Georgia FHA Home Loans - (& Opinion)

I am only telling my buyers to use my mortgage broker and stay away from the direct lenders....they are the ones who don't care and can't close.

I love this. 

At the risk of generating outrage at the hands of every loan officer on ActiveRain, when I have a ratified contract in hand and it's time to select a mortgage company, I do the shopping for my buyers. 

Of course, I've already become very familiar with what my buyers can do and shopping their loan with trusted loan officers is better when the person doing the shopping, me, knows what's going on. 

It's like touring new home builders.  I've had buyers tell me that they hear something completely when they tour with me than they hear when visiting builders by themselves. 

This business is so much fun.  We all turn into amateur psychologists and learn to really listen.  I can easily tell when a loan officer or new home salesperson is blowing smoke.  Buyers rarely can.

It is amazing that some loan officers will tell you what you want to hear and later come back with the bad news. this don't help a seller who could have sold their home a few more times.

 

I just opened escrow on an REO purchase. I appreciated the frankness of the lender who told me he CANNOT close in 30 days. With the new appraisal laws in place, appraisals are taking longer and often times appraisers from other islands are being hired to appraise hire. (that's totally ridicuours). And, underwriters are saying at least 10 business days, which is really two weeks right. So in Hawaii 45 days is the minimum. I'm glad the lender told me straight. Now i just need to get the bank to agree and amend their REO addendum.

Ken-  You know how many times I have written this blog in my head?? LOL...Nice job, and a deserved feature!  As to Lenn's comment..I am a Lender, and I have no problem with your comment at ALL!  It is up to us to earn your business, and become one of those people you would shop for YOUR buyers!  Many 1st time buyers TRULY do need aguidance.  I see NOTHING wrong with that.  Shame on me for NOT earning YOUR business.

As to the rest of this blog...how many other questions could you add Ken?  Like..

Do you have any idea what your credit score is?
Are you using the "cash out" money for a divorce

How much do you owe & to whom?  Do you have any other mortgages on the property!

JUST TODAY< I received titlework on a buy/sell with a 3000 dollar 2nd mortgage on it!  What is that??  Glad I can read title!  LOL

Again, well put!  You need to add your cartoon graphics ken my boy!!

D-Money

aka;  Bucky

Ken,

As a Realtor selling Ventura homes for two decades, I loved this post. I cringe when my buyers are excited about a loan they found online or somewhere states away so I try educate them in advance or it's a recipe for disaster.

I always recommend a local lender although there are some of those whose performance is egregious at best. I've pulled a loan at the last minute and never looked back when our buyers went to sign docs and saw the loan cost had tripled from the original good faith estimate. This lender had the unmitigated gall to call me and ask me "what the &%$# do you think you're doing" and "You can't pull this loan now", to which I said "watch me now".

We turned the package over to my favorite local lender who closed it in eleven days. Sadly, the original guy is still in business, but most avoid him like the plague! 

Ken - This is one of the best featured posts !  So right on and so true.  We just had one of our buyers settle on a deal that we told her countless times to run away.  She trusted "her friend" who whacked her 5 points and had a 1/2 point yield spread on a FHA loan.  This was on a $175K house so you do the math.  It was painful looking at the settlement sheet.  At the end of the day, we always recommend a local trusted mortgage pro we have had success with, but often times like you said people are looking for "the best rates" and get suckered in and eventually bait and switched.  On a positive note, we have caught this many times and have pulled the loan in enough time to save other buyers thousands of dollars.  Great post !

 

Loan officers...GRRRRR

NICE POST...

 

Keep up the good work.

Ken: Thanks for being transparent. Those loan officers who are usually win in the end!

Karen - thanks for your comments!

Lenn - For that very reason we must be honest, of highest integrity and knowledgeable - the BUYERS. They count more than we do. Now if I just had some Georgia and Florida agents who could ... :)

Roland - we have to condition agents and buyers to hearing the truth. Problem is that is not going to happen. I've had more than one agent tell me I must really stink at my job because I could get "their" loan closed. Oh well, I just speak the truth and if the people hearing don't want to accept it ... so sad! (Not)

Ronnie - this HVCC is a joke and has put the lockdown on many deals. It is a major sign of political blow hardedness of the politicians and political appointees giving the appearance of doing something to "protect the electorate". FAIL!

D-Money - "Are you using the "cash out" money for a divorce" LOL, you're nuts. For a divorce- haha.

Lynn - I hear you and feel it, too! In defense of some, though, I will say I have had a few battles with agents over the years - INCLUDING one who worked for me on the RE side - fouling the water for no good reason except the other loan officer bought them lunch or sent them a little pack of magnets.

los Somers - Friends are KILLERS far too often. I had a client just dissappear. I had her pre-approved (at 4.75 with no discount) on an FHA streamline. She wouldn't return my emails or phone calls. I finally called her from another office and she picked up. She said she was in a meeting and would call me right back, which I knew was a lie. Why would she answer if she was in a meeting? Last week I got a call from a new broker in town wanting me to transfer the FHA casefile ID. I said, "Not a problem, did she end up getting the rate she wanted?" Sometimes you aske the right question, "Yes we got her a 5.375". So I emailed the customer and asked if it was okay to release the casefile ID to this guy (who returns in a Google search as an appraiser) and she said, "sure, that's my friend who helped me." DID YOU READ THE PAPERS YOU DIMWIT???

My favorite email

 

"What's your rate on 30yr fixed?"

Usually gets deleted

 

Hi Ken,  Yours is a very well written post.  I have great trust in the lenders I work with and they bring a lot of integrity to the business.

I love Tom Burns' comment. 

It is like the e-mail I get that says.  "Send me everything you have on homes in Montgomery County".

No price range.  No listing number.  No phone number. 

DELETE!

Ken,

Love it because it seems to happen on a few of the listings I have had...they always lie and say everything is fine...losers! I had one who was calling me back everyday after I had to take a jackhammer to his phone just to get him to answer and the buyer wasn't even my client!. I couldn't get the buyers agent to get anything done and in the end found out they needed more time due to a credit problem they had when they told me they knew a month earlier that they had two auto payments that were late and that they were going to repair their credit. I asked them why I'm being told now...they blamed the buyers agent and said they had no liability and weren't a party to the contract...yadaydayada...heard that a million time..not a party to the contract well then we shouldn't have contracts that state that the agents and the buyers give the LO or MB authority to keep the seller and listing agent informed..I wonder if they ever read that clause and tell their clients that they have nothing to do with it....I doubt that at all. pass the buck and just another excuse to lay the blame. It ends up hurting all parties accept the mortgage end.

Ken, What can I say....my deal really sucked. It was actually the only pending listing I had that wasn't a short sale. What's really funny is the agent sent me an email after you and I conversed saying she found a lender that could do the deal!!!! Sure she did!!!

You are so right, I really like to work with loan officers I can trust and I encourage my clients to work with them.  Now it is more important than ever.

Part of my job is to give my buyers a choice of trusted lenders. Where my biggest problem come in is when a buyer for my listings switches lenders, agent doesn't inform me, and turns out the Lo is a friend of a friends second cousin. Those usually fall apart.

Ken,

Get out of my head.  Your post covers everything I have been thinking for years now.  It's absurd what some people will quote just to "bait" the customer in knowing full well they'll pull the "switch" later in the transaction.  Unfortunately it happens all the time.

I had client tell me he was able to get a WAY better deal from someone else so I asked him what this great deal was.  After I informed him that this way better deal wasn't even possible he was curious why I was so sure it wasn't.  I told him to call this lender and tell them that he wanted to lock in at the rate and terms he was being quoted.  Well guess what, he ended up staying with me and we closed the loan with the original terms that I quoted to him.

I work for a large bank that lends in all 50 states and I have saved clients of mine from local lenders conducting themselves in the same manner.  Not all of us large lenders are thieving crooks out to take advantage of our clients. I deplore this type of behavior.

