Beware of Mortgage Lenders from Out of State
Picking a mortgage lender can be hit or miss. As a real estate lawyer in Illinios, I can tell you that I deal with banks and mortgage brokers day in and day out, and the most difficult ones to work with are the ones from out of state. They aren't inherently bad, and probably do just fine when financing loans outside of the State of Illinios, but they just can't seem to understand the way we do things here. Granted, the process of buying or selling a home in the Chicago area is very different than it is in other parts of the country, and even downstate. We usually use the latest version of the Multi-Board Residential Real Estate Contract, which is a contract. This means that the buyer and the seller have to play by the rules contained in those 12 pages, or risk the legal consequences. A big part of the contract dictates various requirements when it comes to the buyer's financing, and mortgage lenders have to be intimately familiar with these rules. For example, the contract requires that buyers provide written evidence that has to come from the lender, confirming that the borrowers have signed something called a "Notice of Intent to Proceed"and that all application and appraisal fees have been paid. Without this, the seller can cancel the contract, and they will if they think that the buyer is not serious or if they get a better, irresistable offer on the property. Getting Illinois lenders to provide this document on time can be challenging, as it is a relatively new requirement, but asking an out of state lender to provide this is next to impossible. Last week, I kept hitting a wall in trying to get the Notice of Intent from a Missouri lender at a major bank. They kept sending me something different, even when I told them exactly what was required. We were able to work around it by agreement with seller's attorney, but the bank just couldn't provide this very straightforward document. Aside from not understanding our contractual requirements, out of state lenders tend to make odd requests that don't apply here, may interfere with the title work, and oftentime seem just plain confused. I am able to keep things in check for the most part, as I have been doing this for a long time and keep a very close eye on all my files (I don't rely on paralegals). However, these issues cause undue stress to the buyers and have the potential to hold up the closing date. That is not to say that buyers should never use out of state lenders, and I understand the desire to go with the best interest rate, but these are issues which all buyers should be aware of and should discuss with the lender, if they are considering using one based outside the State of Illinois.