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They Keep Lying and they Keep Trying.

Before You read this post...I want everyone who reads it to be aware that this isn't about any particular individual or company. It's something that seems to be happening on a regular basis.....not all the time but many times it comes up when it's too late to do anything but move on. Please don't contact me on the phone. Let's keep the discussion within the post.

I have a lot of friends who are in the Mortgage industry and they know what they're doing but when I can't help the client find someone suitable to represent them and help them get a loan then I have to draw the line somewhere.

If you're a consumer reading this post...you might want to take this little bit of advice I'm going to throw at you....if you're looking to purchase any kind of property and you want to pick your own mortgage broker...you should extensively interview them. Ask them how they'll be communicating with you and your Realtor. Ask them if the information that they give you will be accurate...basically you should ask them if they'll be keeping you fully informed of all aspects that pertain to the loan process. It's very important that you do this because if there is a problem....they'll claim that they have no liability if the deal falls through and that they aren't a party to the contract...but as the buyer...you and your Realtor will be the ones responsible.

You might call this a gripe but I have issues working with these types loan officers and Mortgage brokers and I'm so tired of the lying and the "passing the buck" excuses.

This particular situation can happen on a regular transaction or even on a transaction that might be a short sale..REO or Foreclosure property.

Every state has different rules and laws that they have to abide by and every Real Estate contract is wirtten different so I can only speak for contracts that are written in the state of Florida.

Now I've experienced some great things since I've been in the Real Estate industry and after almost 14 yrs in the business...I've seen the good and the bad. This is a big sticking point so anyone who might be offended by what I'm writing can just keep their comments to themselves and move on to another article to read. I'm not perfect and neither is anyone else but when it comes down to issues that come up in my transactions....I'd rather know about the issue before it's too late. I'd rather not have to waste my clients time and neither should anyone else.

Most of my business is as the listing agent....I like it that way because I know that I have more control over keeping the deal intact but when I'm working with a buyers agent who doesn't keep open the lines of communications with their buyer and the lender they choose....then all things can fall apart very fast.

I'm going to give you a pure example of a problem that's happening in our industry and with all the new changes...you would think it would stop. I'm not hear to cause problems.....I'm here to solve them if I can..So when you decide to purchase a property....you really need to do your homework. You need to have complete communication with your loan officer....your mortgage broker and your agent. If you lose control of the situation...in the end you'll be the one to blame.

Let's take a typical FAR9 contract....it's used in most deals but of course there are FAR BAR and AS-IS contracts that are slightly different...but in my area this seems to be the most consistent contract used.

On the first page of the purchase sales contract....under section #3 Financing...I'll just mention the part I'm talking about here and it clearly states and I quote...Buyer will provide the seller with either a written Financing commitment or approval letter("Commitment") or written notice that the buyer is unable obtain a Commitment with in _____ days.

Now here's the part that seems to be the problem most of the time...Buyer will keep seller and Broker fully informed about the loan application status,progress and commitment issues and authorizes the mortgage broker and lender to disclose all such information to seller and Broker.

It also states that if the buyer is unable to obtain a loan commitment after using dilligence and good faith...then as long as they inform all parties in writting within the said timeline...the buyers deposit will be refunded and the contract is null and void.

Now I'm not in the business to have escrow disputes but when the buyer and the buyers agent do not comply with the clause above....they seem to pass the buck to the Mortgage Broker who then goes into hiding and claims not to be a party to the contract.

That clause is such a crock that it should either be amended or they should just remove it if it's not enforceable.

Perfect example...I have this short sale listing...It was approved in writing each time by the lender with the price and terms they would accept. I've had three different buyers present contracts and all of them fell through due to lying by the mortgage broker. Each time I requested and was supplied proof of bank funds...full approval letters yet none could close.

On the last one most recently....2 weeks before we were supposed to close...I received yet another approval from the sellers lender and when I called the agent to let them know we have the approval and that we needed to get the ball rolling...I asked for an update on the loan process the buyers agent started yelling at me telling me that I had some nerve to ask for it and then by calling their mortgage broker...I find out that now the buyer has an issue with their credit which was never disclosed along with some sort of contingency to have a grant which was not even included in the contract.

