Home : Blogs : David Garcia--Seattle Mortgage Expert.com : David's Blog

5 Reasons Why Loans Go Awry at the 11th Hour

I am sure many of us have seen scenarios where buyers and sellers have moving trucks packed and people literally sleeping on couches or even on the floor waiting for a loan to fund and then for everything to blow up at the last minute?....AAARRGGGGGHHH!!!!

Often times, I have had deals brought to me after being submitted to several other lenders where supposedly either the borrower didn't qualify or something was wrong with the property and, of course, the parties involved didn't find out about the problems until the 11^th hour.

One recent instance happened to a buyer whose file was submitted to 8 different lenders and had been denied for one reason or another despite the buyer having near 800 credit scores and very high monthly income. You would think that after going through 8 different lenders that there would be no hope for this transaction. However, I was able to close the deal in a couple of weeks and it took that long mainly because or main processor had just gone on maternity leave and processing was a little short handed at the time.

Why do these deals blow up like this? How is it possible to have a loan denied by many different lenders and then get approved so quickly when the right lender is found?

1. The wild and crazy mortgage market of late. With so many changes in the mortgage market in the past year, many lenders have changed their guidelines because the loans that previously were possible are no longer saleable in the secondary market. Consequently, if investors are unwilling to buy those loans, then banks may not be willing to keep those loans in their portfolio. Thus, the tightening of guidelines. Sometimes, some of these lenders have not been communicating very promptly these changes to the loan officers in the trenches and they don't find out about the changes until the last minute

2. The Mortgage Consultant (or lack thereof). He or she may be quick to assume that the deal meets guidelines and even issues a pre-approval letter and assures the buyer that everything is fine. These types of loan officers are what I call Spaghetti LO's because their approach is to throw the file against the wall and if it sticks then, great, but if not, then too bad.

Knowledgeable and professional Mortgage Consultants will "pre-underwrite" their file upfront before submitting it to underwriting. This means that they will tear a file apart to identify anything that may be a red flag or might be a concern and address it and find a solution so that when the file is submitted to underwriting, he or she is confident that the bases are covered. However, nothing is guaranteed until the funds are sent to escrow (attorney in some states), the funds are distributed, and the transaction recorded at the county.

3. The word, "loan approval" is used too loosely. Many have expressed with frustration, "but the lender had already issued a loan approval." Underwriters will commonly issue a loan approval, but if some requirements are outstanding, then it would be a conditional approval, which means that the loan has been approved subject to conditions being met. One of them is the appraisal. If a problem arises based on the appraisal report, then the approval is not valid. This could explain why in some cases a lender, or many times the loan officer, may say that the loan is approved, but then after the appraisal report comes in, problems arise and the deal is dead.

If an appraisal has not been done or the report has not been submitted to underwriting, then we as Mortgage Consultants should not be telling the parties involved that the loan has received a final approval. We should explain that the approval is conditional and that one of the conditions is that the appraisal report will not show any problems.

4. Misunderstanding of the meaning of a locked loan. Others have expressed, "I thought the loan was locked." The process of locking an interest rate commitment for a certain period and at a particular price is completely independent of underwriting and approving a loan. Having a locked interest rate only insures that if the loan is approved, then it will be delivered using the pricing that appeared on the rate sheet on that day for the period requested (i.e. 30, 45, or 60 days). It is possible to have a locked loan and at the same time have it denied by underwriting. Therefore, if a loan officer promises a buyer that their loan is approved based on a rate lock, then they are either not telling the whole truth or have no knowledge of how the process works.

5. Overconfidence in local lenders. You might think that if a Mortgage Consultant is out of the area or state, then he or she will not be as trustworthy or knowledgeable. Although surely comepetent local lenders exist, a lender being located out of the area doesn't necessarily mean there will be problems since local appraisers and escrow are always used. I have done many loans out of my area and out of state (I can lend in all 50 states) and have not had a problem due to the distance or being out of the area.

Even if a lender were located in the area, he or she still must pick up the phone (or send out e-mail) and coordinate everything. There isn't too much of a difference between doing that in his or her backyard or in another state. If local appraisers and escrow staff are handling the work that absolutely needs to be done locally, everything should work out fine as has been the case when for many of us that have done out of area or out of state deals. If any problems should arise, most of the time they are the types of problems that would have come up even if the lender would have been local. However, sometimes deals have blown up because the local lender did not have the expertise necessary to close the loan.

