David Serle posted a humorus but accurate list of 20 things agents are not taught in class - and that you should know anyway. In the past I have posted things here and there which caused a "heated exchange of ideals" between the occasional agent and the occasional loan officer which, viewing from my side, were so frustrating I wished there were laws preventing it! I know, agents say, "The BBA gives us the privilege of knowing specific information about the buyer's credit, income and assets." The truth is it may give you the privilege but it does not release us to do so until the buyer signs the Acknowledgment and Authorization to specifically release credit scores, income levels, asset levels, credit history, etc., to you. If they sign it, great, if not there is nothing we can do all we can say is, "They qualify, the don't qualify or we don't know if they qualify because they won't get us their docs."
Here are some of the things that happen that we would really love to tell you but can't:
1. I know they are driving a Lexus but they pay every other payment 30 days late. The rest they pay 60 days late. 2. Sure they want to close quickly - they are in foreclosure on their existing home (this can actually be told once the foreclosure is made public but not if they are just late on their existing mortgage.) 3. The man makes only $22k per year and the woman just $18k. That doesn't even cover their credit card and car payments - no way are they getting into a $350k home. (This was real - agent's response? Aren't their scores good enough to go stated?!?!?!?!) 4. Tax liens. Lots of them - this one also can be told since it is public record. 5. Student loan default, default, default. See these mostly on first time buyers. 6. I don't think they ever paid a bill on time. (This one actually happened and the police officer/agent was the sister of the buyer. I did a conference call and convinced the buyer to confess to the agent. This agent became highly verbally abusive until the sister confessed.) 7. The buyer hasn't filed a tax return in years. (Of course we did submit a 4506T to the IRS with a statement of income - I guess they took over from there.) 8. Their appraisal check bounced. Not a good sign.
Believe me, we would love to just spit it all out - and I know some loan officers tell it all. So if a loan officer says, "I sure wish I could tell you more" you may just want to get a Letter of Acknowledgment and Authorization to release specific information or all information from the lender to you. That letter, signed - witnessed - and notarized, can clear up a whole lot of mystery. In defense it doesn't happen very often but when it does it is often later in the process than at application time where a "Statement of Adverse Action" (denial) should suffice.
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.
42 Comments on Things The Loan Officer Cannot Tell The Real Estate Agent (But REALLY Wants To)
NOV
15
2008
Ken...don't you just LOVE us real estate people! We just want to sell houses! LOL! Such a perfect case for why now when I have buyers that want to "start the process" by FIRST looking at homes, and THEN talking to a lender...I say..."No No!" Uh, Mr. Buyer, have you heard the saying, "don't put the cart before the horse."
It will take some time for some of us (not me) to learn that times have changed and you need to be able to do just a bit more than fog a mirror to buy a house! Imagine that!
Thom/Ray - yes I DO love real estate agents! I have to, my baby sister is one, 20% of my friends are and YOU are! We just want to close loans. I sold my interest in the real estate business for good reason :)
Anthony - thank you for your comment and thanks for stopping in.
Betina - thank you.
Darren - I'm sure you have. Anyone who has taken three applications has probably seen it, too.
The pendulum swings both ways, I deal with people that can write a check for anything they see and the house next to it and other don't qualify to live in their parents basement without help..
Jennifer - nobody in any industry understands all of what the person in the other industry has to deal with. Do you realize the oil changer has a hundred duties we never see including cleaning up all that mess while complying with a dozen federal laws and at least half that many local ones?
Steve - true but the ones who can write a check don't normally get stuck in loan processing! :) Thanks for commenting.
Lane - yes, we legally can tell you what they had for breakfast - just not how much they paid for it.
Fran - thank you. And the Title Insurer as well. We know your hassles only in part!
Thanks for the great advice. I will check back often. I really like the blog. I am new at blogging but I am beginning to learn quite a bit from reading blogs like the ones I find on Active Rain. If I can ever be of help just visit my blog or my website: http://yournowwhat.com
Terry - thanks for commenting. Since you are new to blogging let me help you out: It's bad etiquette to advertise (even if you think your services may be unrelated) in another person's blog. Usually you will find people either just delete your comment or get all nasty with you. AR, in particular, has a Term against the practice as do most blog sites. At least AR lets you advertise in the signature line. Enjoy AR and I am sure you will make a lot of great friends here!
Bill - you mean like 1. Your home is NOT worth 35% more than everyone else's. 2. Not one buyer will care that your children grew up in this home. - that stuff???
Step ##1 Find A Lender, Step#1 Find A Lender, Step#1 Find a Lender....sometime I feel like a broken record.
I had a contact last week said she would contact a Lender if she saw something she liked....I posted a list of Buyer steps to her and said I would be glad to help her after she had.....contacted a Lender
If the then decide to work with me step two....give the Lender permission to talk to me.
LOL I have experienced a few of the buyers you mentioned above - most buyers think they have good credit - until a credit report is done to jog their memory.
Wow, makes me realize how lucky I am that I can trust my mortgage broker 100% to tell me "thumbs up" or "thumbs down" without having to get into all the gory details!
