Often conditions to satisfy come back from processing the file that take some time to resolve, such as supplying explanations of apparently derogatory items or legal papers clearing events that might jeopardize the lender if left unresolved. If the borrower takes several days to respond and supply explanations or missing documents, then 20 days won't work. If underwriting takes several days to clear conditions after the borrower timely responds, then, no, it won't work either.
Typically, underwriting takes only a couple of days or a few days to approve a file, but getting all the borrower's information into the file to submit to underwriting depends solely on the borrower. It can take a couple of days to supply the initial information and a few days to get approval. So, closing is possible. However, title commitment has to be ordered by the lender to submit with the file and title may not be done when the borrower has done his part.
Worse, the conditions that come back from underwriting or during processing can take several days, as mentioned. At the end of the month, the underwriting area is very congested. Usually about 80% of the business occurs during the last week of the month. Response times telescope from overnight at the start of the month, to a few days at the end of the month.
The contract is not the controlling document. Realtors often don't appreciate the lending process and put unrealistic timeframes in the contract. Some lenders take 40 days to underwrite, some 10. It makes a huge difference.
While approval is a gating item, documents still have to be drawn (generated by the lender's attorney typically) and handed off to title and then the title package approved by the lender, especially the figures. After signing, funding has to occur, too, which might be delayed if it's after the cutoff for wiring funds.
If you need more information on the whole process, you can see my view of the process from start to finish here: http://rowlett-realty.com/help/the-real-estate-process/
We ask our realtors to put 30 days on the contract.
Why was the contract written for 20 days?
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Lynn911 Dallas Realtor & Consultant
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