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9 words that strike fear into the heart of every Realtor

Buyers have the option of using any lender they want. However, one of the comments that stirs fear in my heart is "We're using a lender we found on the Internet". Please say it isn't so! Let me tell you why I love it when my buyers decide to use one of my preferred lenders.

My preferred lenders answer my calls. They know I will not refer my clients to them if they don't take care of my clients. Your Internet lender doesn't know me and probably doesn't care if I ever use him/her again. What's more...they probably feel the same way about you.

My preferred lenders will have your loan documents to the title company 3 days prior to closing or as required by the sales contract. Your Internet lender may not, which puts your deal in danger. You may lose the house and your earnest money if your lender doesn't have the loan docs ready so you can close on time. It's not your fault, but it doesn't matter.

Many Internet lenders promise great deals with low interest rates then slap you with hidden costs that, if you do the math, end up costing you more than you would pay with a higher interest rate. My preferred lenders explain exactly what that loan is going to cost you and isn't that what you really want to know? It's more than just interest rate.

I feel so strongly about the quality of my preferred lenders that I require that my buyers sign a disclaimer acknowledging they understand the consequences of the non-performance of a lender.

So, when your Realtor recommends a lender, understand that your Realtor is looking out for you.

Amy Jones, Realtor, ABR, CNE, EPro, CDPE
Top Producing Realtor in Chandler, Sun Lakes, and the surrounding Phoenix East Valley.
Named one of the "Top 50 Real Estate Agents" by the Phoenix Business Journal

RE/Max Excalibur
4921 S. Alma School Rd
Chandler, Arizona

Visit www.AmySellsAZ.com for more information including free MLS search.
Visit www.PhoenixArizonaRealEstateBlog.com for a comprehensive Phoenix Area Blog.
Visit www.SunLakesBlog.com about living in Sun Lakes, AZ.
Visit www.hosted.cdpe.com/AmyJonesGroup if you're an AZ homeowner facing foreclosure.

Posted by Amy Jones on 10/05/2009 07:48 PM

Comments (66)

Internet Lenders in the ActiveRain Channel

This post has been included in Arizona Information

66 Comments on 9 words that strike fear into the heart of every Realtor

OCT

And, as a mortgage broker, I find it ridiculous that Realtors feel the need to involve themselves in the loan process. The feedback that I've recieved from clients is that they get annoyed when a Realtor pushes them to use "their" lender, rather than encourage the buyer to shop around. After all, it is their money.

I could not agree more. There is a level of accountability. You are going to purchase within a community. It would be nice to know that your Realtor and lender are within the community as well. Napa is a small town. Word spreads quickly. There is a built in filter to ensure clarity and professionalism.

Yes!

Stefan In Napa Valley

Arizona Home Loan & Mortgage~ I agree. The buyer should "shop around", but shopping on the Internet is a dangerous and sometimes costly proposition and the buyer is often unaware of the risks. I provide 3 lender names to my buyers. Each of them with a level of success that allows me to feel confident they will get the job done. The buyer ultimately decides who they will use. I'm curious, though, AHLM... when you need service...say a home repair item or maybe the name of a physician... do you ask people you trust for their recommendation, or do you feel it's "your money" and you can spend it however you want?

Stefan~ We're on the same page!

Amy,

I normally want as little to do with the loan and lender as possible. I do like the idea of providing clients notice that some lenders will not be as responsive as others. I like your post and will re-blog.

Very well said. Good point about the internet lender teaser rates or loss leaders. Once they reel the buyers in, they uncover all these hidden costs. Caveat emptor!

Many of the internet lenders are not licensed in every state and they tend to give buyers really BAD advice. I always let buyers who are using the internet know that if they don't want to use one of my preferred lenders, to at least work with a lender that is local. Local lenders know the lending laws inside and out in the state they're in, and out of state lenders sometimes "assume" things are the same and troubles happen... every time!

