Banker helps couple work through conditional loan commitment

Mortgage banker: Harry Sessa

Purchase price: $234,900

Loan amount: $227,853

Loan type: Conventional fixed

Backstory: Harry Sessa has been a mortgage banker for more than two decades. He has reviewed thousands of loan commitment letters many of which have “loan commitment conditions.”

Recently, Sessa received a referral from a Realtor in his area for two first-time home buyers seeking a conventional 3 percent down payment loan, a program offered by Sessa’s company, Citizens Bank.

Two weeks into the process, the commitment letter was issued. On the commitment letter, there were several items that had not been completed in time which needed to be addressed immediately. While the loan commitment letter did meet the date required on the purchase agreement for the financing contingency to be met, these outstanding conditions concerned not only the borrowers but also the Realtor who had referred the clients to Harry.

Some loan commitment conditions are considered “internal.” In this case, the final verification of employment document had not been received back from the borrowers current employer. It was summer and the Human Resources department of the employer was understaffed.

For the condition to be met, guidelines required the loan processor to rectify a second “external” condition centered around one particular bank statement that was needed to verify the deposit money being held by the Realtor.

Since the deposit check was drafted recently, the clients’ bank had been unable to provide verification the check had been deposited in time to meet the condition.

Fortunately in Sessa’s long experience, he had seen many situations like this. In this case, these two conditions were not considered to be critical and were met within two days of the formal contingency date. Sessa provided detailed explanations to his borrowers and informed the Realtor that he felt 100 percent certain it would be best to extend the loan commitment date by several days.

The attorney for the buyers spoke to the attorney for the sellers and all parties signed an addendum agreeing to a threeday extension of the commitment date.

Within the three days, both the statement from the bank where the deposit check was drawn and the verification of employment had been received. The loan was sent back to the closing department where it was determined to be “cleared to close.”

Final disclosure documents were issued and the loan closed on time.

Commitments with loan conditions are part of the process for many lenders and borrowers. It’s very important to work with a lender that is well aware of the contingency dates and does everything possible to reduce the number of conditions associated with a commitment letter.