It's happened to me too many times to count now. When buyers come to Hawaii from the mainland, they often want to use the lender they are familiar with from their home state. Some want to use a lender they found on the internet.
Nearly every time I have worked with a lender from mainland, something has gone wrong. The last time was a purchase of $775k in Kaneohe, a beautiful tropical retreat purchased by a great young couple from the mainland. Their lender, who happened to be from New York and worked for a big lender, delayed the escrow by 2 weeks. Then he proceeded to yell and curse at my escrow officer here in Hawaii. Why?
Because the lender didn't know that Hawaii recordings in Land Court require full names, not middle initials. The lender sent over the loan documents with the middle initial instead of full name, so we had to get the loan docs redone. It was a nightmere, because the buyers were ready to move in and had the moving company all scheduled.
Another buyer of mine found their lender online from did-it mortgage, which probably doesn't even exist anymore. The buyer was purchasing a great fixer upper in Hawaii Kai for only $725k, which was a great bargain since homes there in Kamehame ridge were selling for over a million dollars.
With 1 week left in the escrow, the lender told the buyer that they couldn't get him the rate they quoted because the debt raitios were too high. Uh.... are you kidding me? His debt ratio didn't change during escrow did it? We changed lenders and used Amy Benga here in Honolulu who swooped in and rescued the escrow with just days left. She was awesome.
There are many things about Hawaii real estate that are unique to Hawaii, and most mainland lenders don't know all these rules. If they miss just one, it could cost you the entire deal. For instance, do mainland lenders know that in Hawaii the recordation of the title is different based on which system it's recorded in? No, most don't know that we even have 2 systems.
I work with some great lenders here in Honolulu so if you are going to buy real estate here, you should work with a Hawaii lender. Besides, we often have lower rates in Hawaii than the mainland. I saw a Wells Fargo rate sheet that showed the rates from here and mainland and ours were about 0.125% lower!