The agent denied ever knowing about it and said the buyer didn't know about it was well. "What nerve I had to ask".....I guess I could be lambasted for doing my job to make sure my clients deal didn't fall through once again. In the end as we kept calling the broker..they kept telling us through the whole thing that it wasn't their responsibility to keep us informed. All we could get out of them was that they were going to meet with the buyer to discuss what they wanted to do. " What they wanted to do?" "I don't understand?" It turns out that two days before the closing date after countless times of trying to find out what was going on.....the lender sent some cheesy denial letter based on credit issues. Deal is dead..short sale is usually denied.

Luckily we just received a 4th contract and so far we are getting the information we need to complete the transaction.

End of story!

The approval letters that they supply are as good as getting picked up in a bar and getting someones phone number. Everyone should be aware of the type of people they are dealing with before they establish a relationship and waste peoples time.

Now I know why I can't trust most people in the mrtgage industry. they say they are trying to improve and maybe so are but these slime balls need to be out of the business.

So if that means the Mortgage people can't be held liable then they should just remove it from our contracts because if they don't the ones who will be liable are going to be the buyers and the buyers agent who represent them. You should be protecting both parties and not just one.

I would love to hear if anyone else has experienced these problems.

For more information please contact Neal The Real Deal Bloom-Realtor® /Keller Williams Properties

1625 N. Commerce Parkway,Suite 105

Weston FL 33326

(954)608-5556

Posted by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL on 04/03/2009 05:33 PM

Comments (17)

Mortgage Mess in the ActiveRain Channel

mortgage brokers, loan officers, lenders, short sales, lying, disclosure

Originally posted at: Weston Florida Real Estate Blog, Neal"The Real Deal"Bloom : They Keep Lying and they Keep Trying.

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17 Comments on They Keep Lying and they Keep Trying.

APR

Neal, do you feel better now? It can be very frustrating with some of these MBs. Lately I have been pricing my short sales low enough to attract cash buyers. I try to not deal with mortgages at all. It sure makes my life easier.

By the way, I just noticed you are now with KW. When did you make this move?

Okay Neal...

The whole scenario sucks. I also hope you feel better now. Tough market conditions man :)

TLW...ROAR!

BB,

I don't seem to have that luxury to attract cash buyers....maybe the price range so I don't have a choice.

I moved as of April 1st. I tried to call you.

Bille,

Thanks and I hope you feel better now obviously since your typing on my blog:)

This is why I like to deal with Weichert Financial. I have the mortgage person right in the office and I have control over the situation.

I sympathize with you, and I too wish that I do not run into liars.

Simone,

Unfortunately I represnt the seller so I can't make them use one of my people.

Neal - Oh boy! Does this post really hit a nerve with me! Why is it that all of these credit problems or issues always seem to appear at the 11th hour? Duh! This is not to paint a broad brush over all lenders but there are so many that have just been dropping the ball lately and it's no picnic dealing with it no matter what side you're representing.

Our mortgage contingency reads that the in the event the buyer can not obtain a mortgage commitment, the contingency is extended automatically until such time as the seller deems the agreement is null and void. I agree with Donna above, if the buyer has a pre-approval, one would assume the credit report has been run and approved by underwriting or someone who can makes these decisions. Bad credit shouldn't come as a surprise at the last minute.

Donna,

It seems as some people are not doing their job.

Susan,

Absolutely correct...it was all a stall tactic.

Neal, credit issues should not show up at the last minute unless the Loan Officer/Broker was working from an old credit report and did not pull a new one at the time they were giving them a Pre-Approval Letter. By the way there is no excuse for not pulling a new one because the Underwriter will if they don't and that is not the time to findout the the Pre-Approve is worthless. So I will agree with you that who ever the Loan Officer/Broker was did not do their job.

Now here is where we might not see eye to eye. What ever information that I get from my Borrower stays between me and the Borrower and I will not share that unless they give me permission to. having said that letting the Realtor on the Sellers side know where the Loan is in the Approval Process is not part of that confidentiality in my book. If a Sellers Realtor calls me and asks me when I expect the loan to be approved, or if everything is going OK I will give them an answer. If they want details about the Borrowers Loan Application, credit information, or other things that I view as confidential, I will tell them that I will ask my Borrower if I can share that with them, if they say yes then I will, if they say no then I won't.

