With mortgage rates astonishingly low, mortgage brokers have found themselves in a miniature boom. But their refinance customers are finding they are unable to take advantage of the lowest rates.

That’s because those bargains are offered from lenders in the form of a 30-day rate lock, but the mortgage pipelines are so clogged nothing is getting completed in that amount of time.

Volume is high, underwriting standards have tightened significantly, and the major lenders have slashed their administrative staffs, all leading to a volatile process where turnaround times are anyone’s guess.

“You’re just looking at an industry that is much more congested than it ever was,” said Amy Tierce, president of New England Fairway Mortgage in Needham. “No matter how well run your operation is, there is still a lot of congestion all the way across the lines. Getting things closed is just getting harder and harder.”

Tierce has told her brokers to avoid the 30-day locks altogether, and to be skeptical of 45-day locks. Otherwise, having to pay the rate extension fee isn’t a risk – it’s a likelihood. And while the fee is a small percentage of the loan amount, it’s paid each day past the original lock and can quickly add up.

Even with a low volume of purchases and originations, those loans can just barely be closed in 30 days with the lowest rates.

“I can do a quick close on a purchase, because I’ve put all the weight of the company behind me to get it done,” Tierce said. “We have prioritized [for that] here in our branch.”

Refi Roadblocks

One of the grand frustrations for mortgage brokers is the quagmire behind the ongoing rate adjustment. Rates are dropping in an attempt to spur growth in the housing market, but the flood of refi applications gums up the works every time rates dip.

“If there is a little drop in the rates, and there is a ton of locks that day, [lenders] just can’t handle it,” said Kathy Phillips, vice president of Walden Mortgage in Concord. “If they can’t handle the volume, they raise rates, just to slow the volume down.

“If rates went down [more permanently], it would be a thousand times worse,” Phillips said. “It would be a thousand times more frustrating because we wouldn’t be able to lock anything.”

Both Tierce and Phillips said lenders’ staffing cuts have shattered their ability to process loans with any consistency.

“Underwriting can take eight to10 business days now,” said Tierce. “We used to get it done in 24 hours. For [conforming jumbo loan mortgages], you can count on a solid 20 business days.”

“They don’t have the staff, and they keep hiring temp workers, so these are underwriters who don’t have the level of subjectivity and experience to look at a loan file,” Phillips said. “We don’t have a huge volume here [at Walden Mortgage]. We’re a small shop. [Our loans are] simple, good, straight forward loans that don’t need a lot of work, and they can’t get them closed in 45 days. I don’t know what’s going to create a change, other than increasing the staffing at the banks.”

No More Rubber Stamps

On top of their reduced staffing, lenders have increased the scrutiny that each loan application faces, which only multiplies the delays.

“A few years ago, this was easy, because no one was paying much attention to anything,” Tierce said. “But now everyone is looking a lot closer. No one is just rubber stamping files.”

Jumana Bauwens, a spokesperson for Bank of America, acknowledged the mortgage pipeline was slowed due to volume, and said the mega-bank’s staffing has followed the same trends as the rest of the mortgage business.

“Obviously in the last two years the whole mortgage industry contracted, and there has been less staff,” said Bauwens.

Bauwens said one advantage to being so huge is when the company identifies a lagging area of business they can transfer personnel internally to cover that sector quickly. She said Bank of America had transferred 300 employees from home equity processing to the mortgage refinance processing to handle the increase in volume.

As far as tighter underwriting is concerned, she said the new standards were better for everyone involved in the process, from bank to buyer to broker.

“We want to ensure that these refinances will allow our customers to be successful homeowners … in the short term as well as the long term,” she said.