Where I work we get Lending Tree leads.  Wow, what an eye opener.  I'm quoting real terms, par pricing and zero discounts and everyone is telling me that I am getting beat.  I requested to see the GFE of these lenders who were "beating" me and the stuff people are quoting is downright shameful.  You're right about how important is for us to educate and inform our clients about this type of behavior. 

All one can do is continue to conduct themselves ethically, be honest, and you'll prevail in the end.  Great post.

Ken: I guess I had the greatest training in the world because that is how they play the game in the car business.

Dealers: Lie like crazy, just don't let the customer walk off the lot/get off the phone.

Car buyer: Call every dealer in the state, get the lowest bid, go into that dealership to get "the lowest price ever". If the price is higher when  you get there, well, what the heck? They are already there and usually they just go through with it and buy the car.

So the one that tells the biggest lie gets the business. Not the one that told the truth or gave the best service. No wonder the game perpetuates itself!

I flat out refused to play the game and was willing to let people walk. I still feel that way in the mortgage business. Call me smug, but I am not interested in appealing to the ULTIMATE PRICE SHOPPER.

They are going to get what they deserve. And rarely is it going to be the best deal.

 

Many buyers can't see beyond the rates, they just don't know any better.

Rates is ALL they think of.

That's why they need GFE's .

 

Ken,

I wish more mortgage folks told me what I needed to hear instead of what the buyers or I hoped. Fabulous, fabulous post!

Good post today, thanks for getting it out to AR memebers.

Patricia

good blog, buddy.  the rate game will be the death of me someday.  good thing i'm only 34 :)  

I remember the day when a gubment regulator called to say they were going to fine me a thousand dollars because my address wasn't listed in a print ad (mistake on the publications part).  RIGHT NEXT to my ad was another for pay-option ARM's advertising a "rate" of 1.95%.  kinda like a cop writing a ticket for a busted tail light while a triple homicide is happening ten feet away.  true, those programs may be ancient history, but the misleading advertising continues.  just google "lowest mortgage rates" and you'll get an eyeful.  great rates, but they kinda hide the fact that you'll need an 800 FICO, 20% down on a 10 year mortgage and it'll cost you 4 discount points.  oh, and you have to live in Florida.  Great deal for those people, not so good for the other 99.99% of folks that missed that fine print...

"Many buyers can't see beyond the rates, they just don't know any better. Rates is ALL they think of. That's why they need GFE's."

You are correct in that many buyers are rate shoppers. And, they don't know any better. But it's not their fault (to a point). They don't do this every day. But, they're always looking for that one magical loan officer who can offer the absolute lowest rate and fees.

Lenders providing good faith estimates (GFEs) won't solve the problem. Many loan officers deliberately low-ball their GFEs to entice you to do business with them. And when your fees and/or interest rate suddenly increases right before closing, they'll tell you "well, it was just an estimate." They'll tell you the operative word is "estimate."

Baloney. The operative words are "good faith." Loan officers are in the business to make loans. For any given rate and loan program, they should know what THEIR fees are, and they should disclose them honestly and to the penny. There's no reason to "estimate" their own fees. And they SHOULD have a very good handle on what the typical third party fees are including appraisal fees, attorney fees, title and title related fees, settlement fees, and government "hands in your pocket" fees are as well as how much is needed for prepaid interest and escrows for taxes and insurance.

Do you want to know how many times I've heard "Well, your fees are higher than Lender B's fees." Or, "I have a quote for a rate that is much lower than yours." And they could very well have. But what they don't (and won't!) tell me is that they got that GFE 3 weeks ago when rates were 1/2 a point lower! Or the rate they have is for a 5/1 ARM while they're asking you for a rate for a 30 year fixed. And they keep searching for "that better deal."

Well, Mr. and Mrs. Buyer, not to be crass, but when you get hit with higher fees and/or a higher rate at settlement, that's what you get for "rate shopping." Instead, you should sit down with an ethical loan officer who will review all of your information before providing you a true rate quote.

Before a loan officer provides a "good" good faith estimate, he or she needs some very pertinent information - information such as the type of property, how the property will be used, and your credit are all very important. If you're purchasing a home, I need to know the purchase price, the loan amount, and where that money came from that you will be using for a down payment. If you're refinancing a mortgage, I need to know if it's a rate term refinance of if you're taking cash out. I also want to know how you arrived at the value you tell me you think your home is worth. And there are a number of other questions I will need answer to.

If you're not willing to discuss your particular situation before you ask "what's your rate," then you get what you deserve. If all you're going to do is rate shop, then please, keep shopping. My less-than-ethical competitor is right down the street.

WHAT ARE YOUR RATES?!

This is why I have worked with the same Mortgage Professional for the past 6 years now. He is honest and works hard for my clients. If anyone can get them to settlement, he can. The deals that are going south are the ones where the buyer insisted on using BofA, for example, or Wells Fargo. Anyone can do a mortgage when times are easy, but only a mortgage professional that cares about both the buyers and you the agent will do what it takes today.

Remember.  A majority of this will all go away starting Aug 1st.   There will be certain timelines that EVERYONE has to follow regarding changes in T-I-L's, rates, collecting fees, appraisals, etc. etc.   Starting Aug 1st, everyone plays on the same field.   Should be interesting.

1 other quick comment.  I work with realtors, and clients all over the country. I somewhat disagree that your lender needs to be local. So if you are buying a property in Mpls, MN and the lender is in Mpls, MN, does this mean that none of this happens?  Of course not. 

The problem is loan officers are not honest, if you are completley honest up front nothing can come back to haunt you.

Ken,

As an exclusive buyer's broker who has saved buyers hundreds of thousands of dollars in lender fees over the years and has taught mortgage shopping and negotiation to other buying professionals, you are on the right track.

When optimizing a mortgage loan the first criteria is speaking to a credible lender. Credible being defined as: A lender who has made promises and kept their promises for consumers either the buyer knows personally or that we know personally.

In Ann Arbor we are blessed with many credible lenders and through our history we've been able to work with a number of credible national lenders.

And, it doesn't hurt if you know the lender will suffer and the lender knows they will suffer if they don't hold true to their commitments.

But the point is, if it isn't a credible lender there is no point in comparing their rates and fees. There are no "RESPA police" and anybody can publish anything on the internet.

Great post!

 

And for everybody else - you need to know that lenders can lie on the GFE forms. The GFE is not enough to compare if you don't know how to strip away the fees that are not lender controlled. DO NOT just compare the bottom line on the GFE or you will cost your buyers money.

Ken, if you've ever composed a list of questions borrowers should be asking their loan officer, besides what's your rate, I'd love to see it.

I will make your post available to all my new buyer clients. I can 'talk real estate' and answer very clearly why and how we do or don't do things, but get tongue-tied explaining why rate isn't the only thing to consider on a loan. Now, I've got your post to help!

Ken, I'm going to play a bit of a Devil's advocate, not becasue I am a Mortgage Broker/Banker and  a Realtor, but becasue I both agree and disagree with you.  One of the best indicators is how muc experience does that Loan Officer have?  Does he/she return your call back promptly?  As you stated previously, there are many variables when dealing with interest rates.  When some calls up simply asking, "What are your rates?"  I can't in good faith simply give them a quote as to what my rates are becasue of the factors involved like, credit. loan size, loan to value, owner occupied, non-owner occupied,  loan type (FHA/VA/CONVENTIONAL) cash out, no cash out?  ALL of these factors effect what the end rate will be.  Unfortunately almost all buyers and most Realtors do not know this.  So the loan officer looks like there "fishihg" or just trying to real the client in.  What I basically do is this, I will give them a range from the lowest rate to the highest rate and let them know the factors involved when giving a rate.  On the other hand, I also know when the client has gotten missinformation when they tell me that so an so gave me a rate of 4.25% an no closing cost.  As you stated before, Everyone gets paid.  There are LO's that will lie simply to try and get the deal.  Those are the ones I blacklist and never deal with again.  As the saying goes, honesty is the best policy.

