Why Loan Officers Kill Deals, Cost You Time and Money and Anger Customers

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A good friend who has been in the business for many years asked a simple question of me today. It had mostly to do with credit score and what can be done. The answer was black and white - no room for gray - and his response was, "took the mortgage broker 3 months to figure that out. that's how long they tied up my listing!!!"

I have always given the truth even when the response truly does sting. When you give someone the facts and they say, "I'll just go somewhere else" or "well MY lender can ...". What I want to say is, "oh shutup you nitwit idiot" (because I'm human) but instead I say, "Best to you I wish you all the luck."

I can also tell you luck doesn't close loans. Neither do loan officers who lie to you, string you on and cost you time and resources. Not to mention end up pliffing off your customers.

I know for many years loan officers have "said anything to get the deal". I know this because I have had literally hundreds of people over the years come back to me, at or near closing or after the closing has been postponed umpteen times, saying, "You were right. They can't do what they promised." Of course the worst thing of all is when they promise you one thing, end up not being able to do it and countering with what I offered originally and you still going through with the deal ... that dignifies the way they treated you so they'll lie to the next person in hopes they'll settle for that treatment.

YOU CAN WALK AWAY AT THE CLOSING TABLE and the earth will not collapse around you. I know your agent wants their commission they have earned, the seller wants their money from the house they just skipped the last mortgage payment on and you have to be out of your rental house tomorrow. Guess what? You'll pay for that "bad" loan for many years so just calmly stand up, walk out, call the local lender who has an office you can drive to and go see them. Stop rewarding these liars for bad business.

Three common lies loan officers tell today:

  1. I'm as busy as I have ever been
  2. No problem I can get that done
  3. We can close in two weeks (on a purchase)

Of course there are times when those are the correct answers. Here is a litmus test - if two or more experienced professionals give you one answer and the loan officer at mega-bank out in some state a thousand miles away tells you "sure, we can do that - we can do things nobody else can do" be very suspicious.

I have a sale closing coming up soon. Just after I locked the FHA rate at 5.25 (no dicount) on this purchase the father emailed and said "Everhome can do it for 4.75 with no discount and no origination". I knew that was not true because that rate was long gone. I also knew it wasn't true because that was about the best par rate ever and EVERYBODY gets paid. So I called Everhome and spoke with Jeff. Jeff was very helpful and curteous and laughed and said, "Sometimes the rates they advertise are a little outdated." I said, "Outdated? When did you ever do that rate with no points and no origination?" He said, "Me personally, never."

I used Everhome because I have the data to back it up in case somebody wants to challenge me on it. Not to throw Everhome under the bus because it is almost everyone who advertises (adverlieses) rates. If you see a rate or service advertised online you can almost certainly not believe it. Supposedly the FTC is taking care of that but I haven't heard anything lately. There are other names, too, who have promised the sky and couldn't even deliver a crack in the sidewalk.

BUT YOU DO IT TO YOURSELF - I know, I take the phone calls:

Me: "Thank you for calling Novation Mortgage, Georgia's FHA Loan Experts. This is Ken how may I help you?"
You: "I just want to see what your rates are today."
Me: "Fantastic, are you looking to purchase or refinance?"
You: "Uhm refinance. So what are your rates?"
Me: "Is this a home you are living in or an investment home?"
You: "Uhm it's the home I live in. What are your rates?"
Me: "That's great are you looking to take cash out or just rate and term?"
You: "For Pete's sake, dude! Just tell me your rates!!!"

What you just did was tell me nothing more than a lie was going to help you at all. What if you wanted cash out? Waht if you're looking for an FHA streamline? What if you want to go to a 15 year loan instead of a 30 or vice-versa?

RATES ARE SUBJECT to many variables. You need to be shopping for much MUCH more than the rate. So when you're really serious about service and cost that beats anyone you can name you're ready to deal with a mortgage professional and get the quality service you deserve. Or you can keep dealing with order taking operators at some mega-bank three states away. I digress.

So how are you to know?

Find someone you can trust in your LOCAL area.

Find someone who can give you CUSTOMER references (not just agent references).

Find someone who has a LENDER's LICENSE PERSONALLY (not crucial but helps).


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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments (121)

Mitch Rudnick
Century 21 Annex Realty - Quincy, MA
CBR, CRS, e-PRO, RECS, SRES - Quincy, MA Real Estate

First the loan originator lost the pictures of the street scene taken by the appraiser (who lives and works 30+ miles away) and is unfamiliar with the area.  This was late in the afternoon, 2 days before the closing.