Amy, I had a client who insisted on using an on-line lender as the rates were unbeatable. I told the buyer that second home condominiums require a special review, and underwriting approvals. This lender called a week before the closing and said..because they had found an owner offering to rent another condo-unit on line they considered the project a condo-hotel and denied the loan..7 days before the closing. I had my guy who I use close the loan ten days later. But the buyer had to pay twice for several bank fees...Lesson learned...nope its going to happen again you can bet on it.

Thanks for the repost Wayne!

Barbara & Donna ~ I feel like we're protecting our buyers when we share the risks of internet lenders with them...and we're protecting ourselves when the deal doesn't happen because of the internet scammers!

Steve~ I've been there too. It only takes one of these 11th hour crash and burns to make us swear THAT will never happen again!

I had the same situation as Steve. I will NOT allow my buyers to use out of state lenders if FHA or VA is involved. Just too risky. Other than that, I tell them about my preferred lenders, but don't really push them one way or another!

It usually works better to use a known lender than an unknown one, especially in today's lending world.

Amy, The disclosure is a great idea. This should also let the buyer know how important it is for the lender and the realtor to be able to communicate.

Hi Amy.

An "Internet lender" may include those who choose to maintain an Active Rain account. Some of them are reputable.

For me I refer people to a preferred list but make it clear in writing that the choice of lender is theirs to make.

~ Lana

Hi Amy -- I do extensive counseling with buyers regarding this and you are right on with your perspective and it can be be a deal breaker when the wrong lender is used. I had one Internet lender half way across the country, the loan officer quit the week before closing and threw all his files in the trash with no backup.

Another comment that can strike fear...I'm using my cousin who's a lender in _______( a state that is no where near here!!) Sometimes, this may work out...but oftentimes it makes things a bit more complicated. :)

I have no problem with an internet lender if it was referred to them by a trusted friend, family member, colleague or their realtor or other trusted professional

Just being on ActiveRain does not give a person/business credibility and prestige. But if a relationship developed with the lender through Localism/AR, over time, than that is different.

lol......Amy, if a buyer uses those words with me than I kindly explain that I will only work with them if they use a lender that I can go knock on the door when there is a problem. If they do not want to comply with that simple request than I will find another buyer that wants to do business my way.

I am happy that I am in a business where I can do business how I want to do it!

As a Realtor we need to know things are progressing as they should. Nothing worse than on closing day to learn that the loan is not ready to close. I agree it is the buyer loan and they should be able to shop around. They also need to know how to compair apples to apples to ensure they are truly getting the best deal.

That is a hard one. Our team gives out 3 lender names but only when asked. I want to know up front if my buyers are preapproved and can officially "go shopping" so that is a very important question to have up front. It is hard to know what you are getting sometimes on the Internet.

Amy,

I agree with you 100% on this one. Not only can the pre-existing channel of communication that may exist with a known local lender (many to choose from) help things run smoothly on our Buyer's side, but it can make an offer a little more appealing as well. I have definitely said to a listing agent, "Oh, and the Buyer's pre-approval letter is from Jane Doe over at Acme Mortgage... you know her, don't you?" And the listing agent will say, "Oh yeah, I have worked with her several times... she is really good."

It can make a difference.

I couldn't care less about "involving myself in the loan process" except for the fact that I am in the "closing business", and the former certainly effects that latter. And the latter is what all parties involved are wanting to see happen.

OCT

Here's another one we hate here in New York:

"We're using our cousin Mel/our free union lawyer as our attorney in this transaction."

Amy, great blog. Yup, or this one: My loan officer is also a real estate agent!

AGHHHH!!!

I love this topic. I have mixed emotions. As a mortgage broker who happens to have a strong internet presence, I love on-line lenders because I get a lot of business from folks who were mistreated by them - so they come to me. Another one happened just today. I hate to generalize - as there must be some good ones. Like in Ferris Buehler..."Anyone? Anyone??"

If I were a Realtor - I'd probably feel the same way as Amy who wrote this post. I will be writing my own post soon with the message that we should treat our client like they are our only client, and perhaps our last one.