We are lucky to have a lot of great agent referral partners in my local area.  I like to think we have earned the right to have them refer their clients to us, & not becuase we have the lowest rate or fees, but because we tell it like it is, we close on time, & we communicate.  Sure we lose some deals to the liars around the corner.  That's ok, at least the loans we originate always close, & our reputation is stellar.  We're direct lenders, & to be honest, I don't see how a broker could promise anyone ANYTHING these days, since they have almost no control of any part of the process.

 

Where an agent is a prospect's first resource in the process, it's our obligation to help set the best possible lending expectations as part of our service...just know where to draw the line and handoff to the expert. 

Our lenders should be part of an agent's exclusive "circle of trust", and if we have earned a client's trust, they should feel comfortable with who we recommend them to.

Great post!

Hi Ken, I can say you have let the cat out of the bag when it comes to MOST LO's,

but I can also say that it is a GENERAL Statement that also hurts the GOOD and Honest ones out there. I have been in the Mortgage industry for over 12 years now. I have competed with the "yes" LO's out there but the borrowers that come back to me are the ones that understand quoting a rate does not make a good LO. I have endured in this business by showing borrowers what is offered out there and how to help them accomplish their goals. Being an ETHICAL LO is what keeps me in this business. It feels GREAT to go to closing knowing that what I quoted is what the borrower received. NO SURPRISES. Yes, I have lost a lot of deals to the "Yes" LO's but borrower have to look beyond the rate and feel good about who is doing their loan. I feel I owe it to ALL borrowers to continue MY way of doing business and yes I sleep GREAT every night!

Ken, this is something we battle with every day.  They promise the moon, only to disappoint the buyers and sellers.

Could I have your permission to re-blog this entire post on my outside blog also?   With full credit to you, of course.

Great post Ken. Couldn't be more true.

Ahh...the quandary of the business.  Well done.  Real estate agents, buyers, sellers want the deal to close so badly, especially in a down market, that they will many times block out any skeptical thoughts in their head, and ignore red flags.  I also think that people believe their being lied to, when in fact, the LO simply has a poor basic knowledge of the business.  Or perhaps their just lazy, and do a poor job keeping up on the incessantly changing guidelines.  We HAVE to be underwriters these days...in fact, we've always had to be underwriters, but even more so in today's climate.  How do you know when a LO has a solid base knowledge and is trustworthy?  One thing you can do is to take the time to call the LO that your buyer is using and ask him some basic questions like, "Where are the potential problems with this loan, and what do we have to be careful of?"  Ask him/her how long the rate is locked in for and if it's long enough to protect the client in the event of any unforeseen delays on either side.  A good LO will always take extra care to protect their client from any delays...and be happy to talk to you.  A 10 minute phone call will go a long way in determining whether or not he/she is a slimeball or a professional with integrity.  If they're aloof, flighty, and seem like they want to get off the phone, you can express your concerns to your client early in the process.  If they're not, you will develop a good repore and open up communication...always a good thing anyway.

Wouldn't it be nice if they had to put the guarantee in writing and if they did not close on the written guarantee they would be faced with a penalty.

Very good information.  Thanks.

Great post Ken.

When are you going to update your picture with your shaved head?

I'm a lender, and agree with a number of the comments here. It is sad that some in our business treat it like used car sales.

Any agent who wants to do best by her clients will seek out relationships with qualified local loan professionals.

For any agent who thinks they can "shop the mortgage" for their clients? I don't know that I have words to express how ill advised that is. Here's why. First, you need to be listing homes and selling homes. Second, in order to properly arrive at the best decision on a mortgage you would need to borderline violate your client's privacy before starting your shopping process.

Do you know the client's credit score? Income? Assets? Size of down payment? Have you had a lengthy discussion with the client about their financial goals? Are they conservative or aggressive in their investment philosophy? When do they want to retire? Are there now, or will there be, expenses for college education, care of elderly parents, etc?

The shopping you need to do is for trusted mortgage advisors in your area. If you feel you need more than one, that's fine. Once that's done, you can refer your clients to those advisors, comfortable and secure in the knowledge that your clients are being well treated.

That will free you up to do more of the things that are financially productive for you.

I am not a licensed realtor in my state, and I explain that to clients who ask for real estate advice. I enthusiastically refer them to one of the trusted agents I know, secure in the knowledge that they will receive great advice from those agents.

 

 

That why I love Natasha Wall with Denver Mortgage CO.  I stick to one lender, I have had my trials and tribulations with numerous brokers and finally found one for life!

I have started advising my buyers to only use local lenders if they want an appraisal close to market value. 

Refreshingly honest.  Buyers are always looking for that best deal, you can't blame them but there are so many examples on why that's not always the best approach in life.

Great post and very, very true!

I hate when unscrupulous lenders give all of us a bad name - I just had a realtor stop by my office yesterday and say he finally threw a broker out that had been working on a loan for 90 days & he finally got sick of hearing "One more day", "Just one more thing needed", and "We're almost there".

I told him in 5 minutes what the other lender couldn't wouldn't tell him after 90 days.

Unfortunately a really nice first-time homebuyer got burned & is now really gun-shy.

Thanks, Ken.

I will quote rates and do GFE's only after the prospect applies and lets me run credit.  I consider it "mortgage malpractice" to do anything else.

My referral partners (realtors, financial planners, accountants, and insurance agents) know that competence and trust beat price all day long.  I stress that I am in the "advice business, not the price business."

Like Ken, I have rescued deals that other mortgage people failed to complete.  When you save a deal, sometimes it means some straight talk to all parties regarding unpleasant or undesirable actions they must take if they still want the deal to close.  A couple of weeks ago, I got one of these and the borrower had a credit score that affected his rate significantly.  He was "shopping" and talked to someone else who quoted him without seeing his credit (oops!).  As soon as I told him my rate (with his credit at that moment) he cut me off because I was too high.  He would not let me explain how to solve the problem.

The other lender, when she finally got his credit, told him the same thing.  He ended up closing with a third lender.  But by that point, I think the borrower was softened up enough to accept reality. Because the borrower cut me off at the rate, he never let me tell him two things he could have easily done to boost his score.  With the third lender, the borrower finally sucked it up and fixed his credit so he could close at .125% less than the rate that I quoted.  On his 90000 loan that was a whopping 7 bucks per month less.

Here's a simple piece of math that many people don't realize: a .125% rate difference on a $100,000 loan makes an $8 difference in the monthly payment.  That's all.

The closing was delayed for 3 weeks and the realtor has a lot less hair than he used to.  But he told his colleagues that I couldn't close the deal when in reality I never had the opportunity.

Right after this one, I told a realtor in the same office who was trying to sell a condo in a project where NOTHING has sold in the last 12 months was going to be a tough deal to fund unless it was a portfolio loan.  Her broker in charge actually called me to say that I was getting a reputation in the office for turning deals down (because of the rate shopper and now this condo).  I told her how much harder condos were being looked at now, and appraisals in general needed fresh comps, and that I just wanted to set expectations fairly on a deal that was going to be tough.  And I told her that the rate shopper didn't want to hear what I had to say about how to save his precious .125%.

Fortunately, this broker knows my expertise and dedication, so I suggested that I come to their next sales meeting and talk just about condos and HVCC.  It was a great meeting and the realtors had lots of good questions.  I was able to talk through the two cases where I didn't do the deal, and clear the air.  Even if they have lingering doubts about my ability to get things done, at least they know more about what we all have to deal with these days.

With today's loan environment, prequalifications are a must, and good agents will work hand in hand with their preferred lending representatives to structure deals properly to maximize the chances of approval *before* going to contract.

As to national lender versus local lender, the key question today should be "Who's ordering your appraisal" because that matters more than you can imagine.  I just posted a blog on this topic.

Kabir Mahadeva

 

My favorite is when the loan officer at Wachovia (in transition to becoming Wells Fargo) completely DISAPPEARED the day before closing!  Could not find him anywhere!  He had turned the file over to his boss who I called and he said, after just browsing through the file...."this loan should never have gone anywhere".  !!!!!!!!!!!!!!!!!  To say I was furious is an understatement!  Not like I hadn't been asking the right questions on ..where are you in the closing papers, the underwriters, the information, the everything!

