(Source: By Donna Gehrke-White, Sun Sentinel, Fort Lauderdale, Fla. (MCT) - With more South Floridians competing against cash buyers for homes, some lenders are helping out, such as giving commitment letters to assure sellers that the loans will go through as long as homes appraise below the sales price.
Other banks are helping with closing costs, particularly for their South Florida customers refinancing loans already held by the lender.
“You want to keep your customers and not lose them,” said Malcolm Hollensteiner, director of retail lending sales at TD Bank Group.
He said his bank is now offering to modify loans to customers who have been paying on time without them having to go through an appraisal or a formal refinancing that involves closing costs. There is a fee — based on a percentage of the home loan — but it is cheaper than closing costs, Hollensteiner said.
Many South Floridians have recently swamped mortgage brokers as interest rates plunge to historic lows. The average 30-year fixed interest rate held at 3.66 percent this week, the same as it was last week when it fell to a new low, the secondary lender Freddie Mac said Thursday. Average interest rates on 15-year, fixed-rate mortgages dropped this week to match the record low of 2.94 percent, set earlier this month, according to Freddie Mac.
That has brought out customers: Adam Cohn, a senior mortgage banker at Deerfield Beach-based Main Street Financial, said he expected closings to be 50 percent more next month than in June, judging from the loans now being approved.
It’s helping that some lenders are giving commitment letters to assure sellers that the loan will go through, Cohn added. He said he recently was able to persuade a bank to accept a client’s bid on a short sale because he had a commitment letter from a lender. The bank had been holding out for a buyer to pay cash but the letter assured the seller that the transaction would go through as quickly as a cash purchase, Cohn said.
Michael Kodsi, CEO of Choice Mortgage Bank in Boca Raton, said he regularly gives commitment letters.
“As long as assets are verified, I’m comfortable with writing the commitment letter,” he said.
But there are two important caveats: The property must appraise at or below the sales price and would-be buyers keep their jobs, Kodsi said. Some sales have fallen through because people were laid off a day or two before closing, he said.
His bank will also try to cut closing costs for customers, he added. “Some banks are getting very aggressive so we have to follow suit,” Kodsi said.
Wells Fargo gives “pre approval priority buyer” letters once applicants’ income and assets are verified, said Brandon Watson, a Wells Fargo home sales manager.
“It really helps the home buyers assure a faster closing” to the sellers, he said. Just having buyers’ assets already checked speeds up the process, Watson added. But, like other lenders, the loan is contingent upon the home appraisal, Watson said.
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