People are people...real estate agents or mortgage originators...some are upfront and some are unethical (Like the RE agent above who hid occupancy information to allow his buyer to get A mortgage loan on an ineligible complex).

I'm sure all the hidden things that your producing loan originator friends do for you have really helped out the foreclosure scene. Tell me...when that buyer goes to refinance and can't because of occupancy % and foreclosues 5 years down the line does he go to your 'producing recommended LO' for another fraudulent loan?

It sounds like the online loan officer who denied him actually did a proper job in protecting him from financial disaster down the road at their own expense.

Online real estate agents...are basically people just like online loan originators, are even often the same person...your judgement seems hypocritical. By your own logic and clear demonstration loan originators should have buyers sign a disclaimer saying that nonperforming and nondisclosing RE Agents may hide factors that will ruin their entire life merely to sell a house to them for a comission check.

Excuse me...I think I'm going to go throw up now.

Amy,

I almost used an online lender, but decided not to, when I went to sell my house (2006) I found they had a lien on it! No kidding..It was cleared up with a phone call, but what if it had been later and they were out of business like they are today?. Nice post! I hope to become one of your "Preferred Three Title Companies" :)

Paul Guenther

Chicago Title Insurance Company

mytitleguypaul@gmail.com

http://www.mytitleguypaul.com

This is so true. At least if it's one of your preferred lenders you can have a much better idea of what is going on. Not that we need to know the financial situation of the buyers but we just need to know that they will be okay with financing. The same issue happened to me with a building inspector a few months ago. They wanted the most "inexpensive" one out there, they found one, but like the saying goes "you get what you pay for". Great post!

Amy:

The introduction of any unknown professional into a transaction is frightening and I try to avoid it like plague. But, sometimes with a banker the client will be convinced simply because of the rate that he is offering. They have to be made aware of all of the other factors involved, including whether or not the lender is reputable and knows what he/she is doing.

This post clarifies why BUILDERS also promote/incentivize using their lender (despite protestations from Realtors and other lenders). There is great efficiency/ power in having 50-plus buyers umbrella'd under a lender that is responsive, with the builder demanding accountability for any delays. That said, not sure I like the recent, "must be prequalified with x lender" that I see with more and more frequency- choice is everything when it comes to a thirty year commitment, and that buyer paying the fees needs to explore all alternatives. My choice may not be theirs. I had a great experience with an online lender- but like anything, I'm sure there are awful ones, as well.

Thanks for your comments! Ultimately, it's the buyers decision who they choose to work with. Will I work with a buyer who is using an Internet lender? Absolutely...as long as my buyer fully understands the risks and the benefits of their decision.

I've found even some of the "big name" Banks are difficult to work with because of poor communication and poor service. My buyers will benefit from my past experiences with these lenders and can then decide who they want to use. The ONLY benefit I receive from a buyer using my preferred providers is the transaction flows smoothly and my buyer gets the house they can afford...legally and ethically!

It is a part of every listing in MLS "Buyer is required to have a letter of pre-approval from a locally recognized lender."...can't leave/buy a home without it with us !

As someone who represents short sale owners, I will recommend to the owners that they require a local lender as a backup, or no deal. My experience is 100$ bad with internet based companies. Hopefully this will improve but I haven't seen it yet.

I am not an "internet lender" but I've had a few clients that found me through Google, Facebook, and AR. I wasn't working with the Realtor at the time, but we were able to develop a relationship based on exceeding the expectations of the buyer.

Amy, We like to say we provide quality information for buyers to make informed decisions. Like you said it's ultimately their decision.

Amy- what a timely post for me. Two of the buyers I am working with said they are pre-approved with a certain internet lender who has been advertising heavily on television. I have encouraged both of them to shop around with local lenders.

It has been my experience that these businesses over promise and under deliver. I like your idea of having a disclaimer.