I frantically called another mortgage BROKER who a friend of mine had said was wonderful and a few weeks later he DID close it!  I am forever in his debt for pulling off that one!

As for the guy at Wachovia...I am going to the State with him.  Oh...and when the final transfer was all said and done to Wells Fargo, his boss left. 

 

Well said!  Excellent post.  However I must disagree with one thing.  I have many agents in California and I live in North Carolina.  Being able to drive to someone's office does not necessarily equate to good service but i understand your point.  Thanks!

Great post Ken.  As a lender, I too have answered way too many callers that just want to know "what's your rate?"  I recently counted up 26 different variables that affect someone's rate.  Society has become so fixated on rate that it causes many to simply ask that one question, then go with whatever lender tells them the best lie. 

A mortgage is typically the biggest financial decision most people will ever make, yet most people will spend more time reaserching which i-pod to buy than they will researching what loan originator they can trust.

Very deserving of a feature.  Congrats.

Ken... you are preaching to the choir... lol   I will go back and read all of the comments over the weekend.  But you did a great job here.  When people are short with me or tell me that they won't give me any info, but they want answers.. I just tell them that they are "begging me to lie to them."   But I don't get this as much as I use to, because I blog a lot, and people get to know me through this.  It's been less stressful.

As far as quoting rates?  I will ask them questions, which will take 15 minutes. If they don't want to answer them, I just tell them that I can't help them. And I need to know credit scores, even if they don't want me to pull credit. I then ask them to send me their credit...  but that it's not guaranteed until I pull my own. Overall, I haven't had someone argue with me in regards to asking my questions in over 8 months or so...   again, good job here.

Years ago in my former life (as the owner of a retail electronics store) I was looking for a Christmas inventory line of credit, and was told by one lender that I had to go Small Business Admin. and it would take 30-45 days.  Hoping to shorten the process I found another lender who told me he could do it without SBA and get it done much faster.  Two weeks later, the day I was expecting to sign the note and get my $ he told mehe too had to go SBA and we needed 30-45 days more.  That would put my Christmas inventory on the shelves about January 4th.  It was a costly lesson, and that lenders ethical standards are right on par with the folks you are talking about.

 

Great post.  I've picked up a ton from the comments, but Lenn Harley's will stick with me...I love the idea of loan shopping with/for clients.  I usually point them in the direction of a few trusted local lenders, but I like her MO! 

I have always operated under the principle of using one trusted mortgage broker or loan officer to refer everyone to. I don't sweat the ones that get turned down. The bank in most cases just saved me a lot of headaches and the client a lot of heartache. Bad credit is just that it's bad.

I have always operated under the principle of using one trusted mortgage broker or loan officer to refer everyone to. I don't sweat the ones that get turned down. The bank in most cases just saved me a lot of headaches and the client a lot of heartache. Bad credit is just that it's bad.

Ken: So true...  and may I suggest everyone read "How to shop for a mortgage lender". It is an interesting article because NO WHERE in the article does it say ANYTHING about comparing interest rates and closing costs!

Secondly, while the name of the article is "Why Loan Officers kill deals", and the vast majority of the responses here are from Realtors...  I could easily write an article called "Why Realtors Kill Deals." I can't tell you how many times I've lost my lender side of a deal because of incompetent lying Realtors too.

The bottom line? The largest financial transaction of your life is far too important to place into the hands of someone who just quotes rates, but is not capable of advising you properly and troubleshooting the issues that may arise along the way.

Stop shopping rate and cost, start shopping professionals.

Stop using your friends sister who got her real estate license last week, and seek out an experienced agent.

We thought we would refinance so we called a couple different companies.  We are already with Countrywide were told that they could do it, "fast track" and we would save fees.  That was before they were gobbled up by Bank of America.

While talking to the Loan Specialist, June King, I asked if she could send a good faith estimate. The answer was No.  I pressed the issue and went up the chain to her VP, Sean Crone.  He agreed that June could send me the following email:

Hi Mr. Good,

I'm sending you a estimate of fees:

**********THESE ARE ONLY ESTIMATES*********

314.00    Application
930.00    Lender
440.00    Appraisal
550.00   closing/Escrow
60.00     Courier/Express Mail-Clsng
35.00    Credit Report
26.00    Flood Check
95.00    Recording
81.00    Tax Service
405.00  Title Insurance


I will be in the office until 5PM CST

Have a great day!

June King
Personal Loan Consultant
CMD3078-B2C POWERAmnCrtrTm5

That was it... that's my GFE.  When I asked for the interest rate and my payment I received the following response from June.

Mr. Good,

The instruction that my 1st VP gave me was I could not include rate or payment. I was only allowed to show fees. If you want to give me a call we can go over everything again.

Thanks

June King
Personal Loan Consultant
CMD3078-B2C POWERAmnCrtrTm5

 Are you starting to scratch your head yet?  Well I was.  I was determined to work through these issues so I continued on.  On December 26th I locked the loan in... or at least that is what I thought.  On January 16th I received I received my first legitimate GFE.  In the meantime I was checking my bank account on line and seen a $349.00 debit that I could not explain.

In the course of conversation I had given Ms. King my credit card number but at the end of the conversation I was told that they were NOT going to charge my card an application fee, that it would be rolled into the loan.  I guess they changed their minds but failed to tell me.

They have acknowledged what they told me but still have failed to return the money to my account. When I spoke with the VP Sean Crone, I was asked, "What's wrong, are you having trouble paying your bills?" 

The appraisal was ordered and I received a call.  The appraiser lived on the west side of the Cascade Mountain Range, we live on the east side.  I called them.  They agreed that they should use an appraiser who is familiar with the turf.  They canceled the first appraiser...... He showed up anyway and called me at my office and said he had driven by the house, taken pictures but I was a "No Show".  After a few words I asked him, "If you call this a no show do you get paid?"  silence............   well I get a trip fee.

Then I contacted the person who drafted the loan.  I was contacted by someone else who said, Janice is Not associated with this loan, I am and I do not need those papers signed nor do I need them back.  I can process it all without your signatures.

Yah..... No One Can Do It Like Countywide Can

I filed a complaint with the Department of Financial Institutions, who slapped Countrywide with the following:

STATE OF WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OF CONSUMER SERVICES

 

IN THE MATTER OF INVESTIGATING A COMPLAINT FILED UNDER THE CONSUMER LOAN ACT:   BY:                  Lonnie Good Complainant, AGAINST:    Countrywide Home Loans Inc                                                                               Respondent.

 COMPLAINT NO. 29715
 DOCUMENT CLIII
THE DEPARTMENT'S RESOLUTION
AND CLOSURE OF COMPLAINT

As you were previously informed, a complaint has been filed against Respondent under chapter 31.04 RCW, the Consumer Loan Act (the Act).  Complainant alleged Respondent debited his credit card after telling him they wouldn't, and Complainant did not receive a Good Faith Estimate within three days.

The Department of Financial Institutions Division of Consumer Services, under the authority of RCW 31.04.145, conducted a limited scope investigation into this matter.  Based on its investigation and the documentS and statements provided by the parties, the Department makes the following determination:

 •·         RCW 31.04.102(3):  Failed to provide borrower, within three days of receipt of a loan application, with an estimated APR and disclosure of whether there is a prepayment penalty.

•·         RCW 31.04.102(2):  Failed to make written disclosure within three days following receipt of a loan application.

 To Respondent:

 The Department has no further requirements.

 Respondent took Complainant's application for a residential mortgage loan on or about December 26, 2008.  Respondent transferred the application to its processing staff on January 9, 2009, and provided the required initial disclosures on that date.

