No "clear to close" even with commitment letter

Asked by Remo, New York, NY Fri Oct 5, 2012

I am on here today because my husband already received a Commitment letter about 3 weeks ago. He has simply been waiting on a "clear to close" which two weeks ago we were told we would receive the following week. We even got confirmation to contact the bank attorney to set up a closing date. Because of this our attorney contacted the seller's attorney to make arrangements for her to come to NY from Georgia for the closing.

Now he has been asked to hand in additional paper work even though this was already supplied to the bank. We got all info to the bank but now the underwriters still need to review the file before giving us a "clear to close". Is this a natural process? From our understanding, once you have received a commitment letter, this means that the bank needs to honor it but now if our file needs to be reviewed we are worried we may not close even though they have had all necessary info for the past 3 months.

Please help

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9
Michael Rich…, , New York, NY
Mon Oct 8, 2012
BEST ANSWER
Receiving a commitment letter starts you on the road to closing. Almost every commitment letter contains conditions that must be met before a closing can occur. For instance, a title report must be provided to the lender and reviewed to see if there are any issues with the property that need to be resolved. Most attorneys do not order a title report until a contract is signed and loan commitment is received by their client to save their client the expense of paying for a search on a property that they will not close on. In addition, in the current financial environment, the lender will constantly update the borrower's file upto and including the closing date. Any new information received causes the filr to be sent back to underwriting.

Michael Richman
Licensed Real Estate Associate Broker
Bellmarc Brokerage, Ltd.
681 Lexington Avenue
New York, NY 10022
Phone 212-688-8530 x223 Cell 917-991-2528 Fax 212-758-7495
Email mrichman@bellmarc.com
1 vote
Christopher…, Agent, Tarrytown, NY
Sat Oct 6, 2012
Hi, Unfortunately you are at the mercy of whatever lending institution you have chosen. Believe it or not a commitement letter isn't always final if it has conditions attached, even then the bank can deny the loan. At times the banks are verifying your info up to the very last minute because in the past buyers have quit jobs, damaged their credit, etc.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
William Raveis Legends Realty Group
914.406.9023
1 vote
Janet Nation,…, Agent, Baldwin, NY
Fri Oct 5, 2012
Sfss you clearly have not been given adequate guidance of the process. I can go on and on but it's too much.

Are you sure your attorney received an official clear to close?

No the bank does not need to honor a commitment letter. A commitment letter is basically saying they will lend your husband the money providing he satisfies certain contingencies, and the contingencies will vary slightly for everyone. Honestly sometimes they loose stuff or need updates. Also look at it another way, lets say a judgement suddenly appeared on your husband's credit report, just because the lender gave him a commitment prior, they certainly would not allow him to close unless that judgement is satisfied.

I wouldn't worry too much about it, it does seem like the poor seller made a trip prematurely though, it's routine like, your husband is still going through the process, the lender is dotting their i's and crossing their t's.

All the best.
1 vote
Bill, , Southampton, NY
Wed Oct 10, 2012
A commitment letter is an approval of the the requested loan terms based on income assets and credit, usually there are some conditions that still need to be met, IE: title, insurance, verbal verification of employment etc. Very natural process. The seller can use a power of attorney so they do not need to travel to NY.
0 votes
Jolie Muss, , Upper West Side, New York, NY
Wed Oct 10, 2012
An experienced NYC real estate attorney should know how this works. Also your agent and/or broker should be able to assist you with this issue. Sometimes they need updated insurance information from the building manager, sometimes they need updated financial information from the buyer or the building.There was a similar situation with a coop a buyer recently bought through me and I had to stay on top of the everyone involved and the whole process and finally even had to contact the Bank's corporate Department via twitter so that we could close before the seller’s attorney broke the contract..
I do hope it all works out for you.! Best wishes
Jolie Muss
Licensed Real Estate Broker & Brokerage
"The Upper West Side's Buyer Broker"
331 Columbus Avenue, New York, NY 10023
Office: 212 721-3301 Email: broker@joliemuss.com
Website: http://joliemuss.com Trulia: http://www.trulia.com/profile/jolie
Twitter: http://www.twitter.com/jojomuss LinkedIn: http://www.linkedin.com/in/joliemuss
0 votes
James Furlong, Agent, Brookline, MA
Fri Oct 5, 2012
It does take a strangely long time sometimes. You have to provide again info already provided. It has gone from a situation of "lets rush it through" to lets double and triple check.. It is the times we live in. We just need to be patient and live through it. It complicates lives and interrupts schedules but home ownership is worth it in the end.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Fri Oct 5, 2012
Consult with your loan officer; ask for any necessary clarifications that may be causing the delay.....
0 votes
Annette Levi…, , New York, NY
Fri Oct 5, 2012
You only get a confirmation to contact the bank attorney when you receive a "clear to close". What often happens that after you receive the commitment (which always asks for more documents) questions arise. They can be anywhere from page 5 of your bank statement is missing (needed even if it is blank) to what is this deposit.
At this point you need to speak to your loan officer to see what the problem is.
0 votes
Elena Ravich,…, Agent, New York City, NY
Fri Oct 5, 2012
This is pretty typical that bank's underwriters request additional documents in order to give clearance to close. It has nothing to do with commitment letter. Once the underwriters receive every single item they asked for they will take 48 to 74 hours to clear. You cannot schedule a closing until the bank confirmed to their attorney that they are good to go and ready to schedule a closing. I had experience with M& T bank where we could not cloase because the bank requested my client and the seller to initial every page of the sales contract and give them a number of additional documents from the buyer and the management company that weren't typical to issue prior to closing but all of that had to be done. At least these days banks give loans, while just a year ago it was virtually impossible to get financing at all.
0 votes
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