 Then he lost the signature page of the P&S. This was late in the afternoon of the day before the closing.

Then he couln't get the package to the closing attorney because he was busy..had "more than 140 emails that I haven't had a chance to read."

So it's Friday, the day of the closing, which is supposed to take place at the Registy of Deeds.  The package finally shows up at the attorney's office 20+ miles away at 3:30 pm.  Forecast: heavy rain, heavy slow traffic on the highway.

Oh yes, he's a friend of the buyer's family, who by now is %^&&@ because he wanted to close Friday and start doing some fix up at the house over the weekend.

What's going on?


Jul 03, 2009 04:07 AM
Shawn Anderson
Lacey, WA

There are two loan officer I have no chance of competing against; the liar and the inexperienced. The exception of course is if this isn't the borrowers first dance and they are able to recognize the liar and the inexperienced. Then we can move forward building our relationship.

I truly wish borrowers understood that there is one Fannie Mae, one Freddie Mac, one VA, one USDA, one FHA and one Wall Street. Credit score come from Experian, Trans Union and Equifax; that's it. It's not magic, there is no one behind the big curtain...we all work from the same underwriting guidelines!

I believe Loan Officers find themselves in trouble because they don't quite know how to set realistic expectation with borrowers and with the agents they are trying to build a relationship with.

I just had a new agent send me a purchase and sale agreement that had a 20-day close. I immediately called the agent and let him know this is not realistic in this market and that in a good market standard closings are 30-days. We now have a closing that is 35-days or sooner (before you say it; yes, there are loan officers that would have waited until the 20th day to say they needed an extension. I for one, am not that guy...)

Great post, Ken! Thanks for setting the bar!

Jul 03, 2009 05:42 AM
Edy Kizaki
eXp Realty - Seattle, WA

This blog and all the great stories and comments are going to be required reading for my team of Buyer's Agents.  Thanks for the great post!

Jul 03, 2009 06:13 AM
Patricia Greco
Hacienda Home Sales - Anaheim, CA

Great blog! So well written and so true. Unfortunately, regardless of the advice we give, sometimes people just want to believe, if the grass looks greener on the other side...that's where they will go. With all the competition out there, the tendency is for lenders to lie to the people just to get them to work with them. So they get one deal that might close. I would have to say that the best clients are those that come from referrals from satisfied customers that have not been deceived.

Jul 03, 2009 06:42 AM
John Severino
Nuline Funding, Inc. - Westlake Village, CA

Ken, great post.  I agree that it's improper to quote rates without knowing the borrower's issues.  I also go the next step when I'm doing loans in Hemet and California.  I actually tell my borrowers exactly how much I will earn.  I go over the entire pricing grid for their product and adjust the points or rebate to show what I will earn.  If I tell the borrower I'm earning 1.25% then that's what I earn.  I show them the par rate and my fee.  I show them the no point rate and I show them the rate with buydown included. Now they know exatcly what I'm earning and they can see how the rate correlates to that.

I get so angry when I'm working with Realtors that believe all the adds and everything they here.  That's one of the issues.  Some realtors will tell so and so said they could do it or they saw an email.  I actually had one of the Realtors I work with give me the LOs name.  I sent the completed package to him and said if he funds it I want nothing.  He could not fund it and the Realtor realized that I was being truthful in the first place.  

Jul 03, 2009 09:11 AM
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Great post.  I don't have anything to add that hasn't been said already.

Jul 03, 2009 08:20 PM
Eileen Begley
Coldwell Banker, DelMonte - Carmel, CA
Monterey Real Estate

Hi Ken; What do you mean "someone who has a lenders license personally? Are some not even licensed? Is this legal??

Jul 04, 2009 11:29 AM
Melissa Anderson
Be My Neighbor Mortgage - San Antonio, TX
Your Texas Lender

Loan Officers that work for big box banks do not need to be licensed by the state.  They fall under the umbrella of the bank's licensing.  They can get hired by passing the pee test & do not need to evidence a certain level of education or experience in the field.  All the big box bank wants from them is new customers. Most reputable Loan Officers will not even work for a big box bank if they can avoid it.  Mortgage Brokers are required to be licensed, otherwise it's illegal.  Each state has different licensing requirements for Loan Officers, rumor is by 2010 all loan officers no matter where they originate loans will need a license.  I'm a licensed TX loan officer and I work for a direct lender, not a big box bank.  Almost all direct lenders have licensing requirements as well.

Jul 05, 2009 08:08 AM
Bonnie Ramsey
AnotherME - Marietta, GA

Wow, Ken, you tell like it is.  Why would anyone want to hear anything but the real truth?  Great post!  Thanks.

