How much crap can one take anymore!! Wait a second on that one... actually, how much crap can one dish out there nowadays. With the mortgage industry changing guidelines and pricing hits on rates at alarming clips, does that just leave the average loan officer with an easy excuse when they just can't do your mortgage now?
Is 'crapy' excuse behind door number 1? Is it door number 4? Could there be a 'crapy' excuse behind all 6 doors? From what I have seen out there, you betcha your bottom dollar, that's if you are able to even hold onto that.
Now, I am not trying to scare everyone out there, but this is the reality of it. And in tough times, the reality of it is usually negative. I consider myself a very positive person. And by educating you with negative reality, maybe it will just save you down the road, from becoming a victim, that would actually have a positive outcome. See, a negative can make a positive. Overall, I just believe in educating those out there, but with reality, not false opinion or false hope.
So what can be those lies and the dishonest chit chat that might come about from an average loan officer when your deal goes south? Think about these things closely. A lot of these examples are going to relate to FHA loans. The reason being is because you can still manually underwrite a FHA loan. In regards to a conventional loan, if you don't get an automated approval online, then a no is a no.
- The biggest and easiest lie can be your credit score. With many lenders raising their lowest credit scores on FHA loans to 620, you could be caught in this trap. I have a borrower that was just referred to me the other day, who they have been with the current lender for almost 60 days. Lately, it seems like every other day there is a new excuse for the hold up. But wait, the latest excuse now is that their credit score of 576 is to low now. Well, this could have been a legitimate problem several months ago. More on this later.
- The lender now says, "We now need more credit or better credit." This just happened to a client that I spoke with the other day. They have had two 10 day extensions on the property that they wanted to purchase. But now they are being told that they don't meet the regular credit guidelines for FHA loans. For more on the new changes, I will be writing about this over the weekend.
- I can get you a 5% rate costing 1 point. - But I'll tell you what, I will try very hard to get you that 4.875%. People, listen up on this one. AT that same exact moment, this loan officer could get you 4.875%, but not at the same cost of 5.00%. This just happened to another potential client of mine, when shopping for a mortgage. 2 things happen here. There are different coupons of rates, and the prices differ. In this case, just that 1/8 of a percent is very expensive, but the loan officer isn't explaining this. But they make you feel that since you are a nice person, that they can get you this rate will try to get you this rate. Rates change daily. So this loan officer isn't educating you properly, making it sound like getting this lower rate shouldn't be difficult. What they failed to do in the next sequence is go over your lock-in or float options. These rates are no good no matter what, if they won't allow you to lock into them now.
Conclusion : Sure, some of this is based on my own opinion, but also backed up by real live examples of what has happened to some borrowers just recently. If you start to experience any kind of delay, no matter what the reason, I would start pressing your loan officer and or lender. And if you don't feel like you are getting anywhere in a day, don't give in and wait a few more days, giving the benefit of the sweet voice of your loan officer, telling you not to worry, that all is okay. And if you have to, move up the chain of command per se. Ask for their boss or manager, or possibly the regional manager or the owner of the company. Don't think of it as complaining, but just trying to protect yourself and getting to the bottom of what could be a disaster, if you aren't careful.
For a very good read on a topic that is some what related to what I just talked about, read this by Larry Bettag.
You Crave What You Eat - - - GREATNESS IS A DECISION!!!!!
This is good because of the analogies that Larry uses and talks about discipline & success.
And for more about FHA loans and the changes with FHA credit scores, please read :
FHA Credit Scores & All about FHA loans & mortgages !!!!
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- Mortgages -
Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!
Copyright © 2009 by Jeff Belonger
Without you (and Larry Bettag), we couldn't have closed an FHA loan this past Monday. Thanks to you both, and thanks for continuing to educate us on the FHA loan process. Some lenders talk out of both ends. Bad for business.
Jeff - Excellent post and some super examples. I look foward to the follow-up specifics. I think in some cases some mortgage pros just wing it or do not know better and fall into the trap of overpromising and underdelivering. Is hard... but VERY frustrating when the excuses could have been avoided through planning in the beginning and better communication with the consumer/clients. ~ Chris
DON.... . wow, I don't even know you and I truly appreciate that compliment. I would love to know more about this FHA loan, that we some how helped with. But overall, yes, there are loan officers that talk out of both ends. thanks again for your polite compliment.
CHRIS.... . it drives me crazy when someone wings it. Hey, In hate telling someone, "could you wait while I find out, just to make sure." But that is what needs to happen if you don't know or aren't sure. I understand people make mistakes, but when they use poor excuses on something that is hard to prove? aaarrggghhh... and using lame excuses, instead of saying, I messed up. Overall, thanks for the kind compliments.
JEFF- Consumers need straight talk not a "crap shoot" when it comes to understanding how mortgages work and what a difference 1/8 of a point really means! Bravo!
Jeff,
There's alot of misinformation!
When a lender says you can't get an FHA loan with less than a 620 FICO, they are right! But what they said and what the consumer hears are different. What they said or at least what they meant was they can't get you an FHA loan with less than a 620 FICO!
There are real differences between loan sources! Companies with good history of solid underwriting often have more liberal loan commitments than other sources. Lower scores require better underwriting, companies with a history of better underwriting can often make loans lessor companies can't!
Even when the commitments are the same, you have to remember everyone that approves the loan is subject to buying the loan back. Companies that are more sure of their underwriting are willing to take higher risk.
The lower a person's credit score the better the LO and his sources must be, assuming of course the loan makes scene!
They are not all Belongers.