Of course, this is not an exhaustive list of reasons why deals blow up at the last minute, but they may be some of the most common reasons and factors that come up when it does happen.

Does anyone have any other reasons to add to this list?

David Garcia is your trusted lender for Purchases, Refinances, and Reverse Mortgages in ALL 50 STATES. He can be reached by phone at 425-974-7269 or via e-mail through his Active Rain profile. Visit his outside mortgage blog: www.SeattleMortgageExpert.com.

Posted by David Garcia--Seattle Mortgage Expert.com on 09/02/2008 03:07 AM

Comments (59)

Loan Closing in the Mortgage / Finance Channel

approval, lock, locked, loan, commitment, mortgage, underwriting, blow up, last, minute, 11th, hour, appraisal, out of state

Post is included in group: Emerald City Rainers
Post is included in group: LATE NIGHT - EARLY MORNING AT ACTIVERAIN
Post is included in group: Puget Sound - WA Real Estate
Post is included in group: Real Estate Rookie
Post is included in group: Realtors®

59 Comments on 5 Reasons Why Loans Go Awry at the 11th Hour

SEP

2008

Good post. I lost one a couple of years ago about an hour before we were supposed to go to closing!

Jim Gilbert, Heart of Austin Homes

David, nice post, I appreciate the time you invested in the article. Another reason, and there are many more if we really think, is that sometimes, borrowers just haven't been forthright in providing correct information, or they self destruct the deal by going against the advice of their Mortgage Professional. If we just remember to tell them, everything you have shared on your application will be re-verified, so please do not make any changes in employment, credit or assets without discussing with your Mortgage Professional, we would all be better off.

Jim,

That really has to bite especially being that close! WOW!

My goodness!

Thanks,

Tom Davis

World Class DE Realtor

I once had a listing where the buyer had gone through all the steps and was on her way to remove her contingencies. When the contingency release didn't arrive, I followed up with the agent, and she hemmed and hawed.

Finally just as we were about to issue a Buyer Notice to Perform, the agent 'fessed up. It seems her client, to celebrate getting her first house, had treated herself to a trip to Las Vegas and charged up a storm. When the lender did a final check on the buyer's financial resources, the lender found the credit card charges to be so much higher than the time when the buyer first applied for a loan. So the lender did not approve the loan. Sad, but true.

So I always tell my buyers to be extremely conservative with their purchases while they're still at the application process, not to buy any big ticket items like a car, and not to celebrate until after they've got the keys at close of escrow.

The primary reason for 11th hour explosions is reason number 2 above. A loan is not declined by 8 lenders and then approved by the 9th. It is mispackaged once to 8 lenders then properly submitted by the second. Nice work David, the buyer should have been working with you in the first place. Hopefully you have 2 new realtors referring clients from that one.

SEP

2008

Hey, you're interested in this Country arn't you?

Sarah Palen, GOP pick is the mother of 5. One of which is 17 and pregnant. Palen is McCains best choice to be VP? WOW - visit our blog and comment. THX

You're so right . . . Little difference between doing that in his or her backyard or in another state. Appraisers and escrow are handling the work that needs to be done locally. Everything should work out fine as has been the case when for many of us that have done out of area or out of state deals

I have one. The lender did not check to see if the property was FHA approved before, during or after writing the pre-approval letter. Two weeks later, we finally receive the executed offer and addendums back from the seller (bank) but have to pull out because the loan cannot be approved through FHA. :/

Luckily, it wasn't at the eleventh hour and my client did not lose his deposit.

YOU MUST... require that any loan information you are given by a lender be IN WRITING. They say, "approved" you say... "let's see it". They say "underwriter conditions", you say "please fax the underwriter condition list to me".

Get it in writing. Act on the following principle... "If it's not on paper... it doesn't exist!"

Cameron

I am weary of underwirters asking for outrageous repairs or inspections!!!!!!!!!!!! I have never seen so many requirements for structural reports in all my 30 years in business.

I never lost one so late in the game. I am still a licensed originator and work with a local lender. I find it a asset to be all the loops.

