3 HUGE reasons why lenders delay deals...

In recent seminars I have done, I have been blown away that real estate agents never knew about these 3 things when it comes to lending.

 

I am going to try to explain 3 big reasons why lenders delay transactions at the last minute as to help shed some light on it since when it happens, people typically go crazy, get super frustrated and wonder why.

 

1) We want to make sure that the loan will be bought by our investors. 90% of mortgages are sold in the secondary market today -- 90%. If our investors think that we made a bad decision, then they will not buy it from us and we get stuck holding the loan. Get stuck holding too many loans and wave bye-bye to your company (does anyone remember the subprime crisis and how many banks and mortgage lenders went out of business?).

 

2) If the borrower goes 30-days late on their mortgage within the first 6 payments, the lender who gave the loan must pay back all of the money which they made PLUS a penalty fee. (Let me know how it feels when your commission check is $4,000 and you have to write a check back to your broker for $7,000 because your buyer you sold that home to 4 months ago "forgot" that the payment was due).

 

3) If the borrower goes 90-days late on their mortgage within the first 24 payments, the lender who gave the loan gets a strike on their license if the loan was FHA, VA or USDA. Too many strikes and wave bye-bye to your license.

 

Combine those 3 thoughts and I have a question for you -- how many of your sales would you have second thoughts about if those 3 consequences affected YOU?

 

Would you close a deal for someone with a prior bankruptcy, foreclosure, outstanding collections, gift money for a down payment, judgements, job changes, high debt ratio's, divorced 3 times, they are on a payment plan for unpaid income taxes or they live in their overdraft account???? Better yet, would you make doubley, tripley or quadrupley sure that you had EVERYTHING before closing the loan even if it meant delaying the deal by a week or two??

 

Next time you have a delay, instead of jumping all over the lender and calling them names, saying that they have had this loan for 40 days or the world is going to explode if we do not close, take a deep breath, remember these 3 points and try to understand that loaning $150,000 to someone is serious business.

 

As always, call me at 1-216-780-1103 for further explanation or post away and I will do my best to clarify!! Hopefully that was not too long-winded.