My Buyer Needs To Be Prequalified Through Countrywide Mortgage?

By Jim Dvorovy

Real Estate Agent with Cutler Real Estate

April 11, 2008 01:39 PM

Okay, I know the lending industry is working hard to not dig itself into still deeper problems than it already finds itself in. But hold on a minute... insisting that buyers be pre qualified through the seller's lender before making an offer????

HUH????

At first glance, maybe it makes sense. The lender does not want to go out on a limb in these troubled times while trying to sell their REOs.

But at second glance, where is the confidentiality for the buyer when the seller gets to find out their financial even before they are allowed to make an offer? Isn't that going a little far?

Once there is a breach in the confidentialy, it would seem that buyer's negotiation process would be compromised.

Are there any RESPA rules or regulations pertaining to this issue?

We'll probably see this spread like wildfire for the foreseeable future?

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Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Lori - Well said! You bring up some great points! Thanks for stopping by.

Jun 01, 2008 11:49 AM

Robert Rauf

CMG Home Loans - Toms River, NJ

Actually the orrigination departments and the REO departments really do not speak. In our area you speak to a local Loan Officer that knows the area when your buyer is prequalified. And ou cant make some one buy a house, no matter what they are qualified for.

in most cases a lender is losing their shirt on an REO... (Statistically I think the number is over $50,000.) So any lender just wants to be sure the buyer is qualified prior to taking a home off the market to make sure the blood flow stops as quickly as possible, and a Pre qualification from a trusted partner is worth a lot to any seller.

Often the REO's are handed to local agents, and it is not done out of the goodness or CW's heart, it is business... If they give out listings, they expect referrals in exchange.

Jun 02, 2008 01:48 AM

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Robert - Thank you for your participation and input, it is much appreciated. May I add you as an associate?

Jun 02, 2008 03:15 AM

Robert Rauf

CMG Home Loans - Toms River, NJ

Jim

Sure! feel free to add me!

Rob

Jun 02, 2008 08:30 AM

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Rob - I added you as an associate. It's always nice to have friendly voices to network with! Thanks.

Jun 02, 2008 10:16 AM

Matthew Giegerich

SunQuest Funding LLC - Nesconset, NY

Once again - CW trying to manipulate the market in order to overcome there billion dollar earnings shortfall and there cionsistent declining market share. As a bank loan officer, and 15 year mortgage professional i was never a big fan of counrtrywide , especially after the only loan I did with them, they called my client and tried to solicit the business to their retail side and away form me!!. I'm glad to see them fall from grace. This "loophole" is like the one the builders use to steer people to their own mortgage companies- its a violation of ethical business practice - oh nothing new for the industry, except now they are taking theior lumps- as someone once said long ago-"one comes around -GOES AROUND - not sorry at all to see them suffer. I am in the loan business to help folks not hurt them- right now we can offer clients with unlimited lates an FHA mortgage regardless of score- since its a credit invented number not a gov't requirement!!

Jun 07, 2008 09:08 AM

Matthew Giegerich

SunQuest Funding LLC - Nesconset, NY

Oh by the way jim, my bank Golden First is LIC in OH, IN,OK,Al,MO,TN,SC,NC,VA,MD,Ny,Nj,CT,Wa,and HI to do loans!! thats 97.75% financing with no fico requirment, need income only.

Best Regards,

Matthew "theSpecialist" Giegerich

Mortgage Specialist

GoldenFirstbank.com

Office 631-403-4078

Cell 631-764-7900

Jun 07, 2008 09:12 AM

Anonymous

Enough said.Its time to act. I am asking the buyers that i am representing now, together with me to seek the representation of a real estate lawyer. I am representing four buyers at the moment, who are all approved with a certificate from Boa. this persisting problem needs to be tested in a court of law.tThis is the only way that we can actually find out if this practice is legal or not. To me i see a violation of two fundamental laws. (1) enshrined in our constitution-( The Bill Of Rights ), (2)Monopoly Laws.

Maybe its time for some of us ,who have been screwed under this practice to join together and sue in a class action suit. We have noting to lose except to find out in a court of law.I am starting without you, but you can always join later .I will let you happens later.

william brew

Jul 24, 2008 05:31 PM

#25

Anonymous

GLB act and FCRA

No RESPA does not cover this but GLB and FCRA under the FTC does. NO ONE has to provide lender, seller, or realtor ( or their mother) with their credit score. GLB made this a privacy issue. FCRA made it cleat that NO part of the report including the score can disclosed.

