In our current market many of the lenders who made our life miserable have gone away. Unfortunately, a few of them still remain. That is why buyers should stick to lenders who have earned a good reputation with their agent. Invariably, however, they find a "fantastic loan officer I did not know about."
The transaction I closed yesterday convinced me we still have toxic lenders. When I wrote the offer for the buyer they were working with a very reputable and skilled, local lender whose card I had provided along with a couple of others. As soon as the contract was accepted the lender abruptly changed to another lender. I thought that was a little odd but it does happen.
Even though the buyer gave the new lender permission to share information with me, I was not getting updates. I knew the appraiser had had time to complete his report so I called the lender to check on any requirements. I was informed the report had come in a few days before and there were requirements the seller was taking care of. That seemed really strange and initially I thought the lender was communicating with the listing agent rather than with me, the buyer's agent. I did not want to rock the boat so I politely asked the loan officer to please keep me a little better informed.
I continued to check back with the lender but never got really good response. This was very frustrating. The lender kept assuring me there was not going to be a problem. Two days before closing the lender sent me an e-mail stating that we were not going to close until two days after the contract close date and that the buyer was just going to rent the house from the owner. Needless to say, I was shocked. Again, I thought the listing agent was the culprit. I called the listing agent only to learn that he didn't know anything about this arrangement either.
Now the listing agent and I are both wondering how this was happening since neither one of us were in favor of occupancy prior to closing situations. I called the lender and after this conversation the picture got quite clear. I was informed that one of the two owners of the property worked in the bank with the loan officer. The loan officer had been sharing information about this loan with the owner of the property from the time the application had been made. This owner had access to all the buyer's account information at the bank but the buyer was never aware of this connection. The lender had communicated the appraisal requirements directly to the owner, by-passing both agents. The lender had also negotiated an early occupancy between the seller and the buyer. I believe that falls under the category of practicing real estate without a license at the very least.
When I pointed out to the lender we could not do an early occupancy agreement with rent money without sending it back to the underwriter and requiring another 3-day disclosure wait she replied that it could be just between the seller and buyer. Isn't that mortgage fraud?
This lender had also submitted the loan package to the underwriter with a deposit verification with a figure different from what was indicated on the application and so underwriting kicked it back. The lender said she did not think underwriting would be so "picky." She also failed to send the disclosures required by RESPA until after the deadline required prior to closing after having a month to get that job done.
After a very anxiety ridden few days, this purchase was finally closed. The lender attended closing but failed to bring the check to closing for the loan so the transaction still could not be funded. I have lost count of the infractions this lender is guilty of. Just because I did not give you their card does not mean I don't know about them. This should be a lesson not to use lenders whose information your agent has not provided for you. We have done business with these people before. We know the dangers that lie ahead of you.
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