Thanks for the post and info. it seems that there should be more regulation of the mortgage brokers if that is possible. I lost several last year because of the mortgage broker being dishonest and shopping it around until the last week.

If I get an offer from a buyer with a pre-app from a lender I've never heard of, I've started requesting that the buyer get pre-approved by one of five mortgage lenders I know in the area, because that minimizes the "Spaghetti LO" problem David describes above. The buyers don't have to use my lender, of course, but I feel it necessary to protect my sellers in this market.

Good Article! Within our real estate company , I push a policy of working with the same broker as much as possible. My perception is that when you are working with one broker, that broker has to be very careful about how he handles your loans, as if he does anything that doesn't look right,, you will probably not use him again. It just gives the Realtor more control over the transaction.

It is always amazing local lenders criticize out of state lenders and large out of state lenders criticize local lenders. Very interesting

David: Excellent post! The issues present in the mortgage markets have beent the single most frustrating issue in our business in the past 12-24 months. We have several great mortgage people that we work with, however, the buyers often have to bring their own because they have a friend or have found "a bargain". This is no market for bargains, friends or any mortgage lenders/brokers who are not 110% committed to closing EVERY transaction. Thanks for posting this clarification!

Great topic. It's happening more and more.

I'd love to be able to reblog this one because many of my clients ask those same questions.

I can't emphasize enough the importance of working with a trusted, experienced lender. I have my favorites and stick with them through thick and thin. This are stressful times, for sure.

One of the reasons we use local mortgage providers is because they always use local appraisals.

We've had some "off the wall" appraisals from out of the area mortgage providers. Of course, if a buyer already has selected their mortgage provider when they decide to work with us as their buyer's agent, we'll work with them.

David.... kind of funny, because I had this same topic on my list to blog about for the week... the two biggies that I would list, that I see a major problem, would be ....

Not able to read credit - (most of my answers will be directed to the fact that if you did a FHA manual underwrite. Because as you stated, we need to act as an underwriter when qualifying)
- just because they have a credit score above 600, doesn't mean that it can always be done
- if they only have two tradelines with bad credit, we need to show 4 trades.
- not explaining to a consumer that most collections or charge-offs need to be paid off (case by case - but most times, need to be paid off or have a payment history)
Income - how many actually know how to read a pay stub or don't when they qualify?
- How about if I get paid twice a month? That's not 26 weeks, but 24 weeks.
- What about pay stub deductions? If they are loans other than a 401-k, they need to be included in the DTI.
- I just had this happen to a client. Her previous loan officer used her child support. She supplied a piece of paper saying what her payment is and that it started on August 2007. The other person didn't ask for anything else and said that this was okay. Rut row.... what about proof of a payment history and proving that it is suppose to continue for 3 yrs. She was told that she was approved. Her ratios even with this $600 payment are 31%/47.2%. With credit scores of 541/553/590.

In any case, I attribute a lot of this to bad screening of the consumer and maybe bad processing. But I would put most blame on the loan officer. And why are even income and credit some of the main reasons at the end? Because the loan officer brought the deal in last minute? or told the processor that they were helping the client with the credit... but never did or didn't know how to?

All of this is from my experience in closing 8 loans just this year, that the consumer had gone to another lender and was approved. All 8 were told the day before or the day of closing that they couldn't get them approved now. And all but of these were out of state, so I agree with David's statement.

One last thing... David, a post like this should not be a members only post. The public needs to read this and understand this. This is how we can educate the public. Just my opinion, but think about it.... thanks and good post.

Jeff Belonger

I liked everything you said except for the part about the out of town lenders. I have had nightmares with out of town lenders due to the fact that they don't understand the local markets. One contract I had was switched over at the 11th hour to a local lender who got it closed in 7 days. The out of state lender was unable to complete the loan (although all along she said she would be able to) and did not let us know about it until the day before closing.

David: Wonderful article, thank you so much for laying it out there in such detail. I also believe this should not be a "members only" blog. Everyone could benefit from reading this and understanding the process better.

The question I have about out-of-area loans is that obviously you can't attend the closing. What if questions come up at the closing table. Are you available by telephone?

David: Thank you. Jeff is right-this should be a public post. I appreciate your sentiments on a good loan officer. These days an experienced knowledgeable loan officer is worth their weight in gold!

