Preapproval without verification???

By
Real Estate Agent with First Weber Group Realtors

Today two loan officers from a local bank visited my office.  They came in to talk about their loan products and the different loan programs that they have available.  They also excitedly showed us their online preapproval application system.  A home buyer can go onto their website, fill out the online application form, have their credit run and receive a preapproval letter to print off, as long as credit checks out.  We were even told that the entire application is run through the underwriters.  They then proudly handed each of us a sample copy of what the preapproval letter would look like, should someone come into the office with it.  Here's the catch!  The letter states that it is a prequalification, not a preapproval. 

One of the other agents in my office asked about the fact that the paperwork states it is a prequalification rather than a preapproval.  The answer that was given is that it is a wording glitch, but it is most definitely a preapproval and the potential buyer's credit is run.  Here is my question:  How can it be a true preapproval letter if the information the customer provides online has not been verified?  Yes, their credit is run, but what if the person filling out the application is self-employed?  As we all know, the self-employed person's income has a lot of variables.  Not to mention, someone may have excellent credit and state that they make more than they actually do, and still get a preapproval based on this exaggerated earning amount.  Am I looking too far into this?  I would love to get input from all of the wonderful, insightful AR minds! 

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Topic:
Mortgage / Finance
Groups:
Active Rain Newbies
Real Estate Rookie
Tags:
preapproval
prequalification
mortgage application
marshfield
wi real estate
online mortgage applications
wi home buying

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Rainer
70,763
Lori Liveston
Virtual Homes, Real Estate - Waltham, MA

Hmmm... I wouldn't have my buyers put their faith in an online pre-approval.  I always recommend that my buyers call a lender to get pre-approved, not go through the process online to make sure that everything is verified and that we can rely on the pre-approval.

Mar 02, 2010 01:46 PM #1
Rainer
208,325
Sajy Mathew
Coldwell Banker Residential Brokerage - Lancaster, PA
Making your real estate dreams become a reality!

Work with a lender you trust and has got the job done for you in the past.  Important to have a good team behind you in all transactions.

Mar 02, 2010 01:50 PM #2
Rainer
20,780
Jen Olson
First Weber Group Realtors - Marshfield, WI

Lori and Sajy-  Thank you for sharing your thoughts.  I feel the same say way, but I began to wonder if I was just being overly cautious.  The lenders are from a very reputable bank and seemed so convinced at how great this whole thing was, I began to doubt myself!  Go with your gutt, right?

Mar 02, 2010 01:53 PM #3
Rainmaker
144,754
Markita Woods NMLS#196099
Fairway Independent Mortgage - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Pre-approval without verification is a no go for sure. Today's lending guidelines have so many changes, etc. you can not afford to have your name and reputaion on the line. I personally will not issue a pre-approval with the documents.

Mar 02, 2010 02:24 PM #4
Rainer
20,780
Jen Olson
First Weber Group Realtors - Marshfield, WI

Markita-  Thank you for sharing your thoughts.  I appreciate that you are a lender that takes giving a preapproval letter seriously!

Mar 02, 2010 02:49 PM #5
Rainmaker
1,607,599
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

Pre approval is not worth the paper it is written on. It shouldn't be hard to give an approval contigent upon an appraisial only.

Mar 08, 2010 03:43 PM #6
Rainer
20,780
Jen Olson
First Weber Group Realtors - Marshfield, WI

Joyce-  A lender that hands a buyer a prequalification letter in disguise as a preapproval letter is doing a disservice to everyone involved in the real estate transaction.  Thanks for your comments.

Mar 28, 2010 02:27 PM #7
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Rainer
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Jen Olson

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