 RCW 31.04.102 provides:

 (2) For all loans made by a licensee that are secured by a lien on real property, the licensee shall provide to each borrower within three business days following receipt of a loan application a written disclosure containing an itemized estimation and explanation of all fees and costs that the borrower is required to pay in connection with obtaining a loan from the licensee. A good faith estimate of a fee or cost shall be provided if the exact amount of the fee or cost is not available when the disclosure is provided. Disclosure in a form which complies with the requirements of the truth in lending act, 15 U.S.C. Sec. 1601 and regulation Z, 12 C.F.R. Sec. [Part] 226, the real estate settlement procedures act and regulation X, 24 C.F.R. Sec. 3500, and all other applicable federal laws and regulations, as now or hereafter amended, shall be deemed to constitute compliance with this disclosure requirement. Each licensee shall comply with all other applicable federal and state laws and regulations.

 (3) In addition, for all loans made by the licensee that are secured by a lien on real property, the licensee must provide to the borrower an estimate of the annual percentage rate on the loan and a disclosure of whether or not the loan contains a prepayment penalty within three days of receipt of a loan application. The annual percentage rate must be calculated in compliance with the truth in lending act, 15 U.S.C. Sec. 1601 and regulation Z, 12 C.F.R. Sec. [Part] 226. If a licensee provides the borrower with a disclosure in compliance with the requirements of the truth in lending act within three business days of receipt of a loan application, then the licensee has complied with this subsection. If the director determines that the federal government has required a disclosure that substantially meets the objectives of this subsection, then the director may make a determination by rule that compliance with this federal disclosure requirement constitutes compliance with this subsection.

 Because Respondent failed to provide the required initial disclosures within three days of receipt of a loan application, Respondent violated the Act.

 At the time of application, Respondent stated that Complainant's credit card would not be charged for the application fee.  However, in fact Complainant's credit card was charged.  RCW 31.04.027(7) states that it is a violation of the Act for a licensee to:

 Make, in any manner, any false or deceptive statement or representation with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan or engage in bait and switch advertising.

 Respondent's conduct in this case is perilously close to a violation of the Act.

 Given the apparent violations noted above, the Department generally requests the refund to Complainant of any fees collected, however because Complainant has not yet paid any fees the Department is not requesting this action.

 To Complainant:
 Although you may be unhappy with Respondent's actions, the Department identifies only the violations noted above.  This determination does not preclude you from pursuing other remedies.  You may wish to consult with a private attorney.

 Respondent is expected to implement a system of controls designed to prevent future violations of the Act.  The Department will review Respondent's efforts during Respondent's next examination to ensure compliance with the Act.

 Accordingly, this Resolution and Closure of Complaint serves as notice that this complaint filed against Respondent is closed.  However, the Department of Financial Institutions Division of Consumer Services retains the authority to reopen this complaint in the event that subsequent information comes to our attention relevant to this matter.

 cc:           Lonnie Good

Dated: Tuesday, February 24, 2009

Robert E. Jones
Financial Legal Examiner

Amen!  Just tell me the truth. 

I just had a lender string me out for 72 days on a 30 day escrow.  Seller wants to kill my deal and rightly so.  Not my choice of lender.  Now my guy is playing clean up and we're all praying that the seller lets us live to fight another day. 

I loved the part about "use a local lender"!  I work in a Resort Town. It is EVERYONE'S worst nightmare when an out-of-area lender is used!  I beg, I plead, but the choice of the  Lender is always the Buyer's choice!

Kathy Opatka

Wow, what a lot of conflicting ideas going back and forth here. This is like TV for Realtors! I love it!

After 20 years selling real estate, I must agree that working with trusted LO's has always worked best for my clients. Our local paper used to list loan rates every week, and that was the worst idea ever. Totally untrustworthy, no perspective on just who can get these rates or when they actually existed.  Gee, how handy, now buyers can go onlline and get even worse quotes from some unknown party posting rates willy-nilly!  Get references!  Of course Bernie Madoff's friends gave him great references too. Take the time to do research, because you will be living with the loan for a long time.

I was so mad when I read the title. Thought...oh no just someone else bashing the mortgage brokers / loan officers. But after reading the blog  I agree with your statements. As a mortgage broker in TN I just don't get why anyone would lie. The truth always comes out and then you lose any Realtor that may have worked with you in the future. EVERYONE deserves honesty from the initial contact right through closing! This is a business based on referrals and liars don't get referrals.

Thanks for writing a terrific piece with stuff that should have been said a long time ago.  Hopefully much of the general public, or at least the home-buying public, will come across your blog and educate themselves.  

I've worked with many direct lenders, mortgage brokers and loan officers over my career and the ones I still work with have never lied to me or my clients - even when the truth hurts.   Really, that's the only way to conduct business in any industry.

my advice to buyers. Get a loan from somewhere you already do business with or get a personal referral from someone who is using the lender they recommend. Get it fully approved and committed before you go house shopping. Then you can act like a cash buyer and know exactly what you can afford and decide exactly what you're willing to pay.

Once again, "when the smoke clears" the good ones come out smelling like a rose.  From day one, it's always been about honesty and integrity.  I find issues with both sides of the fence, but choose to seek out those with similar character traits as myself.  We're all in an industry with great change, especially these days.  Sometimes things occur (guideline changes, HVCC, etc) that are unexpected, but we should all have the common sense ethics to respond sooner rather than later.  There is simply no excuse for the "Used Car Sales Pitch" in an industry already bruised.  Regardless if you are a lender or a realtor, we have a responsibility to provide honest and straight answers.  After all... A good name is more desirable than great riches; to be esteemed is better than silver or gold.

Great post!

Back in the dark ages, when I started in real estate, it was the local bank that caused the problems. They'd tell people "sure, sure" and then string them along for 3 or 4 months before they said "Sorry, can't do that."

I had more than one couple decide they couldn't buy a home after all because of that one bank. What always annoyed me was that they knew it wasn't going to happen and could have said so right away. Perhaps it was job security for the loan officer - so she'd look busy?

Finding a really top knotch mortgage person is as tough as finding a top knotch real estate person around here (the old 80-20 rule!) Smart agents treat them well and refer their buyers - and explain to buyers about the problems and deceptions you mention in your post.

I'll never forget a young couple who went "out of town" for a better loan and didn't find out until the day of closing that their closing costs were abut $2,500 more than estimated. For many, that would have been a deal-breaker, but they managed it.

Truth. If everyone stuck to it we'd all be better off. (That is, unless you really hate your best friend's new hairstyle. Then silence is a better choice.)

This is where I hope the internet can weed out unscrupulous lenders, America is a big place and it is pointless to assume the regulators will protect us.

Real Estate agents are surely the best judges to promote lenders. They have a vested interest with both the buyer and seller and take a hit if a lender fails to deliver on promises.

This was valuable feedback we received in the design of NationalBLS, The buyer listing service, and is exactly why agents can link their account to a list of preferred local lenders and vice versa. It is easy for consumers to see how many agents recommend a local lender and how many lenders recommend a local agent.

Loan officers ... ARGH!! My absolute favorite loan officer was gold ... until her small company got bought out by Countrywide. And is now BofA. But her word was absolute when it came to getting it down. If she said she could do it, she did. If she said she could do it by next week, she did. If she said run, I did.

Since losing her to Countrywide I've been casting about trying to find someone that's as trustworthy as she is. Sigh. It's been tough. Really tough. And I like to give the Buyers a list of three sources. So she's on the list with my highest praise, along with a general credit union, and a mortgage broker ... that really screwed me over recently.

Trustworthy, caring, and hard working loan folks are difficult to find in this business. I work primarily with first time buyers right now. They need advice and a lot of handholding sometimes. I know they take extraordinary time. But guess what! They have brothers and sisters, aunts and uncles, parents and a lot of friends. Guess which agent they refer them to?

Great post! I'm open to suggestions for highly principled loan officers. And yes, I want them local! I want to go down to their office if need be and rant and rave ... and say thank you with cookies!

I remember the old days when rates were rates -- and maybe some of those callers are as old as I am! The lending industry has changed dramatically and borrowers don't understand it.  It's up to all of us to provide some gentle education, not pull the wool over their eyes.