Congratulations on the new office :)

APR

Neal, you did your job, you represented the sellers.

We had 3 offers on a Short Sale, the first two fell through. If the buyers are working with an unknown lender they found on the internet we always call. Most don't have a clue how our title insurance is paid here, they also don't get the tax prorations.

We bottom lined a contract on Monday for a cute couple, first time home-buyers. They were approved before we took them out. Then they wanted to shop around.

The rate that they were quoted was absurb. Quite frankly we told them we would give them other lenders if they were not pleased with the one we referred them to.

BUT THEY WERE ABSOLUTELY NOT TO WORK WITH THE ONE THEY 'FOUND'!!

If they did they would not be closing on the condo on the 28th and they would not get their homestead exemption.

If more Realtors would act like you, less deals would fall through.

I have found when a buyers doesn't want to get qualified, they are hiding.

Gee this should have been a post..I would have got 225 points instead of 25.

Welcome to Keller Williams......

Neal - When I get an offer in I always call the lender and ask if and when the credit was pulled. Half the time these letters aren't worth the paper they are written on. If I get no, I just spoke to buyer on phone, no credit pull, income not verified, yada, yada, yada. Offer is rejected up front, and buyer is ask to resubmit offer again after they have been pre-qualified by their lender, most of the time they go away. hmmm could if be they can't buy in the first place? Saves the seller headaches down the road.

Kinda makes you wonder why these agents are driving these buyers around showing them homes and submitting offers, doesn't it?

Hey George,

I understand the confidentiality thing with your clients but if they submit a contract and that clause states that they are to give you authorization to disclose...then why wouldn't you disclose it? Also if they weren't in agreement with that clause then they should either remove it or not sign the contract.

So what you're telling me is that there should be absolutely no protection for the seller and they should "just hope that the info they are being fed is real ...take the home off the market...wait until the end and then the deal dies with a denial letter that any MB can use to get the buyers deposit back and the seller ends up with nothing but to have to start over again. And if a buyer is willing to share proof of bank funds then why wouldn't they want to share the other information?

So now the buyer and the buyers agent will be the ones left to be liable and the MB is gone with no liability. I'm just saying that both parties should be protected.

Most sellers are willing to disclose anything pertinent to the deal so why shouldn't the buyer? If not then to me they aren't really serious. Oh by the way...it didn't help matters that the buyers agent was oblivious throughout the deal and didn't seem to even want to be involved.

Hi Missy,

Like I said...I can't force them to use someone I value and even at the end when they claimed to have been dissatisfied with their MB...I suggested to use someone who just closed on a deal and was able to make it happen and they had a worse case scenario...they wouldn't let me help.

Hi Sandra,

I agree...too much yada yada yada...in the end the agent tried to use every excuse in the book to think they were right...I didn't even address it....wasn't worth my time.

I think in circumstances like that, it's important that someone -- anyone -- be there to guide the Buyer and remind him that it's his responsibility to keep everyone informed, not those third partes. As the mortgage lender stated, he's not a party to the contract.

A similar problem exists in the home inspection industry whereby some home inspectors insert a clause into their service agreement -- a service agreement that is signed by only two people, the Client and the home inspector -- stating that if there are any problems with the home inspection, the Client will not sue the Realtor who referred the home inspector.

Generally, Party A (the home inspector) can't have Party B (the Client) sign away the right to sue Party C (the Realtor) as a condition of doing business. If Party C signs the agreement, making all Parties a part of the contract, it might hold up in Court.

Many home inspection service agreements here in California also require arbitration. Unfortunately, the purchase contracts require mediation. So when both the Realtor and the home inspector get sued, they both claim that they are not a party to the contract of the other, so unless either the Realtor or the home inspector abrogates that part of his contract, the result is usually a lawsuit that has to be settled in court.

Russ,

All circumstances hold different views as well as opinions on what is right in both ends of the business...I just think having these legal clauses in contracts when there are too many grey areas isn't helping matters.

APR

Informative post, Neal. Learn something new everyday. Thanks for the education.

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