Paul

Jim--"I lost one a couple of years ago about an hour before we were supposed to go to closing!"--What terrible way to find out that the loan was denied. A lot of this could be avoided if the loan officer does his or her homework upfront.

Michael--"borrowers just haven't been forthright in providing correct information, or they self destruct the deal by going against the advice of their Mortgage Professional"--and Pacita--"It seems her client, to celebrate getting her first house, had treated herself to a trip to Las Vegas and charged up a storm"--

This is a good point. This has happened to me as well. One recent example would be some borrowers I had on a somewhat complicated transaction. After we finally had everything structured properly, we found out at the last minute that one of the co-borrowers had purchased a rental that did not appear on the credit report and, of course, he did not tell me about it despite my asking them from the beginning if they had any obligations that did not appear on the credit report. So, yes I definitely empathize with those situations.

Infinity Financial Mortgage--"the buyer should have been working with you in the first place. Hopefully you have 2 new Realtors referring clients from that one"--

That is what I told the agents. In fact, I started working on the file when they were on their 7th lender and did not know about the 8th until the last minute and they still kind of wanted me to not work so fast because supposedly they were expected a "final decision" by the next day. Well, of course, the next day came and went and we ended up closing the loan after they received notice that the deal was "dead." I understand that after trying so many lenders, the agents were trying to double and triple app the deal, but what they needed was to find a competent Mortgage Consultant with which to work instead. Fortunately, I have been able to save a few more deals that were in the pipeline for these agents afterward as well.

Gloria--"The lender did not check to see if the property was FHA approved before, during or after writing the pre-approval letter"--Were you dealing with a condo or a manufactured home that did not fit within FHA guidelines? A knowledgeable and professional Mortgage Consultant will make sure that this is one of the first things he or she checks out prior to saying that the deal can be done.

Cameron--"Get it in writing. Act on the following principle... "If it's not on paper... it doesn't exist!"'--I agree in the sense that if we are so sure that the loan has been approved, even conditionally, then we should have no qualms in sending out a written list of conditions.

Michael--"I lost several last year because of the mortgage broker being dishonest and shopping it around until the last week"--That is terrible. Now, more than ever, it is important to be working with a trusted Mortgage Consultant who will be upfront about the process and the status of the file.

Jennifer--"I've started requesting that the buyer get pre-approved by one of five mortgage lenders I know in the area, because that minimizes the "Spaghetti LO" problem David describes above."--I totally understand your concern about unknown loan officers issuing pre-approval letters. Many have been burned at the last minute and you are just trying to protect the parties involved. In fact, I provide this service to the Realtors with which I work. Although the buyer is not obligated to use me, at least I can provide peace of mind for the parties involved.

Caren--"I am weary of underwriters asking for outrageous repairs or inspections!"--What type of outrageous repair or inspection requests have you seen lately?

Russ--"It is always amazing local lenders criticize out of state lenders and large out of state lenders criticize local lenders."-- It was truly not my intention to criticize local lenders. In fact, in my local area, I am a local lender. Therefore, if I were to criticize local lenders, I would be criticizing myself.

My intention, rather, was to point out that, often, we tend to assume that if a lender is local, then they should know the market and are more trustworthy. And, I am sure that those types of local lenders do exist as they do in my local market. I am always striving to be one of them. But, we would be wise to not rule out an out of area lender just because he or she is not local. Check out their credentials. It is very possible that they have the expertise needed to actually close those loans that perhaps a local lender may not be able to handle or can handle just as well as the local person, especially in the market in which we are working today.

I think what I will do is edit my last point to say something like "Overconfidence in the loan officer, whether local or out of area." Thanks for your feedback, Russ.

Len--"We've had some "off the wall" appraisals from out of the area mortgage providers."--and Emily--"I have had nightmares with out of town lenders due to the fact that they don't understand the local markets."--

I am with both of you on that one. I can't speak for all out of area lenders, but I can say that when we work on a loan that is out of the area or out of state, the processing is handled by personnel that is experienced in working on loans in that specific area. Further, local appraisers are used which takes care of the local market knowledge that is needed to close the loan successfully.

