It's 2008 and you think you have seen it all. After 15 years in the mortgage business and as an FHA expert, I am baffled at what some states allow and I wanted to get everyone's opinion on a specific matter.
Just the other day, I had a consumer contact me after reading several of my blogs. He told me that his previous loan officer pre-qualified him for a mortgage 2 weeks ago and just the other day, told him that he can't help him now. Why? Because he just realized that his FHA license was going to expire at the end of the year and that he won't be able to help him settle next year, 2008, on his new home. I thought this was very strange, especially since the market will be shifting towards more FHA loans because of what has happened to conventional mortgages. (by Rey Gallegos) And since this will be the case, there are lenders fighting for the chance to be FHA approved and nobody in their right mind would take the chance to lose their FHA license. This is just my opinion. But here is a good example why FHA mortgages will be much better than conventional mortgages if your credit scores are less than 680. Please read : Will Conventional loans be just like the Subprime mess? Are the scales being tipped in the wrong direction? Please read more to find out.
So after he tells me that he has been qualified for an FHA mortgage but that the other lender can't help him, I asked him if I could pull his credit. After I review his credit, there are about $11,000 in collection accounts, two of them being about $4,500 and $3,000. I then question him about each collection account and find out that none of them have been paid. I then ask him if the other loan officer went over his credit or any of these collection accounts with him. He said no on both accounts. Yikes !!! I won't go there for now, in regards to shopping for a mortgage.
But here is the point of this blog. I then asked him if the loan officer ever gave him a Good Faith Estimate (GFE). He said no, but that the realtor gave him one. I said, huh? The loan officer never gave you a good faith estimate, but the realtor did? Are you approved or even for that fact, qualified to buy a house because of this piece of paper, the GFE the realtor gave you?
Conclusion : Here's the scoop. The loan officer was giving him a rate of 7.125%, but he still didn't know what the costs were going to be. I was giving him a rate of 6.75% and he would need $6,300 out of pocket. The realtors good faith estimate reflected a rate of 6.5% with $3,300 out of his pocket. This realtor had many of the correct costs down when it came to title fees, escrowing taxes and homeowners insurance, and even a commitment fee. But she was showing no points at all. The long and short of it? Not only would I make about $700 on this deal if I were to use her rate and fees, but this realtor never reviewed his credit. Now, we can stare at the $700 and assume that this might seem like a lot to the average consumer. What's missing, in my opinion, is someone that is not qualified, giving a good faith estimate. Without knowing if this person can even afford the mortgage, let alone, qualify with their credit.
Little tidbit and I would love to hear from other realtors in Pennsylvania. This transaction and realtor are both in Pennsylvania. I was told by someone that is a state law that the realtor give their client a good faith estimate, from them. Is this true? In all honesty, do you even think that this is a good idea? Me personally? I think it's like puring gasoline on a fire. Are some realtors possibly capable of giving the correct numbers? Maybe, but based on what? What knowledge? From rates published in a newspaper? The media? What are your thoughts? Opinions?
END RESULT as of 01/03/08 -- The client told me that he is still checking with other lenders. Why? Because his offer has now been accepted on the 2nd, when he was told 2 weeks prior, that he could get a mortgage. Why is he still trying after I told him it could be 5 months before he could buy. Emotions and wanting something so bad, especially after it was set in his mind that it could be done. And because the loan officer didn't properly qualify him, told him that he was qualified to buy, and because the realtor gave him a piece of paper with costs, making it sound that they should be able to buy. THIS PART IS WHY SO MANY PURCHASES FALL APART AT THE END. THE LOAN OFFICER CAN BLAME IT ON 10 OTHER THINGS OTHER THAN HIMSELF. THIS IS A FACT.
A must read to see what else can happen when talking to certain loan officers :
______________________________________________________________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert You can also go to this group : The FHA Mortgage Group
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
Copyright © 2008 by Jeff Belonger
Comments(22)