If the BUYER wants to give a number to a lender with out the ability of the seller/bank to pull the score themselves... then it is too bad for the seller/lender if the buyer gives phony information.

The law does not stop Countrywide from pre-qualing. But it would be a silly borrower who would let the seller see how much they can afford to pay!!! Unfair advantage give to the seller would hurt both to the buyer and non-bank sellers.

While the buyer is protected by law not to have to disclose... the seller is not allowing bids if the buyer does not comply. I see more legislation heading our way!

Aug 05, 2008 06:10 AM

#26

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

GLB and FCRA - Thanks for the information. I will have to Google those two acronyms and learn a little more about it.

Aug 09, 2008 04:41 AM

Vicki Pedersen

Pedersen Real Estate - Riverside, CA

Providing Exceptional Real Estate Service

I've run into this situation several times lately with REO's. I have told my buyers what the seller is requesting (or requiring) and let them decide if they want to go the extra step. Most of the time, the offers are still considered by the sellers - but I have one instance where the bank would not consider our offer without the required pre-approval in addition to the buyer's already done pre-approval. This requirement from the seller really grates on me. I think it is wrong to expect it if the buyer already has a valid pre-approval.

Aug 12, 2008 04:25 PM

Anonymous

sue Sanchez - Burbank Il Broker

I am so glad to see that I am not the only one that feels this practice is wrong. I have a situation where my client would like to make an offer on a home but the listing agent is requiring pre-approval thru a mortgage company (not a bank) and then my buyer would be responsible for a 75.00 doc fee at closing for having to be approved thru this mortgage broker. She would be willing to let them see her credit scores and proof of funds along with her current pre-approval, which I think should be sufficient enough.

Mar 09, 2009 12:56 PM

#29

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Vicki, Sue, and Tom - Thanks for your input. This is happening more and more across the country. I make sure I counsel my buyers about this lender's practice. I also let them know this same lender has been one of the most least effective when it comes to working through short sale situations. As part of my due diligence, I ask my clients: "If this lender is so difficult to work with now, why on earth would anyone ever want to do business with them?" After I've related to my customers and clients the experiences I have had, it is up to them to make their own decision.

Apr 03, 2009 01:10 AM

Anonymous

Jack

I just ran into this problem where buyers have to be pre qualified through countrywide and they need the Fico scores plus they want proof of funds. Is their a way to stop an REO agent that works with countrywide from doing this stuff. Is there a letter you can give to the REO agent and the loan officer from countrywide to stop them in there tracks. My buyers are already approved through Well Fargo. I gave them the approval and they still need to be pre qualified. My approval is stronger then a pre qual, and it just does'nt make sense. Its getting worse down here in CA.

Apr 09, 2009 02:19 PM

#31

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Welcome to the club Jack! The concern over this practice by this lender is growing greater each day. I have installed a free program that tracks internet search terms, and I am amazed at the number of searches entered for "buyer needs to be pre qualified through CW" (or similar search terms). It seems to be growing to epidemic proportions.

You ask a great question "...is there a way to stop..." Unfortunately, your question still goes begging for an answer. Thanks for your comment, it is much appreciated. As an aside, someone had sent me a private email that intimated a class action lawsuit should be in order.

Apr 09, 2009 02:33 PM

Anonymous

Carolyn

Help! We (with our realtor) found a bank owned house at an unbelievable price, but, we were forced to pre-qual through a specific mortgage broker, which we did. The broker would call my husband and say - "I shouldn't be telling you, but a higher offer has been made on this house" - The broker told us during this process that our offer would be stronger if we Pre approved through her company. so ... we did and we "won" the house. well now the broker works for the bank, the title company they are usuing works for the bank, and the appraisal came in much higher than this neighborhoods comps. We feel like we are being "taken" a house very similar to ours just sold for 50,000 less than our REO and they told us that the appraisal was 30,000 higher than our contract price...is it possible that the mortgage broker influenced the appraiser to get a higher appraisal? Our realtor did the comps and they were all below our contract price.... should we walk????? can we walk at this point???