Steve--"We have several great mortgage people that we work with, however, the buyers often have to bring their own because they have a friend or have found "a bargain". This is no market for bargains, friends or any mortgage lenders/brokers who are not 110% committed to closing EVERY transaction."--

I couldn't agree with you more! Before, people were so focused on saving that extra 1/8 of a percentage point or $100 in closing costs that someone would be offering them, but now they are realizing that, often, you get what you pay for and sometimes, not even that, because the low-ballers like to pull a bait and switch on the borrowers at the last minute.

Tim Maitski--"I'd love to be able to reblog this one because many of my clients ask those same questions."-- and Jeff Belonger--"a post like this should not be a members only post. The public needs to read this and understand this. This is how we can educate the public."-- and Paul McFadden--"Jeff is right-this should be a public post. I appreciate your sentiments on a good loan officer. These days an experienced knowledgeable loan officer is worth their weight in gold!"--

Your wish is my command!! I have edited my post and it is now public and available to re-blog.

Jeff Belonger--"1. Not able to read credit...2. Income - how many actually know how to read a pay stub or don't when they qualify?...I attribute a lot of this to bad screening of the consumer and maybe bad processing. But I would put most blame on the loan officer. And why are even income and credit some of the main reasons at the end? Because the loan officer brought the deal in last minute? or told the processor that they were helping the client with the credit... but never did or didn't know how to?"--

Amen, my brother! So many of the bad apples in the mortgage industry that have given us a bad name were the ones that just focused on pre-approving deals first and figuring out how to do them later. Kind of like shooting first and asking questions later by whipping out the pre-approval letters that were not worth the toilet paper that they could been written on and then later trying to find a way to make the borrower's circumstances fit into guidelines. Meanwhile the parties to the transaction have no idea that the loan officer has no game plan on how the borrowers will be approved for the loan.

A knowledgeable and professional Mortgage Consultant will do his or her research upfront before telling anyone that the borrower is pre-approved or even approved. In the current market, this is more important than ever since credit and income is being scrutinized with a microscope.

Deborah Ryman--"The question I have about out-of-area loans is that obviously you can't attend the closing. What if questions come up at the closing table. Are you available by telephone?"--

Absolutely! In fact, I review the HUD-1(the final settlement statement) with my clients before they go to the closing table to minimize the closing table questions that usually come up.

Granted, we all know that sometimes we are involved with deals that are truly last minute for some reason or another. Sometimes, I have literally faxed or e-mailed information by blackberry to the Realtors or borrowers just before they go in to sign because there was no other way to avoid this as a result of the circumstances beyond our control. Sometimes, escrow has made some last second adjustments or mistakes and the borrower wants to know what's going on. I always make sure that the Realtors and buyers involved have my cell phone number and I carry with me the files that are closing on that day so when they call me right at the table, I can find a resolution to the issue.

But, of course, if we do our job upfront and beforehand, then these last minute situations shouldn't be happening every single day.

David: Can you move to Santa Cruz, CA? You would like it here and it would be great to have you here. There are some great deals in homes these days, you know :)

We have just come to expect to get loans transfered in at the end of the month that other lenders just simply could not get done. Not because the loan couldn't be done, but because either the loan officer or their system couldn't get it done in time for whatever reason. We see it so often that we now have a code for these loans: "Hero Loans".

We are actually thankful there are so many lenders lack expertise...even in their OWN area!

Great post. A champion loan officer is hard to find - I get the bad deals that fell through with the other lenders all the time and close them and continue to grow my network because good LO's can close the tough loans.

I have found that the majority of the time when loans get tossed into never-get-approved land it is due to either - Lender changing programs and the LO not getting the file closed in time, or MORE LIKELY - the LO did not review the borrowers documentation - credit , income, etc in full detail , or did not understand which program would could get approved with the documentation provided ( this is where the LO that just sat down at a desk and started working without the right training makes the bad name for the rest of us - and misses the slam dunk loan with 740 scores up that can be approved and closed in a few days)

Most importantly, if they were trying to get a tough loan closed - they did not disclose to the buyer and realtor the challenges they would be facing to close the loan to ensure everybody was onboard to close it.

SOME buyers, as we all know have jacked up credit. At times a LO will try to push it through when they know it may hit the fan ... but tell everyone that it is a slam dunk...

So to me it is all about knowing where to set the expectations. Disclosure and communcation are the key.

You really have to work with the right person in all aspects of a transaction to keep it going smoothly!

