Lately, it's been a little more difficult to keep transactions together. If it's not a low appraisal, then it's a problem with a property inspection. But we've learned how to nip those problems in the bud. My biggest issue recently has been clients who decide to secure their own mortgage financing and find some unknown mortgage broker or worse an online mortgage.
I always say, actually I plead, that my clients use a mortgage company that I know and trust. My famous last words are "if it sounds too good to be true, then it most definitely is, especially when it comes to your mortgage financing". Unfortunately, I've had some buyer's who were lured by unusually low rates lately and boy oh boy has it been a ride trying to get funding.
One of my clients recently purchased a Calabasas REO. It's was a fantastic price and the property was in excellent condition. She was putting down more than 30%, had Fico scores close to 790 and was full income, full asset check. She could have probably obtained a mortgage from anywhere. She insisted on using a mortgage broker that I didn't know because the rate and closing costs were less. I explained that the costs one by one and told her that the mortgage broker that she chose was probably not disclosing something. My client insisted on the unknown broker. She locked her rate, and of course had no problem getting an approval. When it was time to close there were problems with the title. Then we find out that her rate was going to expire before the actual closing date in the contract. We couldn't close early because of the title issues.
Of course the rates had gone up and there was no way her mortgage broker would budge on the rate or a rate lock extension. After several (more than several) phone calls to the mortgage broker, the mortgage brokerage management, the title company, the escrow company and the listing agent, plus many tears shed by my client, we got the issue resolved with the title. We were able to get a rate lock extension for two days, but it was like pulling teeth.
In the end it all turned out OK, but it could have been very bad if the title issue had taken any more time to resolve.
The next situation happened to a couple that purchased a gorgeous, almost new Calabasas view home. They had their own out of state mortgage person who was promising to give them a 90%, stated income, jumbo loan at a fixed rate. When I heard this I became alarmed and called the out of state mortgage broker. He wasn't the nicest mortgage person that I ever spoke with but he assured me that he had this mortgage product and my clients qualified with their stellar credit history. Again, I begged my clients to put in an application with a local lender that I trust. They felt that their mortgage person was the best. Every other mortgage broker they spoke with (including mine) told them that they'd have to put down 20% to go stated income. I gritted my teeth and went through the motions. I had my mortgage person on stand by.
When my clients got to the closing table, they noticed that there were two sets of loan docs. An 80% first at the agreed rate and term AND a 10% hard money second due in six months. My client got up and walked away from the table. They frantically shopped for a mortgage while I begged the listing agent for an extension. Panic sets in as my client realizes that his down payment is at stake. After calling everyone we know, he realizes he cannot secure a 90% financing, stated income, jumbo loan. He ended up signing the loan documents with a verbal agreement that he can extend the hard money second for more than six months. Yikes!
And story three is still in the process. I have a great young couple who purchased an amazing pool home with a view. They have perfect credit, more than 30% down and need a full income check jumbo loan. Again, I urged them to use a lender that I trust, but they found a better deal online. I'm very skittish because of these other two transactions so I have advised them to put in an application with my lender also. They have agreed to do this and hopefully we won't need to use this back up, but my guess is we will. The rate lock that they received just seems way too good to be true.
Normally, my client's use a lender that I suggest and trust and we never have lender based problems. It seems that the more business that I get from blogging, the more my clients want to use an online resource for lending. Since they have chosen me from reading my blog, you'd think that they'd choose a lender from a blog, or better yet, trust me to recommend a lender that will actually deliver what is promised.
Price is not the only reason to choose a mortgage lender. High credit scores and great income, don't guarantee that the lender will be fair and honest. It seems that the bait and switch is alive and well in the A+ credit crowd.
I have also run into the same thing! My client is well qualified and has 20% down!! We are still in escrow going on 2 months !