When I was reading this I was thinking.  Good thing a LO is writing this because a real estate agent would get flamed.

I have a LO license and mainly for education reasons to enable me to swift through the BS.  Way too much bait and switch.  When a buyer has taken the bait it's to late for me to help them.

Ken,

I also have had this blog in my head for so long. I am glad someone decided to actually print it. Borrowers are also not to be blamed, unfortunately they don't know any better. I always try to put myself in their shoes, however I am biased because I know the industry, but they don't. Usually they are faced with two or more lenders. Each one of them wants their business and to the borrower each one should be ethical (we know not all of them are). Simply put, in the borrowers eyes, why should my word be better then the other lenders. This is where our relationships with the referral sources that sent us that borrower comes into play. My referral sources have seen way to may deals go bad because the borrowers have chosen lenders they have not recommended. More than often we get the call back from the borrowers that say " You were right", but a lot of them are way to proud to admit it.

To the realtor and builder community, I would recomend that you at least have the buyers get preapproved with your lender. I believe RESPA prohibits you from requesting that the buyers use a particular lender, but it does not prohibit you from requesting that they get approved with your lender. They can then close with whomever they want. The reason for this would be that you would know exactly what to expect out of that transaction. Example: Buyer says their lender can close it in TWO WEEKS. Your lender says "HA, to weeks? NO Way". you know then not to hold your breath and request a longer closing date "Just in Case". Example 2: Buyers says they are APPROVED with their lender, but your lender says "NOT in a million years", you can then plan accordingly, maybe leave the contract open to other offers, or caution your seller that the deal may be questionable.

I have always believed that communication is the key. Alert your referral sources at the first sign of trouble, not a day before closing. That way they can plan accordingly and are not surprised at the end. Bad news early on into the transaction is something that can be dealt with. Bad news a day before closing is tragic. I say this because a lot of LO's, HOPE that the problem will go away, maybe the underwriter will not see it, maybe they'll give us an exception, all they while they are reporting to the Realtor or builder that everything is fine. Sad, very sad. Most of these guys are long gone though. Now some of them are doing refinances again. That's why I have geared my business towards purchases. I will not turn down a refi, don't get me wrong, but my focus is on purchases. People always have to buy homes, no matter what the interest rate is. Interest rate should be the last thing in the buyers mind when choosing a lender. Just like the expense should be the last thing on the patients mind when choosing a doctor. "Well this guy can do it for half the price, I think I'll get my heart surgery done there".

When the borrower is sitting in their living room three months after the closing, they can't remember what their rate is, but the will remember the 2 month ordeal they had to go through to close their house. After a year they can't tell you who their loan officer is, but they can tell you that their closing was hell. And at the end they took the worst deal anyway because they were at the closing table and there was nothing they can do. But there is something you can do. When I say you I mean the real estate professionals, you can caution them and help them look for clues that spell TROUBLE.

Get with your LOCAL professional lender that is still in business today, because they must have done something right. Get Testimonials from other realtors about different lenders, if you're looking for one. Do your due diligence so you don't end up with an ulcer before closing.

Yes, HVCC has made it a bit more difficult to do business, but we're all in the same boat. We can contact our representatives and complain and hope that they will do their job to fix it. In the mean time make the best of it. Plan for an extra few days for closing.

I think I could write a book with all the different scenarios that have happen.

Ken, want to trade stories and publish a book? :)

Good luck to you all and give your Local lender a call. You'll be happy you did.

Ken, I'm printing out this post and saving it to show to my clients.  I have seen them lured away from the mortgage broker I recommend by lenders (not usually other mortgage brokers, but direct lenders) who claim they can do the deal for a lower rate.  Sometimes they do have a lower rate, but tack on enormous fees, but most times they come back with a higher rate, and my mortgage broker has to scramble because we've lost valuable time.  Just because the lender is a big name or a trusted local bank, doesn't mean they are telling the truth about rates or processing time.   

I love this line "...call the local lender who has an office you can drive to and go see them..."  No hiding behind an 800 number at some call center or buried deep on the internet highway.  It's a whole lot easier to get things done if you can meet face-to-face.

Ken, you are THE BOMB! (as my teenage son would say).  I love that word "adverlieses".  You said everything in a nutshell that goes on with bogus brokers and lenders who do dirty deals.  Kudos to you and many happy loans!

JoAnn Srein - Golden Realty Group & People's First Financial Services, Melbourne, Florida

 

Ken,

 

This is a great blog!  I agree with you 100%.  The best loan officer not only closes deals, but the clients are happy when the transaction is completed. 

 

How do you make a happy client?  Well that's easy!  You do what you say you're going to do!  If you quote a rate of 5.25%, the final loan doc's should be 5.25% or lower! 

 

The biggest problem these days are loan officers not know what the hack their doing.  They quote something that is impossible to do!  Or they quote a rate that is way to low.  The true definition of a happy client, is how they feel after the loan is closed, funded and recorded, not when they sign the initial loan application.

 

Realtors, I alway say the most important person in the transaction is your Title/Escrow officer.  They are the last person to see our clients, and their attitude can change the way the client feels about the whole transaction!

 

Have a great 4th.

 

David Kester

Sr. Mortgage Planner

Sterling Home Mortagge

www.trustyourlo.com

www.12trustmortgage.com

602-628-6500

Hi Ken,

 

Thanks for all that great information, it is very helpful.

 

 

Ken, What a great blog.  Your directness is refreshing.  Sometimes the truth hurts but well, it's still the best approach.

Ken, great article.  Our insurance agency works close with some very reputable local mortgage brokers and real estate agents.  When a new client comes to us from one of these contacts, it almost always gets closed without a hitch.  The customer gets what they were promised, the people involved in the transaction are local and easy to contact.  And they have an incentive to do a great job because they may see that client in the grocery store tomorrow!

But when someone calls to get their policy updated or get a policy for a new purchase and they are in the middle of the process with a "rate hooker" - our little term for loan officers using attractive rates as bait - it never ends well.  We usually end up changing the mortgage clause and effective date 7 times.  And by the time the loan is closed the client is not happy with anybody, and I don't blame them.

It is hard to get people to listen though.  Often our clients tell me who they are using for their loan and I tell them that every previous customer has had problems and will recommend a trusted local broker.  Their usual response is "thanks but this is the only place that could get me the rate I was looking for."  Um... how often do you think they actually close at that promised rate. Never comes to mind.

Will Welborn www.lowerpremiums.com

Ken,

As much as I hate to admit, you are right on target!  However, this is the type of post that allows for LO Bashing from Realtors.  As noted in many of the responses above.  What you did fail to mention is that there are hiccups and when Realtors get the news, they act as if "HOW COULD THIS BE?" after having years and years of real experience knowing that many things can go wrong in a loan application, "REGARDLESS" of whatever due diligence was taken on the LO's behalf. 

The other one is when Realtors fail to disclose things about a property to the LO in hopes it all goes magically away and then you are stuck with property issues on the appraisal, or a title issue or whatever.  WHO's FAULT IS THIS?  It somehow, always (AND I KNOW YOU AND EVERY LO, HAS BEEN A VICTIM TO THIS) is the Loan Officer's fault.

What my point is, that be careful with what you say to the industry community, as it ALWAYS tends to point it's finger to the LO. 

Now, I do acknowledge that many LO's make really dumb decisions. I can tell you from experience that those decisions are based on lack of experience and the wrong mortgage model of the company they work for.  I can tell you that professionalism breeds professionals.  For instance the office I work in is definitely the top of the echelon of my whole 11 years.  I am surrounded by some of the best I've seen and it helps me and my peers to want to excel our business and service.

The other item that was left out is the company itself.  There are mortgage companies that absolutely stink in service for a number of reasons.  This can lead to burning bridges before the LO realizes that they "really" do work for a company that stinks.  I know that I've been victim to it.

