It is usually out of frustration that I write the best blogs... Ok maybe not the ones with the most attention paid to them. I am sure this is going to be one of those.
Usually my rants about lender practices and issues with ethical issues are left to my professional community in order to keep things positive and informational in my public blog.
In this case I think everyone needs to be informed and give an opinion. As real estate agents we all have our favorite lenders that we work with. Sometimes they help us advertise (jointly) and sometimes they just are the ones that always do the best for our customers. I have a favorite lender that I recommend that has the best success rate at making my clients happy and closing deals. That being said, I give out 3 lenders to my clients to check with and see which one they would like to use. Three good lenders give my clients a choice and legally keep me out of trouble for recommending only one person. It has not happened to me, but I have heard of law suits involving the recommendation of contractors, lender and such that did a bad job and of course the person who did the recommending are brought into the suit. a
Lenders (banks, mortgage brokers etc) are now governed by RESPA which has limited their ability to solicit business from Realtors. In the olden days lenders could offer free real estate classes pay for business cards pay me even pay for referrals basically wine and dine an agent to get his business. It is good to know that when an agent recommends someone now it is not because of some kickback or incentive that they are getting. Of course some Realtors are also Loan Officers but that is another blog for another day. :)
Today one of my investor clients made an offer on a foreclosure in Plano that Bank of America holds. The bank REQUIRES a prequalification letter from Bank of America in order to make an offer. You don't have to use BOA for the loan but you must be qualified through them in order to submit an offer. They will throw in a free appraisal and credit report if you end up using them. Am I the only person that can see a problem with this? My client owns more than 4 properties and BOA does not finance more than that for anyone. He was denied by them after trying to contact a loan officer at this bank for the past few days. He is fully qualified to buy this home through his lender but that prequalification letter is not good enough for BOA. They want him to send a denial letter from BOA with his banks prequalification and they well then submit the offer. Did I mention that BOA needs 48 hrs to get us a denial letter and the offer is due by 2pm today? Multiple offers do happen in our market and this home was a great deal with many offers.
It seems like Realtors are held to a higher standard than these banks. Imagine if I required you to have you qualify through my lender in order to show you homes. I do require prequalification but any lender will do. Wouldn't that be considered steering if I did that?
This is something that is also used by builders. Builders have ties to lenders. Sometimes the builder has a parent company that is a lender. Many times any discount you get at a builder is contingent upon you using their mortgage company. Prequalified buyers are forced to use the builder's lenders in order to get the incentive.
It is my opinion that Lenders and Sellers should not be allowed to require the use of specific banks in order to get incentives or be able to make offers on a home. What do you think?
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