My clients have not had success using an internet lender. I've also found that listing agents are very leary of working with an unknown lender.

very true. we do have to educate our clients of the pros and cons of working with each type of lender. great post.

Amy, I agree.

If they have chosen one we just ask them to speak with one of our 3 preferred lenders. For the reasons you named.

Most do and decide to stay local.

One didn't last summer, and he called during the final walk-through and told them he couldn't do the loan.

The buyer fell down and bawled and admitted she should have listened to us.

We called our lender, got the appraisal re-assigned to save time and closed a week later.

In the mean time they lived on the floor of their apt.

"I will NOT allow my buyers to use out of state lenders if FHA or VA is involved"

"Buyer is required to have a letter of pre-approval from a locally recognized lender."...can't leave/buy a home without it"

I am concerned about comments like these. I agree that the benefits of using a local lender are huge.

But I disagree that Realtors should "not allow" or "require" that clients choose a lender dictated to them by the Realtor...or else they cannot buy the house.

This does not help buyers see your role as Realtors in a positive light. In fact, they may believe it is nothing more than blackmail. "Do as I say, or you are not getting this house"

I am going to agree with Arizona...buyers deserve to choose their own lenders and Realtors should respect this.

Like most of the comments, I have also has buyers burned with internet lenders, closings delayed, problems with them not knowing how things work in our state.

That said, I once had a sticky deal that I posted on AR, and our own Jeff Glick with Brayden Capital out in Georgia offered his help and saved the deal, and went on to refinance my own home. And one came to me with an approval through a VA Mortgage Center (can't recall where they are though), and I was worried since it was out of state, but it was one smooooooth deal. So I think it depends on your definition of internet lender....

I usually have my buyers get Good Faiths from a couple of lenders, and if they have their internet one, one from them, and we go over them line by line to see the differences. Usually they can then see the fees and whatnot, and they do get suspicious when the internet one doesn't have things in there that the other two do like oh title insurance or 1/10th of the insurance and whatnot.

9/10 local is almost always better, and the listing agents DO care where it's coming from too.

I have never had a good experience when a Buyer used an internet Lender. If that's what they're doing, I ASK them to please interview 3 local Lenders, 'cause the bottom line is you want to be able to walk in their office and strangle them if necessary.

I absolutely respect a buyer's right to choose their own lender! I will suggest local banks and mortgage brokers whom I trust, but it's the buyer's decision whether to use them or not.

That said, I strongly discourage buyers to use "internet lenders" (and by that, I do NOT mean any lender who happens to have a strong internet presence...I'm talking Quacken, Duh-tech, etc.) I've seen too many people be assured that everything was on track only to have their files lost, their requirements changed at the 11th hour, deadlines ignored, etc. etc. (One excuse: "You're going to have to delay the closing. We're a little behind because of the holiday weekend." Um, excuse me, but were they not aware that Labor Day occurs on the first Monday of September? Every. Single. Year. Furthermore, they'd had the file for weeks. I'm willing to bet they didn't forget to take the day off. Oy!)

They are a disgrace, and Buyers are well-advised to seek additional information beyond the promise of low-low rates. If the financing is a means to an end...be sure that the end is the one you're hoping for.

I understand completely that a realtor would want the buyer to use a mortgage broker or lender with which they are comfortable. I have an internet prescence and get loans through the internet as well as referrals. I can sympathize with realtors who essentially have done their jobs in finding a willing buyer and a willing seller at an agreed upon price and now they dependent on some moronic loan officer for their commission, let alone hurting the buyer and seller.

The best way I know how to make everyone comfortable is through communication. I usually will set up a specified time on a regular basis to let everyone know what is going on. This includes, the buyer's agent, listing agent, the buyer (of course) and attorneys (if their are any). If their are problems I let everyone know right away. If I feel that the loan process for this particular buyer will take longer than usual, I let everyone know. Ultimately, if I feel that I am unable to get a mortgage for this particular buyer, I tell everyone as soon as possible. Ultimately, it service, communication and honesty, not necessarily rates that is the difference.