These are very valid points that all of us need to consider before coming to an instant conclusion.  As one LO wrote in ActiveRain, Mortgages: SO EASY A CAVEMAN can do them  http://activerain.com/blogsview/1117810/mortgages-so-easy-a-caveman-can-do-them, being an LO is not as easy as many would like to think.

 

 

Ken.

Good info a good loan officer want kill a deal i have certain loan officer's i use like to

have a sit down and chat with my clients before we start the process. And if they

are honest with me i will direct them to the approiate lender

When a deal drags on and the agent/broker is getting antsy - the problem is NOT with the loan officer it's with the agent/broker.

Take responsibility for your own future and your own transactions.  I believe that part of the agent/broker responsibility is to find out what a buyer can afford (qualify for).  Educate yourself, don't be afraid to ask those personal questions (like is this your first marrage or how many times have you been married), and any other personal and financial questions that you can use to locate red flags before you waste your time and efforts. 

Educate yourself on what underwriters are looking at and for.  Keep updated on changes.  And when you pass your buyer on to a loan officer of your choice or their choice you will feel confident the transaction will close smoothly.

No I'm not a loan officer but an old school broker.

I like Mr. Statewide Realty!!  It is true.  I know probably 80% as much as an agent does and that is solely out of knowing what to anticipate and what to look for before it becomes an issue. 

Learning what each other does, makes you that much more stronger and better at what you do and how you do it. 

Ken, I've been wishing and hoping for more of this type of content for several years now.  Recently, I wrote an article on my own blog about the need for a "code" much like baseball players abide by.

Your example exemplifies what we really ought to be talking about.  Unless mortgage professionals begin calling out folks like EVERHOME, bad actors will continue to permeate the negative perception of the industry.

I know your intent wasn't to single out one lender, but I for one am glad you did.  After all, to your point, it's not like the FTC can effectively regulate.  It's up to the guys on the streets.  Great work Ken.

Lately Wells Fargo has been pre-approving people that have had trouble elsewhere and for higher loan amounts.  I am curious to see if they can come through.  I have my doubts.

Great post!

Gene,

They are the last company that would approve the borderline loan.  I can tell you that I have received at least 10 referrals that did not close/ were not approved with Wells Fargo and the loans were very text book stuff.  It was a bit amazing as to why they did not approve the loans.  Besides, most (not all) of the Wells Fargo Loan Officer staff are highly inexperienced (They tend to be more order takers than anything else), the ones who are experienced tend to be highly professional.  I guess it depends who is working on the file.

Great article.... 

Article very well written and on target. Thanks!

"Statewide" hit it on the head!

Others who suggested that agents, lenders, and others who are involved in a buyer's purchasing a home should  know what is going on in the transaction are so right.

I have worked hard at establishing relationships with lenders, real estate attorneys (who do many closings, personally), title companies, insurance agents, and home inspectors. As a buyer's agent, I provide the name of a competent person in a "big" bank, a local bank, and a mortgage company and suggest that the buyer talk with each and determine the best fit for them. I also tell my clients outright not to go with an online lender and to never be swayed by a low rate.

Often the lender that they choose will call me for an opinion on a match, personality wise, for an attorney to do the closing. Many times I've spent enough time with the buyers to know that they need a very detailed individual to explain every "jot and tittle" and not the laid back person who might have been next on the list of the lender. In my opinion, these relationships help everyone experience positive transactions.

Ken,

Excellent, excellent article.  I have been saying this for many years and have wanted to yell at customers who claim that "so and so down the block can do it for (this rate) or get this loan done in two weeks(lie).   What really pisses me off is when clients get strung along for months and months after turning down your proposal, going to the closing table, the numbers are different, and they still proceed forward with the deal.      Do customers not have any pride or any guts to tell the unethical or incompetent Loan Officer to stick it? 

As much as the new regulations and elimination of many programs has phased out a lot of rogues in our industries, there are still quite a few liars out there.

You will continue to stay successful because you are ethical, honest, and do what you say you are going to do.

Good luck

Paul Thompson

 

Wow I didnt read all the posts but have a lot to say ased on the first and a few later.

First to get off my chest---I take issue with the sensational negative headline used to further the authors cause. Its an opportunity to advertise his method at the expense of others.

Look people, we all know that there are bad mortgage people. There are bad real estate people. There are bad grass sod salespeople in nurseries. There are bad politicians (I know! Thats probably a rumor)

Some humans are just plain bad. Ive owned real erstate and mortgage offices for 30 years and have only run up against a small percentage of bad agents in either profession. To use negatative headlines to point out how neat, thrifty, honest, reverent you are isnt the way to go about it.

OK that said, lets get to truths and basics instead of being self serving as I see many are doing in many posts. In facty, Id post the heck out of this place if I could do it with no company or personal info showing.

FACTS:

1. There are only a FRACTION of the number of brokers in business last year. Tens of thousands are out of the business.

2. The BANKS want us dead. They have for years. They want the retail back.

3. We only have a FEW wholesale sources left taking brokered business. Wells, BofA, TBW, and a handful of others. There are other 'bankers' playing lender but they send to the same sources.

4. I can usually take you to Wells whiolesale and beat their street retail. Who knows how much loger that will be.

5. Lending Tree and the other net lead companies SUCK.

6. We have been knocked back to about 1979 mortgage wise. People had to qualify then. Agents (the few around) knew how to document things and analyze tax documents!  On the other hand we are forced into score models and other anti fraud procedures. Interest rates for even the finest of borrowers is determined by scores, LTVs, etc. You rate can change with only a few points difference on your score.

Borrowers dont want to hear this but there is ZERO way we can give an accurate rate/fee without knowing everything about them. I must say that most of the time a borrower comes and lays a 'They said they can give 3.0 with ten point rebate' crap on me, the quote is from the retail side of a bank!! Chew on that for a while you real estate agents who trust the banks over brokers!

As others may have mentioned, I have sent borrowers to some of these mis quoters only to have them come back with tail between their legs after being screwed over. The main question to be asked when considering going to a banl/lender is 'CAN YOU LOCK THAT RATE RIGHT NOW AND GIVE ME PROOF?' If not run away.  I worked part time this spring as an underwriter in a big bank. We were processing thousands of applications that were taken when rates hit 4.75. NONE OF THEM LOCKED! As rates went up, they marketers tried to get most people to accept the current rates. They had some fallout but they kept many, who would have had a better rate had they been locked b a smart broker.

 

The public is going to suffer from this. Real estate agents will suffer too

Ken, thanks for writing a much-needed blog. I, like most others here, also have lot's of stories to tell - and it is sad and frustrating! Not many live like we do, no paycheck until the escrow closes - yet all the time, effort and our own money spent up front! The last thing I need is for a loan officer to not do their job correctly and cause my escrow to cancel, which is EXACTLY what happened to me today! What I found interesting in this case, is my buyer's claim that 17 days isnt long enough for loan approval! It is plenty of time if the loan officer is doing their job! In this case, she wasted close to 10 days trying to go from conventional to FHA - which as I explained to her is a change of contract and can't be done without the seller's permission, nor was this option ever discussed up front! Had it been, I could have told them the home didnt qualify for FHA as the owner had just purchased 60 days ago.........so, after 10 lost never to be recovered days, I am still basically getting the same old tired excuses - on people with perfect - over 800 credit, money down, good long term employment, etc! I had actually suggested to these folks that they double app with my local, long time no fail - over 57 loans closed never a hiccup mind you - and they said they would but never did! I obviously cannot force them - and since it turns out they had a personal relationship with this loan officer, they wouldnt leave her - but in the end - as of today - it cost them the home...........and in a community with record low inventory, they were lucky to have been the chosen buyer! And they threw it away over an inept loan officer!

This all - including all of these sad, but true stories above - just reinforces some facts:

1. When you have a solid, trust worthy loan officer - stick with them and insist your buyers be pre-approved by them as well - and don't hesitate to share the stories!

2. When the loan officer isnt performing as we know they should - CALL THEM ON IT! Esp in front of the buyer - that's why we have wonderful things like conference calls!

