A client said yesterday that he was tired of shopping mortgage brokers. "All their rates are the same," he said. He had called a bunch of brokers and their good faith estimates were all very similar. Having been through several horror-story closings due to working with inexperienced mortgage brokers, I recalled the details of a recent escrow, which highlights the fact that service is just as important as the rates.
Folsom home buyers elected to work with a bank in Folsom since the bank was located near their new home. They entered escrow last year, with a scheduled closing date 40 days later. This couple had made travel plans to leave for India on the 50th day, after being assured by the bank that they would close on time.
A week before closing, the loan officer promised the buyers that loan docs would be ready to go out. Every day that week we received an email apologizing for the delay and promising that loan docs were being drawn. This went on for 12 days. The escrow was overdue.
On the 50th day of escrow, the buyers decided to try to cancel their international flight and reschedule it for Sunday. Since their travel agent needed time to contact the airlines, the buyers felt they had no choice but to hop in their car and start driving from Sacramento to the San Francisco airport. They made it to Vacaville by the time their agent called to say he was able to reschedule their flight, at a cost of an extra $2,000.
Almost simultaneously, the loan docs arrived at escrow. The relieved buyers and I drove to Folsom to sign. They studied their estimated closing statement and then asked the escrow officer, "What does POC mean?" It meant the loan officer at the bank in Folsom was receiving 2 points from Wells Fargo. The clients were confused. They weren't paying any loan points. It was hard for them to understand why Wells Fargo would pay their loan officer. YSP is controversial.
When they figured it out, they decided the bank in Folsom should pay the difference they were charged to change their flight plans. Lots of luck with that approach. The thing is if they had used the mortgage company their agent recommended, that lender would have guaranteed the fees shown on the good faith estimate and guaranteed the file would close on time. They would have received a lower interest rate, too, because 5% with high FICOs and low debt ratios was not the best rate out there. My preferred mortgage company gets wholesale rates from Wells Fargo. It would have paid charges incurred if the escrow didn't close.
I didn't share my thoughts with them at that point because there was no reason to rub salt into their wound. Besides, I had explained it 50 days ago. The choice in lenders is always the buyers' decision.
Sacramento home buyers deserve guarantees from their mortgage broker. When you interview a mortgage broker, ask if the good faith estimate is guaranteed. Ask if the closing date is guaranteed. If the mortgage broker can't deliver that guarantee in writing, call me, and I'll refer you to a mortgage broker who will, even if it's not my transaction.
The Short Sale Savior, by Elizabeth Weintraub, coming to a bookstore near you in February.
Photo: Elizabeth Weintraub
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Lisa - You are so right and thank you for the reBlog, I would have missed Elizabeth's post if it wasn't for you. Thanks again.