It happens. All too often if you ask me. A borrower believes they are doing the right thing by shopping around. They call one of the big guys who advertise on TV. They call a local bank. They call a local lender.

There are generally 5 reasons why a loan officer stops answering calls and emails:

1. They are dead. This is an acceptable excuse.
2. They quit or were fired. In this case someone else should have contacted you.
3. You are impossible to work with. In this case their "me" should have called you. That's my lovely job.
4. They lied to you and nothing they told you can happen.

How to know when your loan officer is dead.

Call the office and ask if they are dead. If the receptionist says they are dead - they are probably dead. Ask for a new loan officer.

How to know if your loan officer quit or was fired.

If the receptionist says they quit or are "no longer with the company" - ask for a new loan officer.

How to know if you are impossible to work with.

If you have no or very few friends, are on your third marriage and none of your ex's are dead, if you think everyone sucks and all professionals are idiots - seriously, go somewhere else. Oh, if you think getting the lowest interest rate is all there is to a loan - do the same. Call the loan officer who ...

How to know when your loan officer lied to you

This is not fool-proof but it's a good measure. (A) Never shop for interest rate or closing costs first. Those are very important but not by any means the most important. The most important is getting YOUR rate and YOUR closing costs. Yes, almost every deal has a different number based on YOUR scores, YOUR property, YOUR income, YOUR assets, YOUR job history and a few more YOURS. Besides, if you don't qualify the interest rate is pretty much a moot point (B) Be suspicious of the loan officer's rate if it is lower than what you would see advertised at Bankrate.com - Bankrate has become more accurate over the years even though their accuracy is only an aggregate of what we call "lowballer". (C) If you call ANY mortgage company and ask for a Good Faith Estimate and they send you one without asking any questions ... it's probably not yours and it is DEFINITELY not accurate.

When is a Good Faith Estimate Accurate?

A GFE should ALWAYS come with a Truth In Lending (TIL). You should never trust a GFE until you have submitted all of the documents requested on the "findings", an appraisal of your property has been completed and submitted, your credit history, income history and assets have been validated and a few more little things have happened.

Ken - You're A Scammer and a Liar

Hmmm. So I believe in providing honest and accurate information to my clients. Sue me for being honest and accurate and not sending you a good faith estimate until you have completed an application and I have examined your credit. Here is the REAL truth: a GFE/TIL is trash until the application has been approved. I have NOTHING to hide. I will not publish my closing costs because the government considers that COLLUSION and PRICE FIXING. But I will tell you when we compare our ACTUAL APR's to the APR's you see advertised on Bankrate - we're right there in the game. So how can it be that I occasionally lose a client to an interest rate 2 points lower than mine? (Hint: not ONE TIME has one of those loans ever closed at the quoted rate without some other HUGE factor like discount points or a rate buydown coming into play.)

So how are you supposed to shop?

Do your homework. Understand rates and how they are affected. One simple litmus test is to call around and ask for a rate quote. If they spout off an answer without asking you ANY questions - hang up. Here are the minimum questions you should be asked:
Is this for a residential or commercial property?
Are you buying or refinancing?
Is it for your occupancy or an investment? (Don't lie - that's mortgage fraud).
What is your credit score?
Are you self employed, 1099'd or W2'd?
Have you been on the job for at least 2 years?
If not, how long have you been in this line of work and have you had two years of consecutive employement?
What is your average annual income?
Will anyone else be on the loan with you?
-All those same questions for them.
Is this a single family home detached? (Condo, quad ...)
If purchasing how much down payment will you be making?
What is the sales price of the home?
If refinancing what do you think the value of the home is today?
What is the payoff on your existing loans?
How much do you want to borrow?
... at the very MINIMUM they should ask you these questions to deliver an accurate guess.

You can't believe the big guys just because they are big. I got a call from a lender (a big one that loans country wide) offering me a 4.5% rate locked for 5 years. Sounds good, doesn't it? So I played dumb. The operator who called me doesn't know me from Adam so I say, "Wow! Aren't rates in the 6's?" He says yes they are but because we are so big and we do so much volume we have programs the other companies can't do. "Really? Tell me about this loan then."

Cutting to the chase: He knew I had equity and this is a refinance. I'm currently at 5.375% so he had to find a lower number or I'm not interested. 4.5% is lower than 5.375% even if it's only for 5 years - I agree. Since this is a refinance and I have equity in my home I won't have to "bring anything to the table to close". I let him keep talking to see if he told me why. He didn't - in fact he started asking me qualifying questions.

"Wait a minute", I said. "You mean you don't know if I'm qualified for that rate but YOU called ME and offered me a rate???"

Mmm, hmmm. So I asked what the qualifying score would be: 720. And my maximum LTV? 75%. And when the rate adjusts in 5 years - what is the cap? 3%. Mmmm, hmmmm. And since par is currently 6.25% on a jumbo loan how does the loan get to 4.5%? Oh we buy the rate down for 5 years. "Who's we?" We, it turns out, is me.

So how much will this buydown cost "us"? Well, it's 2% per year for five years so about $65,000. Mmm-hmmm. And if I pay off my loan some other way within that five year period, how much of my pre-paid interest (buy down) do "we" get back?

He didn't know. He guessed however much was left. HE WAS WRONG - they would keep it all.

Oh, then there were the almost 3% in lender/closing fees. So another $19,500. No I didn't need to bring anything to closing because they would be increasing my loan amount by $84,500.

So how are YOU supposed to know when the loan officer lied?

ASK POINTED QUESTIONS AND INVESTIGATE THE ANSWERS
Assume that if their deal sounds too good to be true it is. Ask other professionals what they think. PROSECUTE LIARS WHO LIE TO YOU ALL THE WAY OR BAIT AND SWITCH YOU. Sue them. Seriously. If loan officers and banks got sued more often for lying to clients to get them to "sign on the dotted lign" this would be a better country.

A couple of days ago I shared a story with Jeff Belonger how I offered a client a 6% rate on an FHA fixed 30 cash out loan on a $165,000 refinance on a primary duplex. Closing costs INCLUDING all lender fees, appraisal, pre-paid taxes and insurance were about $6700. Not bad at all. The client stopped responding to me until I caught him on his cell phone. He had decided to go with a larger MUCH larger bank who quoted him 5.625% with NO closing costs and the bank would buy his rate down to 4.25% for the first year - costing him nothing.

Jeff is probably still giggling. I'm still waiting for the client to call me back because I made him promise to remember that he was given the truth and a fair deal by me and that the other company lied to him. The problem is when that happens it usually is discovered too late. The offending company then says, "Oh, we're sorry. Here are the real numbers and they are about what the original guy quoted but we can close it for that." So instead of the client doing what I would call the "right thing" and coming back to the honest lender with high integrity, they go ahead and fuel the fire - thus proving dishonesty works in America if you do enough television and radio advertising.

It's called BAIT AND SWITCH and, evidently, it still works. While I don't have any information to provide to the FBI I see it happen regularly and it's always the company with the high integrity that loses. So my advice to you? I have none. I lose deals all the time because some other person lies and I refuse to and I will fire a loan officer before they can hang up the phone if I hear them do it. In fact if you call me and ask for a rate I give you a speech followed by a request for a loan application. If that's not how you want to do business, fine - call the liars. Their ad will run while you are on your way home tonight.

See you at the polls in November. Vote for higher taxes and more regulations - vote Obama/Biden.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender