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Borrower Forced to Apply with REO approved lenders

By
Mortgage and Lending with Core Mortgage Financial

I do not understand how REO agents and lenders can FORCE a prospective buyer to get pre-qualified for a mortgage with their selected lender.

This practice drives me crazy. I recently had a buyer call me after the deal feel apart with the selected lender. He went through the loan process and was given a specific rate.

13 days before closing he was asked to sign the FINAL mortgage brokerage business contract. He realized the rate and fees are considerably higher than what we agreed upon.
I do not understand how lenders can get away with FORCING a borrower to use their lender. The lender say they are not required to complete the loan with the selected lender. Trust me, the pressure put on the borrower to use the selected lender is very high. They will do whatever they can to get the loan.

It seems like their should be a law against this steering policy implemented by lenders and some REO agents.

I ended up closing the loan barely for the client. This is just ONE scenario of many nightmare stories concerning this abusive practice.

Posted by

CORE Mortgage Financial

Comments (4)

Roy Kelley
Retired - Gaithersburg, MD

The lenders and their asset managers control the REO market. You can work with them or pass the opportunities.

Oct 02, 2009 02:32 AM
Core Mortgage Financial
Core Mortgage Financial - Naples, FL

Thanks for your comment, Roy ! The lenders and their asset managers already have lenders in place. Example the former Indymac bank has aligned with Prospect mortgage and now steers their clients in that direction. This is NOT an open market for me to work directly with asset managers. The lenders selected to service the prospective buyer are chosen at a high level within the REO organziations. Have a great day !

Oct 02, 2009 02:37 AM
Teresa Cwik
Showcase Staging Houston - Houston, TX

its simple...they do it because THEY CAN.. You are right...there are A LOT of things that need to change to get the market back on track and the economy...starting with the banks and our current credit system...

Oct 02, 2009 02:38 AM
Core Mortgage Financial
Core Mortgage Financial - Naples, FL

Thanks Teresa !! You are right on ~!!

Oct 02, 2009 02:40 AM