Jul 06, 2009 11:23 AM
Tere Rottink
CoastalVa Realty Inc - Virginia Beach, VA

Good post.  If I had the time, I would also read the comments. Point blank, that is why I try my best to have my clients use one of my recommended local lenders.

Jul 08, 2009 11:21 PM
Linda Schneider
Fast Newsletters - San Diego, CA
Fast Newsletters for Real Estate Agents

Good post. And good comments.

I like Dave Woodsen's comment to consumers who call and ask for rates. He answers "1%." They laugh and the conversation is easier from there.

It's useful to startle someone out of their patterns like this. In this case the pattern is "I call you for rates; you try to sell me something; I insist on getting a single rate as an answer."

Dave's 1% answer breaks the pattern just long enough to enter a conversation where he can explain to the caller that rates are different for refinances, people with good credit vs. bad, etc. Follow it up with "Tell me about your situation," and the caller will open right up.

Jul 09, 2009 06:50 AM
Mark Velasco
West Shores Realty - Whittier, CA
Top Producing Broker Associate

Ken. That is exactly why I am an Agent versus a loan rep. The loan peo almost have to compete with lies just to survive. Honest, though, is ALWAYS the best policy

Jul 12, 2009 07:29 PM
Robert Ott
Century21 Beal Inc. - College Station, TX

Great post! I read all the comments; what an eye-opener to my "I think I will shop around for a better rate", buyers.

Jul 17, 2009 05:55 AM
Pete Buckley
Independent Broker/Realtor, North San Diego County CA. - Del Mar, CA

Great post! I've had many folks go away due to some 1-800-Lending Outfit promise the moon, only to have them come back when things don't add up at the tail end.

I seem to be saying "Best of luck with that" a lot lately!

Aug 08, 2009 06:41 AM
Jane Penttinen
V.I.P. Mortgage - Tucson, AZ
NMLS #222178

Ken, I am reading your post quite a while after you wrote it.  I am new to ActiveRain and spenidng alot of time looking around to see what's going on.

I have been in the mortgage industry in Tucson since 1980.  I couldn't agree more with your post.  Too many loan officers act like used car salesmen.  No offense to that industry but bait and switch is the name of their game.  Bad news doesn't get better with age.  If the deal won't work - it won't work no matter how long you wait.  Often the loan officer does not have the experience to know whether it will work or not.

Rate shoppers have no idea what goes into pricing a loan.  My favorite is when I provide a Good Faith and they take it to several other lenders and say can you beat this - not understanding tht if you want to shop rates you pretty much need to get all your quotes simultaneously.  I have had people call me back with ridiulous quotes and my answer to them is "Hang up the phone and run back to that lender.  Get your rate locked in before it changes.  By the way, IF you really do get that rate, could you call me back.  I'd like to refinance my own mortgage with them".

Thru hard work and ethical practices, I have a very good group of realtors who trust me with their referrals.  They have had offers get accepted because my name was on the pre-approval letter and the listing agent knows I can be trusted to get the job done.

All we can hope for in this environment is the bad actors move on to a different play.

Aug 23, 2009 03:33 AM
Jeffrey Ragan
Friendly Real Estate Group LLC - Tallahassee, FL
Save Time, Money & Mistakes. Call Now!

Great Post Ken!!

Very few loan officers acutally do it right.




Oct 12, 2009 12:06 PM
Kristin Larson
Troy, MI

This may come as a surprise but most loan officers don't make money if a loan doesn't close. The problem is that loan officers don't ask the questions they should upfront. Most are focused on refinance business and less than 10% of their business is made up of purchases. I myself am a purchase only banker and take the necessary steps to make sure a loan can close up-front. It pains me reading these comments that so many bankers out there give those of us who take the right steps a bad name.

Jan 14, 2010 11:31 AM
Kevin Cottrell
Austin Real Estate Today - Austin, TX

We work closely with several very professional loan officers today.  That said, we had a real nightmare getting to the correct team to support us.  Your piece outlines the very issues that many real estate agents and teams struggle with when working with the 'wrong' loan officers. Thanks for posting this.  Validates that we're on track with our current origination team.

Jan 17, 2010 01:16 PM
Leslie Common

great stories here.  good education

Feb 05, 2015 04:00 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

If there's a serious problem with the file I want the LO to tell me asap. I don't want to have to chase the LO to find out why the file isn't hitting its milestones. Buyers and sellers need to know what's going on with their transaction so they can plan accordingly.

Jul 17, 2017 04:37 AM