3. If the buyer isnt willing to listen to our expert advice, why bother? It will do nothing but cost you time and money - and none of us can afford to lose that today!

Thanks again for such great posts!

Best,

Suzanne

The TRUTH is always spoken Eloquently.

Thank YOU!

Joy Carter

Excuse my errors---I have had a long day.

Ken...  You already know what I think of you.  I send people to you because I know that they will get the REAL answer... even when it isn't what they want to hear. 

Lenders many are just... overly optimistic--they would never lie to Realtors and their clients--would they?

Great post Ken.  It is so important that a buyer work with a local lender who gets the job done to ensure the closing will happen.  It seems there have been so many snags lately with the lending side of transactions.

Ken,  Here is another item to add to the list of lies.

#4.  The computers have been down for the past 3 days.  But of coarse....this is actually true.....yeah right!!!

I just went thru this with a buyer who picked a lender in Texas for their purchase in Illinois. A few days from our mortgage commitment date, I called the loan officer to make sure we would make our commitment date and his reply was, "We're never going to make that date! I don't even look at a commitment date unless the buyer points it out!"  Are you kidding me? Like buyers are the ones pointing out things on a contract for the loan officers. Riiiight. 

Loosely translated = "I put the contract you sent me over a month ago on the end of my filing cabinet and forgot about it."

Of course, it was touch and go from that point on whether or not we would close. And, of course, because they didn't pick a local lender, we could only sit and wait for the loan "team" to pick up the ump-teen messages being left to find package and eventually the funding.

Great Post, thanks for your input.

Ken, have you ever considered moving to the Ozarks?   I could sure use you here, got two deals that have been extended since contracted several times, one was originally scheduled for March and the other for the first week of June, and talk about people getting angry!

First the loan originator lost the pictures of the street scene taken by the appraiser (who lives and works 30+ miles away) and is unfamiliar with the area.  This was late in the afternoon, 2 days before the closing.

 Then he lost the signature page of the P&S. This was late in the afternoon of the day before the closing.

Then he couln't get the package to the closing attorney because he was busy..had "more than 140 emails that I haven't had a chance to read."

So it's Friday, the day of the closing, which is supposed to take place at the Registy of Deeds.  The package finally shows up at the attorney's office 20+ miles away at 3:30 pm.  Forecast: heavy rain, heavy slow traffic on the highway.

Oh yes, he's a friend of the buyer's family, who by now is %^&&@ because he wanted to close Friday and start doing some fix up at the house over the weekend.

What's going on?

 

There are two loan officer I have no chance of competing against; the liar and the inexperienced. The exception of course is if this isn't the borrowers first dance and they are able to recognize the liar and the inexperienced. Then we can move forward building our relationship.

I truly wish borrowers understood that there is one Fannie Mae, one Freddie Mac, one VA, one USDA, one FHA and one Wall Street. Credit score come from Experian, Trans Union and Equifax; that's it. It's not magic, there is no one behind the big curtain...we all work from the same underwriting guidelines!

I believe Loan Officers find themselves in trouble because they don't quite know how to set realistic expectation with borrowers and with the agents they are trying to build a relationship with.

I just had a new agent send me a purchase and sale agreement that had a 20-day close. I immediately called the agent and let him know this is not realistic in this market and that in a good market standard closings are 30-days. We now have a closing that is 35-days or sooner (before you say it; yes, there are loan officers that would have waited until the 20th day to say they needed an extension. I for one, am not that guy...)

Great post, Ken! Thanks for setting the bar!

This blog and all the great stories and comments are going to be required reading for my team of Buyer's Agents.  Thanks for the great post!

Great blog! So well written and so true. Unfortunately, regardless of the advice we give, sometimes people just want to believe, if the grass looks greener on the other side...that's where they will go. With all the competition out there, the tendency is for lenders to lie to the people just to get them to work with them. So they get one deal that might close. I would have to say that the best clients are those that come from referrals from satisfied customers that have not been deceived.

Ken, great post.  I agree that it's improper to quote rates without knowing the borrower's issues.  I also go the next step when I'm doing loans in Hemet and California.  I actually tell my borrowers exactly how much I will earn.  I go over the entire pricing grid for their product and adjust the points or rebate to show what I will earn.  If I tell the borrower I'm earning 1.25% then that's what I earn.  I show them the par rate and my fee.  I show them the no point rate and I show them the rate with buydown included. Now they know exatcly what I'm earning and they can see how the rate correlates to that.

I get so angry when I'm working with Realtors that believe all the adds and everything they here.  That's one of the issues.  Some realtors will tell so and so said they could do it or they saw an email.  I actually had one of the Realtors I work with give me the LOs name.  I sent the completed package to him and said if he funds it I want nothing.  He could not fund it and the Realtor realized that I was being truthful in the first place.  

Great post.  I don't have anything to add that hasn't been said already.

Hi Ken; What do you mean "someone who has a lenders license personally? Are some not even licensed? Is this legal??

Loan Officers that work for big box banks do not need to be licensed by the state.  They fall under the umbrella of the bank's licensing.  They can get hired by passing the pee test & do not need to evidence a certain level of education or experience in the field.  All the big box bank wants from them is new customers. Most reputable Loan Officers will not even work for a big box bank if they can avoid it.  Mortgage Brokers are required to be licensed, otherwise it's illegal.  Each state has different licensing requirements for Loan Officers, rumor is by 2010 all loan officers no matter where they originate loans will need a license.  I'm a licensed TX loan officer and I work for a direct lender, not a big box bank.  Almost all direct lenders have licensing requirements as well.

Wow, Ken, you tell like it is.  Why would anyone want to hear anything but the real truth?  Great post!  Thanks.

Good post.  If I had the time, I would also read the comments. Point blank, that is why I try my best to have my clients use one of my recommended local lenders.

Good post. And good comments.

I like Dave Woodsen's comment to consumers who call and ask for rates. He answers "1%." They laugh and the conversation is easier from there.

It's useful to startle someone out of their patterns like this. In this case the pattern is "I call you for rates; you try to sell me something; I insist on getting a single rate as an answer."

Dave's 1% answer breaks the pattern just long enough to enter a conversation where he can explain to the caller that rates are different for refinances, people with good credit vs. bad, etc. Follow it up with "Tell me about your situation," and the caller will open right up.

Ken. That is exactly why I am an Agent versus a loan rep. The loan peo almost have to compete with lies just to survive. Honest, though, is ALWAYS the best policy

Great post! I read all the comments; what an eye-opener to my "I think I will shop around for a better rate", buyers.

Great post! I've had many folks go away due to some 1-800-Lending Outfit promise the moon, only to have them come back when things don't add up at the tail end.

I seem to be saying "Best of luck with that" a lot lately!

Ken, I am reading your post quite a while after you wrote it.  I am new to ActiveRain and spenidng alot of time looking around to see what's going on.

I have been in the mortgage industry in Tucson since 1980.  I couldn't agree more with your post.  Too many loan officers act like used car salesmen.  No offense to that industry but bait and switch is the name of their game.  Bad news doesn't get better with age.  If the deal won't work - it won't work no matter how long you wait.  Often the loan officer does not have the experience to know whether it will work or not.

Rate shoppers have no idea what goes into pricing a loan.  My favorite is when I provide a Good Faith and they take it to several other lenders and say can you beat this - not understanding tht if you want to shop rates you pretty much need to get all your quotes simultaneously.  I have had people call me back with ridiulous quotes and my answer to them is "Hang up the phone and run back to that lender.  Get your rate locked in before it changes.  By the way, IF you really do get that rate, could you call me back.  I'd like to refinance my own mortgage with them".

Thru hard work and ethical practices, I have a very good group of realtors who trust me with their referrals.  They have had offers get accepted because my name was on the pre-approval letter and the listing agent knows I can be trusted to get the job done.

All we can hope for in this environment is the bad actors move on to a different play.

Great Post Ken!!

Very few loan officers acutally do it right.

Thanks,

Jeff