Bill
Jeff, Thanks for another good warning about what to watch out for. I like your suggestion that if we are not getting answers to move up the chain of command. It usually works pretty well, because most people have someone else they must answer to.
Jeff, you realize it all boils down to taking the time to explain and educate your borrower? I have told customers "I'll try to get you the 4.875% rate" before but only after explaining to them the inherent risks of floating and exactly the rate they would get if they locked right now. Laypeople can't possibly know what they need to know to make mortgage decisions if we don't supply them with the facts. Unfortunately that usually boils down to a time thing, and some lenders just don't spend enough time with their customers. Great post!
Gerry Suarez, Jr.
Your FHA Loan Pro!
I could go on to all the reasons that this is a good post, but I'd jsut be reiterating here. It's an awesome post and you're spot on. I flagged this for a feature...thanks for the shout out.
Jeff - We just got to keep plugging away to keep the mis-information as rare as feasible. We aren't only in the "Money Business" or even in the "People Business" ... we are also in the "Teaching Business".
ALLISON..... . they do and I just got another e-mail from a borrower that was with me until he got a loan that is much better than mine. It was a tough deal with a full doc loan, and he is self-employed loan. But he just got approved with 25% down and no income... and guess what, his rate is 5.25%... LOL Sorry, but this is the crap that I am talking about. There are no "no doc" loans with rates the same as a full doc rate. Some one has misinformed the client.
WILLIAM aka BILL.... . lol... Well said, which I didn't want to go into details. But there are some that can still go lower, but it's extremely rare. There just happens to be some loan officers that make it sound easy though, when it's not. thanks for your input.
BARB.... . I have always believed in moving up the chain of command. I guess this came from my experience from when I was in the Army. The one thing that I do not like and will not stand for is if that person complaining doesn't give you the courtesy first, in talking to you. If they go right over your head to complain first, then I lose respect for that person. I fired an employee based on this. Secondly, I can't stand those that give their loan officer months, excuse after excuse. People need to wake up and take charge much sooner. At least these are my opinions... thanks
GERRY.... . you are correct about stating that you will try to get them the lower rate, but that you also explained to them on how it works. This last person wasn't explained this. I asked him in detail and explained how it works. All he said was that the other loan officer didn't explain this, just that he would try. You and I are different when it comes to stuff like that. It's like me saying to you, I will try to give you a million dollars, (knowing that it won't happen), but also not explaining to you the chances or how this all works. thanks for your feedback.
LARRY.... . thanks... as many of us know, it just comes down to communication, being upfront, and leave the fluff & bullshit on the side. Thanks for the flag and for the comment...
Jeff: Thanks as always. I appreciate your candor. I wish everyone were as knowledgeable as you! Have a great day!
As always, good stuff.
I can't figure out why, with the housing initiative Obama is pushing, lenders are raising minimum FICO score requirements? Just doesn't make sense.
Jeff - I do agree that poeple need to be better at shopping for their loan guy. Look for the professional. Do some homework before making the final choice. At the same time, people want to do more shopping. Because of this, many LOs have come up with the 'I can try to do better'. I think its more of a hope that the person will stop shopping and choose them. You have to admit that although this CAN BE deceiving, more and more people shop for the 'lowest' deal. One has to have a catch so the customer stops looking. Most people just want to know you will do your best to ensure I am getting treated right.
Don't get me wrong, I think LOs can abuse this and typically do. But I dont think its the 'norm'. Just my opinion.
On another note, I completely agree that taking 60+ days to get something done is a BAD sign. There are lenders that are taking up to 40 days to get things done, but that was about a month ago when several lenders were still in a HUGE refinance boom. Rates are still great (as you know) but the lenders are finally getting caught up.
One last note... What I have experienced is that many LOs have overcommitted thinking the rates would continue to get better. I just picked up a deal where the LOs offerend a rate with NO COSTS. As you guessed it, rates stopped moving and they can no longer honor that GFE. As a matter of fact, the customer cant even get ahold of the LO. The times she has gotten ahold of them was because she called from a different number... and then was told she would have to call back. GARBAGE! I was hoping we got rid of all those LOs.
So... I guess I agree with you MOSTLY. :-)
PAUL.... . thanks for the compliments...
DREW... . it's makes plenty sense. What Obama is pushing doesn't protect the investors. Any president can push programs, but until they actually back up the lenders for that program with gov't funds, it just won't work. The problem with the tarp monies is that there were no major conditions. ... the money could be used for any purpose of their own. That was a major mistake.
JOHN..... . or gal... ;o) Yes, there will always be a loan officer that will say that they can do one better, but not come through, because they wanted to try. Trying in many cases doesn't cut it, unless you give specific reasons to why. But to try, in hopes that something good comes out of it, is just plain wrong. But the borrower doesn't know this and won't know until it falls apart.
In regards to the rate aspect of it, that some loan officers offered lower rates to beat others out, but then rates stopped... they shouldn't be in this business period. They are guessing with peoples lives. It would be like a doctor saying.... gee, the cancer is getting worse, but let's hold out to see if the sun comes out and things get better. And no, this market or any other market will never weed out all the bad apples... never.. and right now, as I have told many loan officers in my group, I expect it to get worse before it gets better. That is an old trick of not answering their phone. It goes back to... if the service and follow up is great the first few days when shopping.. but once you do the application, the return calls slow down or follow up is 50% less... that's usually a major red flag. I am dealing with 2 new clients now, that went through bad issues with their previous loan officer. It wasn't rate issues... but it was poor lending. thanks
Jeff, this looks like the kind of post that TLW might enjoy hijacking.