I love love love this!!! I know at times we expect you money people to jump through a lighted fire hoop that will send you sailing into the lions mouth but in the end we just want to sell houses.........We don't care how you do it just do it...........
No really that way of thinking is what got us all in the mess we are in now...... I believe it should go back to the days when I bought my first house at 19. My husband and I we saved and saved and paid our bills on time and we put 3% down and paid all of our closing cost.
Love the post, times have changed, were back to the 80's with underwriting and I find myself having to remind the Realtors and Borrowers I work with that everyday.
Other than perhaps a 1st meeting at a house I have listed, I almost never put a buyer in my car unless they have a preapproval from one of my lenders or I have talked to their lender. I have no desire to know all the gory details but here is what I do want to know from the lender.
Can they buy now or do they need to wait? If they need to wait, when do you think they will be ready?
How much house can they buy? What is the maximum mortgage they qualify for & at what interest rate?
What kind of loan do they need - FHA, VA, Conventional, special programs,etc.?
How much cash so they have available for downpayment & closing costs.
What loan amount do the clients feel comfortable with?
This way, if the client wants to see properties that they don't qualify for, I can bring them back to reality and together we can find the best compromise between their wants & reality. I presume a loan officer should have no problem answering the above questions since the questions don't reveal confidential information and this is information that is necessary to craft an offer that is in the client's best interest.
We agents run into this type of thing all the time where we cannot disclose the one piece of info that would help clarify everything. Your post has given me an idea. The things a realtor wishes he could tell the ______ but can't.
I don't think I have ever had this struggle with a loan officer? Either they qualify or they don't. Typically the client tells me all of that stuff anyway? Like Joan said, step 1 is to be pre approved by my lender and we are good to go.
The Agents response below makes me sick to my stomach :
The man makes only $22k per year and the woman just $18k. That doesn't even cover their credit card and car payments - no way are they getting into a $350k home. (This was real - agent's response? Aren't their scores good enough to go stated?!?!?!?!)
Ya know, I need to make a living too BUT I also want to sleep well at night. Why anyone in their right mind would put someone into a home KNOWING they could NOT afford it is beyond me ! I mean, isn't that was has gotten us into this mess we are in right now !
As for me, pre-rec for getting into seeing that 1st home...At the very least a pre-qual letter from their lender ! All terms spelled out in plain english so everyone knows what kind of money one is dealing with and if they have funds available to pay for down payments, inspections etc. In my book it's simple, Qualify...yes or no...I don't even attempt to get into the detail of my buyers credit and/or history, not my job and some things are better for me to well, simply NOT know !
As an appriaser right here in Georgia (Hey by the way do you need a good, solid, experienced appraiser who thinks like you do?)
Anyway, I love the "Appraisal check bounced not a good sign" comment. We typically require payment up front from the borrower. There are so many times that they cannot afford the appraisal and that is when the red flags should go up! If they can pay the appraisal upfront, that is not only good, but it also commits them to that lender right up front...this is one reason why lenders like it when they pay at the door.
As for pre-approval before a Realtor starts showing homes, that should be the first thing you do before you put these people in your car, regardless of the economy. Unfortunately realtors and lenders are paid on a commission and in good times and bad this makes people do things that they would not otherwise do if they had a steady income....like "Can't they go stated income on a $350,000 home, when their salary cleary will not support this payment". No wonder we are in a bail out situation.
I wish lenders could tell agents more, so they are not wasting their time on clearly non qualifying borrowers.
What surprises me is how much buyer's agents will tell the listing agents when their clients make an offer. "We have to get this closed before they can start the bankruptcy."
I have noticed an increase in unpaid/late paid debt with my younger Buyers. Not because they couldn't pay... they just don't see why paying when they get around to it is such an issue! It seems to be an increasing pattern... And, most want to blame the credit company not themselves!
Ken - great post and boy can I relate! When first sitting down with a client, I always tell them "I'm going to run your credit so tell me now what I'm going to see". It never ceases to amaze me the absolute cluelessness of some buyers.
Just the other day, I met with a client and I ask my standard question and she tells me "oh it's not too bad except for a couple of lates here and there". After pulling her credit, she had a tax lien for delinquent prop taxes and seven open/active collection accounts. When I spoke to her about it her response "oh those shouldn't be in collection yet, I'm only a couple of months late". DUH
I understand the privacy act, its just frustrating when the loan officer will not say there's a problem period, let alone what the problem is. And week after week there is a delay. I have found when the loan officer speaks up immediately problems can be resolved quicker and with out disaster.
I am sure that enough can be said so that a buy/agent should no longer go forward without giving out cofidential information. In fact, you can have different levels of laughter on an index that should help you get thru it. ME - On a scale from 1 to 5, how 'laughable' is it? Your reply - 5.2 and you both LOL. See that was easy and non controversial! What you've just said to me is RUN.
Buyer's agents cannot, if they have any sense, work in the dark. We have a "need to know".
