Lenders' closing time targets shift over time depending on market conditions, and as such they tend to be a sign of the times.
Pre-crisis, for example, there was talk that technology could someday make a "three-day-close" possible.
But instead, post-crisis timeline targets turned out to be five to seven times as long in a best-case scenario, and even longer on average.
In 2014, for example, one wholesaler was promising it would be “ready to close" qualifying loans
Now, some home lenders have been retooling their operations with the aim of ideally closing within 21 days.
"We've been working on a 21 day close and in getting to that 21 day close, we've been looking at every step of the manufacturing process," said Alice Carmack, executive vice president of credit risk at Bay Area lender First Cal.
National retail lender CrossCountry Mortgage Inc. in Brecksville, Ohio, also has been training its staff to ideally close a purchase loan from application to funding within 21 days, said Chief Operating Officer Jodi Hall.
"When you look at contracts, they are typically written for 30 days. Many of them have gone out to 45 and 60 day contracts because of the long turn times that have occurred within the industry," noted Hall. "If you can deliver well ahead of a 30 day contract it's very attractive to our Realtor partners and customers. That is the best practice."
Differences between the current 21-day target and the 15-day closing guarantee identified three years ago reflect changes in the market since 2014.
The 15-day close came with the promise the lender in question would apply a $500 closing cost credit to the loan at closing if the targeted time wasn't met, but the 21-day-close ideal doesn't include any promises.
"We don't guarantee the 21-day turn time because there are so many things that play into a guarantee," Hall said.
Closing times for purchase loans averaged 47 days in 2016, according to information origination system provider Ellie Mae gets from its users. Even the conventional loans that are usually the easiest to close, the average timeline is just two days shorter. So a 21-day close is clearly not always possible.
"It's nice to talk about," said Brian Vieaux, a senior vice president in Flagstar Bank's wholesale and correspondent lending division. But it's not a practical reality because factors beyond lenders' control exist, and that lack of control means some lenders find it impractical to have a specific closing target, he said.
However, other lenders believe such goal setting is helpful because while they can't guarantee a 21-day-close, they believe they can get closer to one more often by trying to control for some factors. CrossCountry gets borrowers committed to the timeline upfront.
"One of the first things that we coach our loan officers on, in terms of their engagement with the borrower, is to explain our loan process and turn times," Hall said. "If the borrower commits, we can often close their loan in 21 days or less."
But even if the borrower commits to the process, are other hurdles delaying timelines.
Among the most notable are appraisals, a traditional wild card in the mortgage process. An
Appraisals are "much less predictable than title, credit or other parts of the process," he said.
But all those other components factor into the timeline as well.
Other aspects of the process that limit the degree to which closing times can be reduced include integrated disclosures required to be sent to consumers ahead of closing under the Truth in Lending and Real Estate Settlement Procedures acts.
The volume of loans in the market at any given time also is a big driver of closing time changes. While on average the closing time for loans hasn't varied too much in the last three to five years, one of the times it did a little was in 2014 when volumes were lower, said Jonathan Corr, president and chief executive officer of Ellie Mae.
"Lenders could eventually bring their closing times down under 30 days if they embrace technology and do everything perfectly," said Corr. "Maybe you could even get it down to a couple of weeks."
