is to work with a lender that is competent and reputable. We recommend a lender that is going to have the file done well before the 5 days so if there are quality control we never are impacted.
Quality control is a necessary evil as part of the lending process to protect the consumer and more importantly the institution purchasing the mortgage after the sale. It ensures that our lending processes are fair and concise.