A Letter to a consumer - Borrower BEWARE !!!!

SAL.... .  this is not even an eight of a point. We are talking about a 1/2 of a percent and no money at closing. I know when we might be off a tad, but not a half of a percent and $6,000.  I am waiting for the good faith estimate, because if I had to bet on this, I would say that they used a much higher loan amount. And HUD specifically states that you can't go above the original loan amount if you aren't doing an appraisal.  I just would love to see this in writing. And who knows, maybe the borrower is trying to get me to lower my rate. 

But in regards to your situation, about the commitment. Just a loan officer using stall tactics and not being upfront and honest. Busy is one thing... but a 'busy' excuse is another. Because it it doesn't happen in the next day, after 3 days of excuses, what will the next excuse be?  And if this happens, than a major red flag.

TOM.... .  love it...  and you got 25 points for that?  ;o)

LARRY...... yes we have, about the lady that I referenced at the end. This is the crap that pisses me off.  But can you really blame the borrower, because of false promises, some one making promises, yet they under deliver?  We need to educate more and keep writing about this. I hate to say it, but my past client will probably be victim to this, having a 99% chance, because I have good knowledge of this and what happens. And just for the fact that even the President of the United States couldn't get this deal, at 4.5% with no money at the table... not when his old loan amount was $238,000 and he still owes about $236,000. Not when you have prepaids and title insurance...and even though there is a MIP refund involved, you still interest to tack onto the pay off.  Oh well, I digress.

FREDY..... .  my pleasure... and yes, FHA is a great product.  But just for the record, this was more about loan officers promising things that they can't deliver. I hear it more often than one should.  I get one of these calls or e-mails about every 10 days, the false promises that were made and then it didn't happen. Gee, look... I get one from Ohio as I am writing this.  It happens a lot more than what is talked about and I think it's our job to talk about it, to warn borrowers. I had one loan officer said that I am scaring potential clients away.  Okay, so we just blindly ignore this, and hope it doesn't happen to them?  How about giving them ammunition and what could happen, so they can be on the look out.  ???? thanks

LIZ...... . yes they do, but with the help of liars and those that mislead. Can you blame the borrower, especially when they don't do this for a living?  If I don't know much about cars, and a mechanic told me that my x,y,z was broken... unless I was an expert, would I know any better?  And you have to be careful when shopping, because you could possibly have more than 1 person tell you the same thing and it could still be wrong. I had 1 client that this happened to.  Please read : Do two wrongs make a right?

ANDREA..... what irks me more is that this is about a borrower that trusted me 11 months ago, who did a little shopping, and thanked me up and down for my service. But believes that since someone put something in writing, that is much lower than me, that it will happen. If I did his deal, I would lose about $3,500 out of pocket, and I have a very good deal with my company in regards to what I cna charge and our profit margins.  And the other issue is that he won't share with me the letter that he got from the other lender.  So many he is just pulling my leg also.  But I am done with him, I basically fired him and don't want to talk to him. In my last e-mail, I said, don't bother basically and wished him the best of luck. Because if he is hard to deal with now, he will be later on. And he was even semi hard to deal with the first time around, but what I promised him, happened. I guess people like to sacrifice and risk all of that, believing everyone.

JANICE..... lol, yes, so true.   And thanks for the compliment. But curious, what links were those?  I went back and I didn't see that I added any in my blog.  thanks

STEVE..... many of loan officers have this happen to us. I truly appreciate your comments and your experiences. The main reason why I write about this is for other consumers that either think they might be getting this great deal or this is written to those that this has happened to... letting them know that there are still professionals out there in the mortgage industry that truly value their clients and don't pull these stunts.  But also to make them aware that if you had a great experience with someone previously, why take that chance and risk with someone else.  thanks for your input.

KIM.... .  I will never be the cheapest and for great reason.  If they want me to make little to nothing, I can't be asked to return calls and e-mails 24/7 as I do in most cases. But you and I know this, but the average client doesn't understand this most times. And the other issue, many of those that cut cost usually will change it or bait and switch at the end anyhow.  And then my very good deal, becomes better than what they were originally offered. This happens a lot also.  Hey, I know I can't win them all. But in this case, my ex-client won't even give me the benefit of the doubt and send me what he was sent. Why not?  Get a third set of honest eyes. If I see it's a great deal, I will be the first to tell them.  But I would bet something isn't the same, comparing apples to apples in regards to the same loan amount.

JOHN.....  there is a reason that I start many of my blogs semi harsh and negative towards many loan officers.  Now, I never say all or most... I leave it up to the imagination that it's many, which could be 50%.  And even 50% might sound harsh, but I talk to about 10 to 15 other loan officers weekly and we talk about this.  Most of them that I talk to, 75% of them, say 70% to 80%.  I know many that have worked for sweat offices or companies that teach you to lie, or tell you to do anything to get them into the door and then deal with the problems.  I get about 1 to 3 e-mails and or phone calls a week now, from people that have been lied to.  You want a great example?

Example :  I had one guy call me over the weekend about 2 months ago.  I wrote about this, but maybe you missed it. He told the first loan officer that he was on workman's comp and the loan officer said no problem.  Poof, he was denied 25 days later. He called up another lender and they said yes... poof, denied.  The 3rd person, even though he told him the problem, the loan officer said no problem, they can do it because they are a direct lender and use their own money.  LOL...  hell, we are a direct lender and use our own money also... but 99% of us have to follow certain and specific guidelines set by Fannie Mae/Freddie Mac, and HUD.  Guess what, 30 days later, excuse after excuse, he walked away from the lender.

