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Loan officers cast serious doubt on latest loanDepot, Chase mortgage promises

"More marketing schtick!"

In recent LendingLife news, loanDepot announced its new digital mortgage, which it says can identify significant time and cost-savings for borrowers in seven minutes.

The lender claims its digital mortgage, mello smartloan, can now close a loan in just eight days.  And, loanDepot is not alone in launching a new lending product promising big results. Chase Home Lending now claims it can close on a borrower’s mortgage in as little as three weeks.

Chase announced recently that it is rolling out a program called “Closing Guarantee” for its existing customers. Through the program, the bank promises to close a mortgage in 21 days, and if the bank doesn’t close on the loan in the timeframe, it will pay the borrower $1,000.

The program is available to Chase customers who have a checking account, credit card, or car loan with the bank. Customers must also be using Chase as their mortgage lender. The 21-day closing guarantee window begins when the prospective borrower completes their mortgage application with Chase.

So how did regular loan officers react to the news?

LendingLife readers were quick to email in their responses; and none of the opinions were positive.

Here's a sample of some of those comments.

One broker called BS on the quick closing time promises:

More marketing schtick! I’ve been originating loans for over 33 years. In that time I’ve moved 4 times. With two dogs, a teenager, a working spouse and a very busy life, I can’t imagine why anyone would want to even think about moving in 21 days, much less 8! Every originator and Realtor knows when human beings are in the process of buying a home and moving they go from a rational level headed existence to an emotional roller coaster. We leave the tea-cup ride at Disney and head directly to Space Mountain. Now we want to suggest they do so and bring all their belongings with them? I tell Realtors all the time. Schedule a 45 day close and be prepared for the smoothest transaction, great results, happy clients and future referrals. I can close in two weeks now. It’s a carnival show every time. The homebuyers and sellers are stressed not so much do to the process, but due to compressing their lives into a ridiculous window of time. Hell it takes me a couple of days to find my car keys sometimes, you want me to move my family in 8?? Thanks but uh, no.

Another agreed:

In 1992, I closed $7,000,000 a month in north Texas . I had billboards along the toll road in Dallas that read:  loan app to closing-10 days.  And e did this with full paper processing.  So to see the crap they come out with today is a joke.  

Why can’t they get it done in 10 days? Management thought they were smart by having a processor process 50 files at a time to save the salary of adding another processor. I had 20 files per processor and a dedicated copy person for the processors to use.  Title companies delivered title work to me in 3-5 days,  surveys were ordered up front, my appraiser delivered our appraisals within 5 days, my wholesaler would underwrite file and omit at the same time. Approval within 7 days, docs drawn and funds ordered and to title company by day 9.

A third questioned the extent of the usefulness of the products:

Virtual VS real world seems to be all the buzz for sure. 

I think it’s a combination of everything. If I back into our current turntimes from the closing date we are at 8 days as well. Now enter 3rd party vendors. How does Loan Depot control VA appraisal turntimes? Oh, that’s right they can’t! 

I have no doubt that efficiencies with the blend of digital infrastructure has helped or industry tremendously, but I think it will depend significantly on a small parameter of buyers E.g; W2 high FICO VS self employed with 10 rentals. 

Again, Chase is focusing on the small pocket of buyers and products it services well, not government loans. 

Just my opinion but seems a majority are trying to create the best mortgage for the “best buyer.” As for organizations like ours, there are more buyers that don’t fit that model than there are those that do. 

As a bonus, here’s a fourth opinion on the news from a loan officer, who calls these claims as overall “misleading marketing” by "Large Banks and Large Lenders":

1. The marketing of saving thousands without full disclosure, or an APR. The costs you will pay and how long it will take to start saving money after your expenses. Rates are at historical lows?? 

2. The marketing of a no closing cost mortgage. This is one of the biggest misleading ads. They don't say your interest rate is inflated and higher then the rate you qualify for. The higher rate pays for closing costs. Plus they don't specify what closing costs are and what pre-pays are. The consumers are misled assuming they don't have to pay for nothing.

4. Large Banks that offer better rates and costs if they move their portfolio to their bank and or open certain accounts. If your offering loans for mortgages, it should be the same for all applicants who qualify for the same type of loan.

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