Amy: Thank you so much for clarifying the difference between being an Internet Lender ... and a lender operating and maintaining a healthy internet presence. I have blogged and written extensively about this very topic and have tried to educate regarding the differences between the two.

The efforts you make and the loyalty you show on the behalf of your preferred lending partners is extremely admirable. It is exactly what a lender longs for in a relationship with a realtor/broker ...

Gene

I think we all know who you are referring to you and yes I am on your side. In past years I have had a local lender step in to get an approval and close the deal. I am even considering getting my loan originators license, does anyone else do both?

My last experience with an internet lender was not a good one. Had to wait days for return phone calls if I got them at all. A couple days before closing they said it will take 7 additional days to consumate the loan, when I asked why they said because you have a 7 day automatic closing extention in your state for lenders. Uh yeah, but it's not there for you to abuse.

Amy: This is a nightmare waiting to play out in real life! I will not work with anyone who will not get a second opinon from my lender ... normally they get a better rate and have somone to sit down and talk with ... and ultimately they make the decision to use a local lender. It's about selling the advanatages weighed against the pitfalls ... great post ... Thanks!

I have had sellers refuse an offer because the buyer was using an out of state on-line lender....I called the lender to verify the buyers pre-approval info and he returned my call 3 days later...yikes I hope I didn't wake him up...LOL

Buyers do have the choice but why would they not want to go with a lender or company recommended by the realtor. Realtors and lenders have relationships that can be beneficial to buyers and sellers...

We have seen significant delays and issues with lenders and underwriters who are not in the area. And when there are delays, it can be very difficult to get answers which is even more frustrating.

We have an in-house lender, however if a client asks I offer the names of several lenders. It's part of the service we offer as agents. They make the ultimate decision.

the interenet lure will always be there over promising and under delivering

WOW ! I think using the word INTERNET lender does not get down to the real issue here. I can tell you recently got burned by an "Internet lender". I sometimes receive Internet traffic on my website for in-state loan transactions . It's a matter of forming a relationship with the borrower and Realtor immediately to ensure trust and a smooth loan transaction. Characterizing that all Internet lenders do not care about escrow deposits, pick up the phone and cannot complete loans on time is incorrect. Like anything in life, their is always BAD loan officers and BAD Realtors. Please consider the source not all financial professionals. I do understand steering your clients to trusted, efficient and effective loan professionals is important for you to facilitate the transaction. Good Luck Selling and Best Wishes !

Good post, Amy. I was on the other side ( mortgage broker ) for many years and certainly appreciate the different perspectives that have been shared in the comment section. Part of the issue for us is control, and we prefer to have it whenever possible. Good local mortgage professionals value their reputation within the real estate community they service whereas an out of town/state lender probably does not.

Great post, couldn't agree more.

I recently worked with a buyer who was pre approved with a well known local lender (who had been referred by his cousin). The listing agent told her sellers that this lender was very knowledgeable and knew what she was doing and basically took the contract based on the terms AND the lender. My buyer (with prodding from his best friend), changed lenders and went with his best friend's buddy after the contract was signed. Long story short, we had to extend the close date 15 days due to total incompetence on the lender's part, the seller was mad, the seller's seller was mad, the agents were mad and my buyer STILL chose to stay with the lender. It was a 5 hour closing because the lender and the closing department were not communicating. The buyer was just lucky that there wasn't a backup offer on the house! Listing agents make decisions based on where the money is coming from and you can't blame them for being less than excited with a unknown mortgage company.

Amy,

What's worse than that? Having Internet lenders send out their hand-picked Internet appraisers...who compare custom homes to track built...OUCH. That hurts!

Amy,

Great post! Clearly you understand that job 1 is getting the deal closed. I've seen several deals get sideways when the borrower, who is convinced there are no possible issues in his file, decides to go with some fool who advertises 1/8 percent under the market. Thanks for sharing.