So, I write these posts because the consumer needs to be aware of this and a lot more cautious.  What about my current client in this example above, who is being told on a FHA streamline without an appraisal at a rate of 4.5%, that he needs no money at closing and they even told him that he will skip a monthly payment. And this is someone that bought his house about 11 months ago and never prepaid his mortgage down.  The balance is about 236,500 and his original loan amount was 238,100. You do the math.  I don't even need to do a good faith estimate to know that this guy will be short about $5,000 at closing, for that rate of 4.5%.

I have no problem casting a semi black cloud over our industry, because you have a certain loan officer here on AR that says they could never see a loan officer purposely bait and switch a borrower.  Now, if they totally believe this?, then we need to let others know that is completely incorrect and very misleading.

Overall, from reading your posts and comments, I know you have integrity and care about your clients.  But I have worked for 11 companies, have been doing this for 16 1/2 years, and I have worked with about 150 different loan officers and or have drank with many that have worked at sweat shops that deceived the consumer and changed things on them at the end.  I hear their stories of what they do... or many that ignore the complaint calls. I could be here forever... it happens and it happens more than what people talk about. So I feel that I need to make people aware of this.  Sorry for the babbling book, but if I don't talk about this, then the next person could be a victim, I have had many borrowers read my red flags post and call me up and say that they felt uncomfortable after reading it, because they felt that it was happening to them. In many cases, not only did I reduce their rate and safe them costs, but got them to close. I closed 10 loans in 2008, that all 10 were denied the last day prior to closing or the day of closing. I closed all 10... but all 10 were denied after 30 + days of processing.  Some were made promises that weren't kept.

In any case, I guess you get my point now.  I won't change this or how I write. I would feel like I was doing a disservice if I wrote all the time that all or most loan officers are very helpful, honest, and would never lie. There are 2 loan officers in my corporate office that I caught in multiple lies... and you know what, they are starting to get complaint calls.  They will be on their way out.  Education, even if honesty does hurt or make one industry look bad.  But I do want to thank you for your input and for your support.

PS... I want to leave everyone with this comment that you made.,,,

"The sad part is that they other person sounds sincere to the consumer... so who are they going to believe"

BINGO>.. you know how many people I get on the phone that I start to discredit the loan officer and can prove it... yet the borrower says, but they are so nice and sound so sincere.  rut row...

GERRY..... you stated, the loan officer at Wells Fargo couldn't even calculate PMI.  Ouch... FHA mortgage 101.  Yes, we talk about this often and I am glad I can bounce things off of you. I am glad that we have a very good group of 15 or so, that all seem very ethical and have integrity. Yes,. we all need to make money, but I also need to sleep at night. Thanks for your support.

LISA..... what's sad is that many consumers will trust someone when they use the simple phrases... "I promise" and or "I guarantee"... and then put it in a good faith estimate. You know how many clients, when I question the other loan officer, tell me that they aren't worried because they can't change that good faith estimate, because it's in writing. LOL  .. sorry for laughing, but that is what they hang their hat on and so do the loan officers that lie.  It's based on good faith, which isn't the same with others. thanks

SCOTT....is this a bribe comment?  lol  I am sure you get that.  Seriously, as I mentioned to Steve K. above, this happens to many of us, that we get a client that is wrapped around another loan officers' fingers because they used the words, "I promise".  or, don't worry, etc etc. Hey, you are an old timer in this business and I definitely know that you get this and understand this. And you made me laugh in regards to your last statement...  lol  Now, the one argument that I have with this... I am a stranger to about 75% of my clients, because many of them find me on the internet.  I get my borrowers to closing... but you make an excellent point. The last lady that I mentioned in this blog?  Well, she will be going back to renting, because they denied her on her settlement date. Gee, I wonder how long the loan officer knew this and never told them until you couldn't take it too far.  It is a shame.  thanks

MATT.... yes, many of us are usually around the same pricing and fees on the same day, depending on our profit margin. But most of the borrowers that I have been getting lately either have been given the best deal on paper or the worst deal. I only had one in the last 30 days that was spot on and I beat them by $900 by charging no fees. Other than that, I just saved one person $6,000 in fees and points and another one to where I dropped their rate by a 1/2 of a percent and also by $1,700 in costs.  That is huge and I still met my profit margin.

Overall, it usually comes down to educating, explaining to the borrower how it all works and giving a fair price, backed by very good service. In my experience, the best price is usually not delivered and or has no service and follow up.  And yes, I will check out your site in the morning... thanks

RANDOM GUY.....  well, I just closed one with a 43% ratio and a back end ratio of 51%.  But it was approved in the system.  If it has to be manually underwritten, most want a front end under 39% and if you have limited credit or hardly any compensating factors or no rent history, they like it to be under 35%.... in regards to the back end....  45% or less. Are in the process with a mortgage company?  Promised something and now getting resistance or lack of feedback?

Hope this helps some and if you want to ask me more questions and or go over your scenario, you can reach me at jbelonger@ihmci.com   thanks, jeff

RANDOM DUDE.... .  my pleasure.  Keep in mind that it's not truly FHA that allows these higher ratios.  These are investor overlays and each investor is different.  Yes, HUD watches over to make sure that there is no abuse, but if done correctly and or carefully, things can be achieved. Especially if the loan if approved by DU or LP, which is not the same system with every company either. Each company can tweak this system to their standards.  thanks   PS...  are you part of this community?  If not, how did you come across this particular blog?  Just curious on your searches and key words.  thanks