Deborah--"Can you move to Santa Cruz, CA? You would like it here and it would be great to have you here."--

It's funny that many years ago, before I was born, my parents lived in Santa Cruz, CA. I always asked them why they moved away since it would have been great to have lived there. I love Santa Cruz. Maybe some day we will move down there although I still have projects to finish here in the Seattle area.

In the meantime, however, if you need any help with anything down there in Santa Cruz, please feel free to contact me. My e-mail address is David (at) D (hyphen) Garcia (dot) com. My direct office phone number is 425-974-7269. Thank you for your comments.

David Garcia

Great Post with lots of useful information! Thanks!

Appreciate your candor and insight into these problems; especially in this market, but also in really great markets, Brokers and Buyers have been in too many situations where a loan does not close and we can't get the "straight story" as to why. Your information is appreciated! Terri White Broker/Owner Las Vegas Properties

Recently lost a sale for a foreclosed property at $500K, Lender wanted both credit scores above 720 (the other was 780). Once we had a deal, the buyers were turned down. The denial letter stated "change in policy". Could you please be a bit more vague????

David, that was an excellent post and seems to hit right on the mark. I have had the occasional loan that goes wrong at the 11th hour because of something being reviewed by a different underwriter than originally approved the file. In those cases, something was overlooked by one underwriter and the file was approved. Then, when the last condition is in, the original underwriter is out of the office so the files has to go to someone else that catches a mistake and either conditions for more items or kills the deal. It never ceases to amaze me that, no matter how many eyes are on a file, mistakes can slip through all of us!

Thank You David for your great post! As a 23 year veteran Realtor I must tell you that lenders are for the most part hard working individuals that obviously have the same goals in mind when taking a loan application: They will not get paid unless the transaction closes. But... like in any other profession, not all are "on the ball" when it comes to understanding the nuaces of the new lenders policies, I believe that a good Realtor should ask the questions that come about when a "pre-approval letter" is handed over to a potential buyer. I typically call the Lender with whom I have not worked with before and ask a few key questions to try and find out who she/he is. I don't need to know the details but... have your run a credit check? have checked VOD's VOE's?. As Realtors, specially in a market like this, we need to ask, ask and ask. That will guarantee that the other party must provide at least some answers.

Antonio & Alexia Cardenas, "The Realtors In Motion" www.ListedbyAntonio.com

I prefer using a local lender or mortgage broker - one with whom I have established a trusted relationship. I see a real estate transaction as a team effort - team includes lender, escrow officers, inspectors, transaction coordinators, etc. You brought up a lot of great points and clearly you are one of the few and rare superstars in the lending business. The idea of working with someone I don't know and who is out of state causes my head to shake no. I prefer hands-on and the lender to be present at the sign off.

David, after many years as a real estate broker, I have come to realize that whether you are local or remote doesn't matter. We all need to have a couple skilled mortgage originators that we can trust with our business. I personally have 4 names on my list, 3 local, 1 remote. and I never have problems there. The problems I have experienced all come from the mortgage companies that my buyers have some reason to trust, but that don't actually perform! Since the end of the refinancing boom, the banks and mortgage companies are spending a fortune in advertising to try to retain market share. This has resulted in many poorly skilled mortgage originators doing business in our resort marketplace. Since it is very hard to tell a buyer that his brother-in-law or banker may muck up the deal, I always suggest that they put in a 2nd mortgage application, "just to check rates".......

David: This can be so frustrating when this happens.. Benn there Done that..... You have a great list.. Thanks for sharing

I lost one 30 minutes before closing a year or so ago. They just called up and said they were going back to Missouri. People had moved out for the close.

David - Great post full of information, very impressive.

This section is what you see the most of in Las Vegas - Nevada! Deals that go dead after loan approval.

David I think #3 is a biggie most people get that confused. BTW Off topic are you guys keeping your Countrywide name or is that still up in the air?

