Has this happened to you? If not, it probably will soon!!
Your customer has a written Pre-Approval from a good and reputable lender.
After a nice slow search, and taking lots of your time, they find a house they really like. They make an offer, the seller counters, they all agree on a fair price. The contract goes back and forth through attorney review. All is well... or so it seems.
The borrower is now told that the program they requested or were previously approved for is either no longer available, or has changed substantially. What's going on? How did this happen? Who is responsible?
The answer is: the market. The mortgage market is literally changing daily, and not necessarily for the better, although sometimes it has. Tighter guidelines, appraisal issues, declining markets and whole product discontinuations, all coming with little or no warning, is creating The Perfect Storm of mortgage headache.
What can you and your client do to try to avoid this?
1. Work with a lender you know and trust. Allowing the borrower to simply produce a dated Pre-Approval letter is simply not good enough in todays changing market.
2. Update the Pre-Approval. Check with the buyers lender, or recommend your preferred lender to make sure that the buyer still qualifies for the desired loan product, or if there is a better one for the customer available.
3. Don't fall for the "I don't want anyone looking at my credit" excuse. Without a credit check, we can't even quote a correct rate now a days, let alone tell someone we can approve them. If a customer will not allow you to check their credit, I'd be very wary.
4. Don't be naive. Pretending that you don't know that there is an issue, is not going to make it go away. This is not like 2005. Being upfront with the lender will get you the most positive and reliable results.
5. Finally, If it sounds too good to be true, it probably is!. The oldest line in sales rings truer than ever now. If 99 companies have said no, it's unlikely that company #100 has the loan, and with less down and at lower rates!! We've all been burned by that one.
When our industry turns around (and it will), we'll all be smarter and more diligent next time...Right?
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