This is incredibly timely and poinant article by an incredibly astute mortgage broker and fellow ActiveRain blogger in San Francisco, Janet Guilbault. I'm honored to be able to re-blog her post here. Enjoy!
When a bank sells a foreclosed property do they try to replace one bad loan with one good loan?
If the main agenda is to dump the house, is the hidden agenda to seize a golden opportunity to gain a new loan customer (far less risky because the "dumped" price was lower and the qualification standards higher)?
And should we believe our honorable lender sellers when they torture a buyer by forcing him through a second approval process (right at the time he is ALREADY feeling stressed about making an offer)?
They justify it this way: "Preapprovals from other lenders are worthless, we have to check this guy out ourselves before the house goes off the market!"
And if some little minor detail gets in the way, you know....like the buyer feeling bonded to their mortgage broker who spent months getting them ready BEFORE they made the offer, what then?
Bank thinking: Wait. I am the bank. I own the house. Why not just whisper this in the buyer's ear? "Use my financing and I will sweeten the deal. Use his and I won't".
Is this scenario the best thing the real estate industry can dish up for our poor customers?
If you have ever watched a buyer in this situation you have seen one unhappy camper. He is torn between the lure of a better deal or the confidence of sticking with his original mortgage person. Why should he be forced to make this choice?
You have watched him squirm and you know why.
His skin is crawling. He senses something very slimy is going on. And he is right.
I will admit the tactics of these REO mortgage people can be more subtle. Sometimes they offer to pay for appraisals. Sometimes they offer to throw in the credit report.
And sometimes way less subtle: like continuing to hound the client right up until the week of the closing to "change your mind".
They also know no shame. I have had REO loan officers call asking ME to send them documents from MY file to help them approve MY CLIENT. What is wrong with this picture?
I'm going to help YOU steal my customer? I may have been born at night, but not LAST NIGHT.
In the background, a very confused buyer has no idea what to think, but we know this: the distraction of 2 loan officers fighting over one loan cannot make buying a house a better experience. Only worse.
One has to wonder this: why would ANY loan officer want to do a prequalification if he thought the loan was going to someone else?
What did the banks THINK would happen when they asked their mortgage people to prequalify people making offers on their foreclosed properties? Did they think buyers would come to the table without a preapproval already in hand?
For the record, we mortgage brokers don't lose many clients this way. We are too far ahead in the game. We have the ability to lavish far more attention on each individual buyer. And frankly, we wouldn't be very good if we didn't already intimately understand bank tactics.
What we lose as an industry is far more serious: We lose RESPECT.
Written by Janet Guilbault, San Francisco Bay Area Mortgage Lending Specialist