I am a mortgage lender in a resort area (Destin, FL) and I would have to say that I disagree IN SOME INSTANCES about the local lender vs. remote big lender. All of the condos here (from Pensacola to Panama City Beach) have been classified as "condotel" by FNMA and FHLMC, which means that those of us here in the area have had to find alternative lenders to do the loans. When a buyer calls me to get rates, I always ask if it's a condo and, if so, what project. I give them a rate and they say they will let me know how it compares to their hometown lender and I always make SURE I give them one piece of advise: TELL YOUR HOMETOWN LENDER THAT IT IS A CONDOTEL! Needless to say, about 90% of the time, we end up getting the call after the hometown lender gets the appraisal and condo checklist and finds out that they can't do it. EVEN AFTER THE BORROWER TOLD THEM UP FRONT THAT IT'S A CONDOTEL! I get them back from some VERY big banks that can't do condotels anymore (you're with Countrywide, right? Are you still able to do condotels on the retail side?)

I love getting 2 days to get a loan closed. :) NOT! I have some realtors I work with that tell them that they HAVE to have a full approval from us even if they are still working with their hometown lender for just this reason. Some areas really do have some market-specific conditions that local lenders are much better equipped to handle because they do that certain property type day in and day out........

Thansk for the update. I wondered why it was always a problem

I have been reading most of the comments about local lenders vs out-of-state lenders... it comes down in many cases to the loan officer. yes, many of you might have success with your local person.... but do you know how many loans that I have closed out of state this year? 17 purchases... 2 refinances.... 8 of those were first approved by a local lender who dropped the ball the day before or the day of settlement. 3 of them I closed in 5 to 11 days...

My whole point... it can happen anywhere at any time.... it comes down to who is knowledgable, truthful, upfront, and if there is a problem.... will let you know right away and not at the end. Most of it comes down the very initial pre-qual, as I stated in this comment.

09/02/2008 08:32 AM

Why am I a little upset with the in state vs out of state? I almost lost a deal in Miami, Fl, because a realtor demanded that they use someone local. The very first guy? Worked for Countrywide and ahd them approved for $30,000 more than I could... why? because he was using income that he shouldn't have used. That thing would have died by the time of settlement. She then went to Wachovia and she didn't feel comfortable with them. They didn't share much info with them upfront and it took them a week to get them a good faith estimate. The third local person was a broker and he thought he was a shoe in... charging them in $1,800 in fees, when mine were $500... and his rate was a 1/4% higher...

Just a FYI... sorry David... not here to highjack, but to help educate the public and the realtors that just assume. And I am glad that you made this public....

Jeff Belonger

SEP

2008

David i have always loved the borrower that is buying one of my borrowers homes and is "prequalified". I tell the my client the seller that all this means is that the someone has spoken with the buyer but this does not mean they are actually approved. My client thinks the buyer for their home is golden only to find out a couple of days before closing that the buyers financing has fallen thru. Heck the loan was never approved so it couldn't fall thru.

David,

I once dealt with a lender/broker that did not service their own loans. We had 3 different closing dates that never materialized. This went on for about 1 1/2 months. Finally we were all frustrated with the lender and I had to pull the case and give it to Suntrust. Suntrust did an outstanding job for my buyer in a 6 day period. They were able to deal with the previous bankruptcy issue with no problem and it "closed like a lamb" in 6 days.

The right lender makes all the difference!!!

Why loans blow up...

Overconfidence - PERIOD. Overconfidence in some putz quoting the "lowest rate", be them local or out state. Just because someone has a web site, just because someone quotes you a rate or cost doesn't mean anything.

The big lenders, the small lenders, the bankers, the brokers... They all screw up. They all make mistakes! Although I must admit, I actually fix more loans started at banks (especially the big banks), than I do with smaller lenders.

My opinion, stop shopping rates and costs, and start shopping LOAN OFFICER (NOT Lender). There are good Loan Officers and bad Loan Officers at every single mortgage originating office nationwide. The name of the company is meaningless. The EXPERIENCE OF THE LOAN OFFICER is all that matters.

A great Loan Officer with tons of experience rarely if ever makes a mistake, have the customers best interest in mind, and give very competitive rates and costs for the individual customers exact situation.

You can have a 17-year experienced person like myself handle your largest financial transaction, or you can have the glorified in-bound telemarketing clerk (oops, I mean Loan Officer).

I know what I would choose!

I have been dealing with three different lenders, all of whom promised approval of a loan. This sharde has been going on for over eight weeks. What I didn't realize was that my ratios were very bad as was my mid-score to get any type of approval for a mortgage. In steps Jeff Belonger with words of wisdom and pure truth. Had I not had the "tough talk" with him regarding my credit/ratio situation, I may still be toiling with those other guys who have their best interest at heart and not mine.