Of course, the loan officer needs permission from the buyer to release details. Fact is, we rarely need details. We need to know whether or not they can buy, up to what, with what conditions, which would be on a loan commitment anyway.
Our BA Agreement provides that the buyers agree to provide us with financial information as needed. If they don't, they get another agent. Simple.
I don't need a lender to qualify. I need a lender to provide credit approval when my buyers are ready to write. If a buyer needs credit repair, the buyer will tell me.
We can't be expected to spend the time showing properties for someone for whom neither the buyer nor the loan officer will give us information. TOTOH, we can't expect the loan officer to violate a person's privacy either.
Great post. I got a real chuckle out of it! I have been fortunate that the majority of my buyers have waited until all of their "ducks were in a row" before moving forward - but could easily see the scenarios above playing out quite frequently!
As a real estate agent married to a mortgage specialist, I feel lucky to have the inside scoop on what a lender goes through that we as agents may never realize or fully understand. Making a transaction go smoothly really comes down to good communication, trusting that the other professionals you are working alongside are doing a top notch job and allowing them enough time to do their job properly. Good post and thanks for the insight!
Joan - Ha! You think people would actually listen instead of #1Shop #1Shop #1Shop! Thank you for stopping in.
Karen - yep. "Have you ever been late on a payment?" "Nope, I've been late on all of them."
Kathleen - that sure makes it simpler! I wish they were all that cut and dry. Unfortunately sometimes it is days after the application that we get the information back from an old employer, an old tax report, some other information we did not have in our hands when the borrower filled out their application :o<
Shelly - but we CAN jump through fiery hoops and into the lion's mouth :) it's just more difficult while the clowns are shooting canons at us! Thank you for your comment. Sean - in many ways I would welcome the 80's back!
Nancy - We don't disclose interest rates without borrower permission. We also can't tell how much cash they have available but they can and should. We CAN however indicate whether or not we have verified the information they provided to you. In your case it would be a perfect example to have the buyers sign the disclosure letter then we can tell you all thing relative to the loan - everybody is happy and life is smoooooother! (Blame the lawyers.)
Brian - Maybe we should start some type of "anonymous disclosures" action with the governing bodies!
Audrey - when performed in the right order you wouldn't!
Melissa - in her defense she probably hasn't sold a home in 2 years. Everytime she sends me a client they are a cousin, sister or comeone from church you know? We love letting the agents know up front: Yes, Maybe% or No. We give the option on the maybe% whether the agent wants to procede or not. The problem is so many buyers come to us AFTER they have an accepted offer.
Randy - as my daughter would say, OMG.
Mary - pleasure to meet you! I would love to send you 4 or 5 deals a month to appraise. I really would! We always make the borrower pay the appraiser directly and up-front. I bought my last appraisal in 2003.
Joetta - oi ve. Why does this happen? And when it does the lender always ends up getting yelled at!
Dan - isn't that normal for the market after the way everyone has been badly conditioned over the last few years?
Pam - very true - we see it too. Donne - all I can say is, "what are you doing with my clients!" Ha?!
DeAndrea - right they should say something like, "This isn't a done deal. We have issues." We certainly do that. In fact we ask, "Do you still want to continue knowing there is only a small chance this can be approved?" What we don't like, of course, is, "Well, MY lender can get this done." (Although if you're not working with an experienced, long-term broker this could certainly happen.)
Lyn - oh if it's denied we say right away. Then we do have a scale - I love the laughable so long as we're not overheard. Thanks!
Lenn - it is and it isn't. It should be a non-subject but from time to time it is. With more seasoned agents it's not. Thanks as always!
Heather - these really are rare but it happened recently. I usually write what is on my plate at the time.
Martha - Thank you for your confidence and comment.
Liz - yes, you have a rare insight. My baby sister is in the RE biz and I have been a partner in one so I know and understand how "out of the loop" you guys can feel when odd things are happening behind the curtain of Oz. (It's not usually intentional!)
Loved your statements. I know the lenders I work with are biting their tongues in two a lot of the time. I don't really want to know what they know. When certain lenders say there's more than meets the eye, that there is. I ask, "Can they purchase something slighly lower in price?"
Ken, we al understand the rules of confidentiality, I doubt that any buyer with a bad credit will sign that letter to release information to anyone. The general public should be educated about the things they do that affects their credit. Good post.
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knowing specific information about the buyer's credit, income and assets." The truth is it may give you the privilege but it does not release us to do so until the buyer signs the Acknowledgment and Authorization to specifically release credit scores, income levels, asset levels, credit history, etc., to you. If they sign it, great, if not there is nothing we can do all we can say is, "They qualify, the don't qualify or we don't know if they qualify because they won't get us their docs."
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Ken...don't you just LOVE us real estate people! We just want to sell houses! LOL! Such a perfect case for why now when I have buyers that want to "start the process" by FIRST looking at homes, and THEN talking to a lender...I say..."No No!" Uh, Mr. Buyer, have you heard the saying, "don't put the cart before the horse."
It will take some time for some of us (not me) to learn that times have changed and you need to be able to do just a bit more than fog a mirror to buy a house! Imagine that!