How Aggressive and Questionable Tactics of Lender Sellers Torture Buyers & Cost Our Industry

Reblogger Randy Hooker
Real Estate Broker/Owner with Dreamcatcher Realty / Greater Phoenix Area


This is incredibly timely and poinant article by an incredibly astute mortgage broker and fellow ActiveRain blogger in San Francisco, Janet Guilbault.  I'm honored to be able to re-blog her post here.  Enjoy!

Randy Hooker -  Chandler, Gilbert, Mesa, Queen Creek, Arizona Real Estate


Original content by Janet Guilbault NMLS #238304

When a bank sells a foreclosed property do they try to replace one bad loan with one good loan?

If the main agenda is to dump the house, is the hidden agenda to seize a golden opportunity to gain a new loan customer (far less risky because the "dumped" price was lower and the qualification standards higher)?

And should we believe our honorable lender sellers when they torture a buyer by forcing him through a second approval process (right at the time he is ALREADY feeling stressed about making an offer)?

They justify it this way: "Preapprovals from other lenders are worthless, we have to check this guy out ourselves before the house goes off the market!"

And if some little minor detail gets in the way, you the buyer feeling bonded to their mortgage broker who spent months getting them ready BEFORE they made the offer, what then?

Bank thinking: Wait. I am the bank. I own the house. Why not just whisper this in the buyer's ear? "Use my financing and I will sweeten the deal. Use his and I won't".

Is this scenario the best thing the real estate industry can dish up for our poor customers?

If you have ever watched a buyer in this situation you have seen one unhappy camper. He is torn between the lure of a better deal or the confidence of sticking with his original mortgage person. Why should he be forced to make this choice?

You have watched him squirm and you know why.

His skin is crawling. He senses something very slimy is going on. And he is right.

I will admit the tactics of these REO mortgage people can be more subtle. Sometimes they offer to pay for appraisals. Sometimes they  offer to throw in the credit report.

And sometimes way less subtle: like continuing to hound the client right up until the week of the closing to "change your mind".

They also know no shame. I have had REO loan officers call asking ME to send them documents from MY file to help them approve MY CLIENT. What is wrong with this picture?

I'm going to help YOU steal my customer? I may have been born at night, but not LAST NIGHT.

In the background, a very confused buyer has no idea what to think, but we know this: the distraction of 2 loan officers fighting over one loan cannot make buying a house a better experience. Only worse.

One has to wonder this: why would ANY loan officer want to do a prequalification if he thought the loan was going to someone else?

What did the banks THINK would happen when they asked their mortgage people to prequalify people making offers on their foreclosed properties? Did they think buyers would come to the table without a preapproval already in hand?

For the record, we mortgage brokers don't lose many clients this way. We are too far ahead in the game. We have the ability to lavish far more attention on each individual buyer.  And frankly, we wouldn't be very good if we didn't already intimately understand bank tactics.

What we lose as an industry is far more serious: We  lose RESPECT.


Written by Janet Guilbault, San Francisco Bay Area Mortgage Lending Specialist







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Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

There is one little thing here that nobody is talking about. Sure, the banks may want the buyer to get preapproved through a certain mortgage broker. Sure, that mortgage broker knows there is no money in it for him because the buyers will stick with their first lender. So there is little incentive for that mortgage broker to hustle and get these buyers approved.

But there is one thing that these mortgage brokers know. They know how much each buyer is offering. In a multiple offer situation, that kind of information is invaluable. Think about it. It will dawn on you.

sacramento agent

Mar 27, 2009 07:27 AM #1
Randy Hooker
Dreamcatcher Realty / Greater Phoenix Area - Gilbert, AZ
Gilbert, Chandler, Mesa, Queen Creek

I'm not sure about other parts of the country, Elizabeth, but in the Phoenix area they do NOT know what the buyers are offering.  They are stipulating in the MLS listing that an LSR (basically, loan pre-approval) must accompany the offer.  To test to see how firm they were adhering to this policy, I submitted an offer to one of them a month ago, and the word came back fast and strong that the listing agent was under strict orders to not even submit the offer to the bank unless and until they had received pre-approval from one of their own loan officers.

Mar 27, 2009 12:29 PM #2
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Randy Hooker

Gilbert, Chandler, Mesa, Queen Creek
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