I especially agree with The word, "loan approval" is used too loosely. I have been "98% guaranteed approval" but what exactly does that mean in terms of getting a mortgage? In my experience, absolutely nothing! My original loan officer actually emailed me that "98%" nonsense which is not even possible with my credit score where it is and my ratio as high as it is. I am still rentng as a result and until I "clean up" some of the items on my credit report as suggested by Jeff Belonger, I WILL NOT GET A MORTGAGE, PERIOD!

This is great information! Thanks for the post.

Antonio & Alexia--"I typically call the Lender with whom I have not worked with before and ask a few key questions to try and find out who she/he is. I don't need to know the details but... have your run a credit check? have checked VOD's VOE's?. As Realtors, specially in a market like this, we need to ask, ask and ask."-- I hear you on that one. If you don't know the LO, then you need to find out if they actually checked out the borrower or if they looked in crystal ball, or what. I don't blame you.

Kathleen--"clearly you are one of the few and rare superstars in the lending business. The idea of working with someone I don't know and who is out of state causes my head to shake no. I prefer hands-on and the lender to be present at the sign off." --

I understand that you are weary of unknown Mortgage Consultants that might mess up the deal and cause the transaction to fail. One of the ways to find reassurance is to work with someone you know and that will be there at signing just in case something comes up at signing.

Although it would be nice to be at all the closings, it makes it hard to help more clients because if I were to be present at all my local closings, my days would be full of closings and very little time to help others. I like to assure my clients that they will have smooth closings, so smooth that I have the confidence in saying that I don't need to be there because everything will be taken care of beforehand including reviewing the HUD-1 settlement statement with them. Even if some last second mistake by escrow were to come up, my Realtors and clients will have my cell phone and I carry the files for my closings for the day, just in case, so that if I do get a call, we can resolve it on the spot.

SEP

2008

Well I guess its not just me. Its funny reading these posts and realize that so many of them relate to so many of us. In the old days (14 months ago) we would loose around 2 out of 25 loans for qualification reasons of one kind or another. In the last several months, we seem to loose about 4 out of 15 almost all after being approved. Great post and great responses. Thanks

SEP

2008

Justin--"are you guys keeping your Countrywide name or is that still up in the air?" --The Countrywide name will disappear; however, we have not been given a firm date yet. Tentatively, it will happen in early 2009 since it will take several months to merge our systems together.

Sue-- "we end up getting the call after the hometown lender gets the appraisal and condo checklist and finds out that they can't do it. EVEN AFTER THE BORROWER TOLD THEM UP FRONT THAT IT'S A CONDOTEL! I get them back from some VERY big banks that can't do condotels anymore (you're with Countrywide, right? Are you still able to do condotels on the retail side?)....Some areas really do have some market-specific conditions that local lenders are much better equipped to handle because they do that certain property type day in and day out" --

You are correct in that we no longer can do Condotels and I can appreciate your concern regarding knowledge of the local market. However, as I mentioned in a response to a comment above, 09/02/2008 01:51 PM, when we do loans out of state, we have a fulfillment center that is experienced in loans for that particular area that takes care of the processing.

Regarding those out of the area lenders that you mentioned that would have the appraisal done and then they would find out that they were dealing with a Condotel even after the client told them so upfront. Well, that is a big mistake that actually has little to do with being local or out of state. If someone tells me that they want to buy a unit in a condotel in China, I don't need to live there to know that I will not be able to help him. This has more to do with the Mortgage Consultant doing his or her due diligence regardless of whether they are physically present in the local market. Thanks for your feedback.

Joseph--"Why loans blow up...Overconfidence - PERIOD." -- I am with you on that one and, as I mentioned in my response to an earlier comment above (09/02/2008 01:51 PM), I would edit the last point to reflect that.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?

David Garcia--Seattle Mortgage Expert.com

Seattle, WA

More about me…

Address: 200 112th Ave NE, Suite 210, Bellevue, WA, 98004

Office Phone: (425) 974-7269

Email Me

Feedjit Live Blog Stats

Links

Archives

Find WA real estate agents and Seattle real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.