The Risks of Using a Large Bank Such as Citizens Bank For Your Mortgage
It is exciting when you are about to purchase a home and even more exciting when you get that sales contract back signed by the seller! The house is yours! Now you have to begin your mortgage process. You might think that the best option is the large banks that you are familiar with such as Bank of America, Wells Fargo or a bank that you have your checking account with such as Citizens Bank or PNC Bank. What else should you do? Go to Lending Tree?
This is where you really need to trust your Realtor in terms of which local mortgage company has the best service, who stays on top of their loans and who makes sure your loan will close on time. There is substantial risk if your mortgage company falls behind in the processing and underwriting of the mortgage. If your mortgage company cannot produce the mortgage commitment by the date that it is due or be ready to perform by the settlement date, the seller can terminate the agreement and your dream home is poof - gone due to incompetence.
We have found that the best local mortgage companies in Philadelphia are the ones that have underwriting in-house or local. That means the loan does not need to be shipped to a different state to be reviewed by someone else who is not familiar with the Philadelphia market. This can be important if a repair issue comes up on an appraisal where an underwriter may need to make an exception for properties "common to the area". If an underwriter is in a different state, that will never happen. For example, all of Citizens Bank underwriting is out of Rhode Island. A repair issue came up on a crawl space in the basement where in discussions with the below banks, the repair would have been waived. In this case, it was not and it cost the buyer an extra $1,500 for a repair that was not necessary.
So usiing that example, I will pick on Citizens Bank for a moment where I just had a loan close 5 weeks after the settlement date due to a whole series of debacles. I went on Facebook and asked if anyone else was experiencing delays (of course I knew the answer already):
Jamie: This is very helpful information Chris. Thank you so much for sharing! I am working w/a Buyer who is insistent upon using them and I have experienced nightmarish situations with their underwriting as well.
Ryan: I was fortunate to close my deal with Citizens, but the process was a nightmare. My clients went to a local branch to get approved, but after that we never dealt with that loan officer. We were pushed to a lady in Rhode Island and it was just an all around bad experience.
Tom Tommy Mortgages Mellett: They use to be pretty decent but I've been hearing quite a few horror stories out of them lately. A lot of lenders have operation centers in other places, not the end of the world if there is communication between the local person (loan officer) and the ops center. But when there isn't, it's a nightmare.
Dave: I could tell you a horror story about Wells Fargo, Mortgage and Bank.
Ken Krauter: I had a Citizen's Bank loan cause a two week delay just last Thursday due to underwriting problems; they do not have the infrastructure to handle purchase-loans...terrible service!
Mark: Having a devil of a time with Citizens underwriting for one of my buyer clients. I warned her strenuously about it.
Not great feedback...
So what is a buyer to do?
My recommendation in Philadelphis is to go with one of the 5 mortgage companies/banks below:
- Cardinal Financial
- Boulevard Mortgage
- Allied Mortgage
- Trident Mortgage
- 3rd Federal Bank
The main difference is that the mortgage loan officer is a 100 percent professional that works at these companies, knows the product inside and out, and most importantly, the underwriting of the loan is done LOCALLY, not shipped 6 states away or worse, to a different time zone. Or the bank is just too big, your loan is sitting at the bottom of the pile. You deserve better than that.
It is also important to note that none of the recommended banks required ANY bail-out money!
There are many other good local mortgage companies too that I might be leaving out, and other large bad mortgage companies too.
Overall, of course there are a lot of opinions on this. Ours comes from dealing with A LOT of buyers and sellers over the course of the last 2 years. Our team alone sold 172 houses in 2011.
What are your thoughts?