I get referrals rom realtors.... But I can also be found on the internet.... Which, makes me an internet lender.

I guess that means I suck!

Hey, Realtors.... why blog? If someone finds you on the internet, you will just burn them in the end by not showing up at closing or popping a transaction fee on the HUD-1 without the loan officer's knowledge.

I have never had a customer use an internet lender, I have had a couple of buyers indicate that they were thinking of using one. It didn't take very long to talk them out of using one. In todays market its more important than ever to use a very competent and very local lender. If you can't walk in their office speak to them face to face don't use them.

I grew up in the industry as an internet lender. I am primarily a local lender so-to-speak now, but most of my business is from online. I'd like to think I offer the best of both worlds. Seriously, it almost always comes down to the loan officer, internet lender or not.

Amy, as a hyper local lender that does a wonderful job tearing up "internet lenders" I'd love nothing more than to be able to agree with you, but I'm afraid I can't.

That moniker- "internet lender"- is something we all define differently. If your definition is "the boiler room operative that brings no knowledge, little communication and incorrect disclosure to a transaction", then I think everyone would stand firm with you.

But what of the internet lender that can be defined as the forward thinking and adaptive professional who realizes many buyers begin shopping these days on the internet. The lender who actually excels in communication and oftentimes specializes in certain programs to the point of being truly expert in his field. The guy (or gal) that is so good at what they do they are simply choosing to cast their net over a wider area to attract more market share. Is that anyone's example of a bad idea?

I would certainly hope not...

Gerry Suarez, Jr.

Your FHA Loan Pro!

I heard that..whenever I hear that... it conjurs up bad memories. of deals not closed.

I am sure Chandler is like us ~ you gotta go local. Too many financing challenges and the stupid internet lender always ends up with "WOW, when did that happen?" My answer is something to the effect like "duh, that is so two years ago." Maybe I leave out the "duh" and smart arsery but you get the picture!

I have seen buyers insist on using some broker that no one knows, and then at the closing table, the documents the lender supplies do not match what the buyer was told. At that point, what do they do? Back out and lose their deposit? Go ahead with the deal with a terrible financing plan in place? At that point they are up against a wall. Yet if you push too hard for them to use a particular broker and by coincidence something goes wrong (it does happen), your name is mud and you get blamed. All I can do is say is here is a list of brokers my customers have used before and have not had any problems. If they insist on going with someone else, that is their choice and they will have to live with the consequences, good or bad.

Great comments! It seems the term "Internet" Lender has caused some confusion.

Of course, in today's market, just about anyone who is successful has a strong internet presence which is a good thing, so that's obviously not the type of lender I was talking about.

If I can call the lender and actually speak with the lender the day I call AND every I is dotted and T is crossed WHENEVER it should be...we're all good. However, we all know there are so-called lenders who are all over the internet throwing out bogus claims to trap buyers. You can usually tell which ones they are by the number of times they don't call you back. AND...Yes, a local agent is what every listing agent I know of wants to see on an incoming contract.

OCT

Amy, if someone wants to use one of these guys for a refi, that's fine. But I do whatever it takes to get clients to one of my good guys.

OCT

If I have a client who is working with an internet lender we insist they also get approved locally just as a precaution. In our experience there are unknown fees that crop up that the buyer is unaware of. Do I get involved with the loan/lender, yeah sometimes I do. Ihave ahd deals fall apart because the lender wasn't "up" on some of the ever changing rules of FHA. I don't know or am privy to all the changes either but I do know how to get the information how to RUN to another lender if this one falls down on the job. Its my job to get the transaction to close and to do that I need to be aware of any problems with the loan. Dear Lender, I am here to help get this deal close let me help trouble shoot with you, counsel and calm the buyer or seller down. We are suppose to work as a TEAM to the best interests of our joint client. If I as an agent was doing something that you found suspicious I hope that you would keep a careful eye out for your client as well. TEAMwork is an important aspect of our job.

OCT

Thanks for your comments, Patricia & Jo!

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