May 04, 2009 06:21 AM

#33

Jim Dvorovy

Cutler Real Estate - Canton, OH

REALTOR - Canton Ohio Real Estate

Hi Carolyn - This exact type of experience is happening all over our country, from what I have been told. Let's take a quick look at some of the issues:

"Help! We (with our realtor) found a bank owned house at an unbelievable price, but, we were forced to pre-qual through a specific mortgage broker, which we did."

Though a suspect practice on the part of the lender, this may not be illegal, but some folks certainly think it should be challenged in a court of law. In some of the comments above, mention is made of a class action law suit. That might cost you a ton of money.

"The broker would call my husband and say - "I shouldn't be telling you, but a higher offer has been made on this house"

Again, depending on the laws in your state, the seller may indeed notify others about the presence of multiple offers, and Ohio it is legal. However, that broker should have called your REALTOR with that information.

"- The broker told us during this process that our offer would be stronger if we Pre approved through her company. so ... we did and we "won" the house. well now the broker works for the bank, the title company they are usuing works for the bank, and the appraisal came in much higher than this neighborhoods comps."

And... there in lies the problem. Very suspect activity on the part of the seller/lender/bank. Your REALTOR can challenge the comps.

"?We feel like we are being "taken" a house very similar to ours just sold for 50,000 less than our REO and they told us that the appraisal was 30,000 higher than our contract price..."

That is a very normal and natural feeling, and should send up lots of red flags and raise a lot of questions.

"is it possible that the mortgage broker influenced the appraiser to get a higher appraisal? Our realtor did the comps and they were all below our contract price.... "

Everything is possible, and you would have a difficult time proving anything.

"should we walk?????"

Not necessarily! As agents we are not allowed to give advice that would come under the auspices of attorneys or financial planners. It would be great to immediately sit down for a face to face conference with your REALTOR (I hope you are being fully represented by an agent other than the REO agent that is marketing the property?) and your REALTOR"S broker or office manager. Have some specific questions written out beforehand in order that you can learn exactly what your contract states. I am sure there are some escape clauses, but go on the professional advice through persons that are involved.

"can we walk at this point???"

Again, advice that needs to come from an attorney that does REAL ESTATE full time.

There are many situations such as if you were attempting to purchase this property using an FHA loan package, there are app that specify that if the property does not appraise for the amount of your offer, you could walk, or negotiate with the lender and ask them to drop the price. You may have to pay for a second appraisal, as well as challenge the validity of the appraiser used by the bank. The bank may lower the price to your original offer.

Make sure you document everything, all communication. Talk with your REALTOR, your REALTORS broker, and a real estate attorney.

Good luck with your transaction, it all depends on how badly you would like that property, and a question of 'is it worth fighting for and over?'.

I am sure you will see other very aggressive agents answer your question also, I hope they add to the post, as this problem is becoming epidemic.

May 04, 2009 07:05 AM

Anonymous

Matt Haynes

I know I am dealing with this situation and have contacted CAR Legal and there responce was that my clients would have to sue the banks based on anti trust laws, and as of right now they see nothing wrong with current banks requiring them to qualify with them.

Jun 22, 2009 07:31 AM

#35

Anonymous

Tomas Quintana

I have seen that a lot in Central Ohio.. I am about to show 4 properties today, of which 3 have this requirement. The idea is good, but besides losing points with another credit pull, the seller's lender will always ask, "what rate did you get?" and try to steal the business from the other lender, which should not be allowed. It is as bad as some banks who claim that the buyer has the right to choose the title company for closing, but if they do not go with the bank's they will no longer pay for owner title or some other closing cost to pretty much force the buyers to use their company.

I understand that the seller (bank is these cases) has the right to ask for anything of the buyer.. but this is taking advantage. Many of my clients choose not to even look at these properties so they are only hurting themselves by making it even more difficult to get rid of their inventory.

WRONG!! WRONG!! WRONG!!

Aug 05, 2010 06:47 AM

#37

Mitch Muller - Charlotte NC Real Estate

ProStead Realty Charlotte, NC CRS SRES mitch@prostead.com - Charlotte, NC

Certified Residential Specialist

This is a great sequence of posts! I deal with this a LOT. I'd love to see more recent articles on where things stand with this! (ie legal, legislation, etc)

Mar 29, 2011 10:08 AM