When I began working in banks, it was by accident. It was 1960 and I was a sophomore in college, home for the summer, and looking for a summer job.
One of my daddy's friends was the president of a local Galveston bank, and he hired me.
A couple of times he and I had coffee together, just the two of us. One time he told me how to loan money. I'm going to share it with you.
Here's how to make a loan: Have the guy fill out all of the paper work and bring in all of the exhibits the bank examiners are going to want to see.
Next, personally go look at the collateral that will back the loan.
Then do your own credit work up on him to make sure that he will not have to strain to make his monthly payments. Then put all of that stuff in the file for the bank examiners, and never look at it again.
Finally, look the guy in the eye and ask him this question, "Are you going to pay me back?" Watch how he reacts. That's primarily what your decision should be based on.
Without going into a lot of details, throughout the years I have been involved in loaning a lot of money. First as an officer of a couple of banks, then a savings and loan association, then as a board of directors member of a bank or two and as an consultant for the real estate department of insurance companies from time to time.
I can tell you that the "Look 'em in the Eye Approach," at least for me, has worked very well. My delinquency ratio was always much lower than average, and while I must have had at least one real estate loan go into foreclosure, I swear I don't remember it.
Right now, I have a client who has applied with a major bank for a 50% loan. She has had two home loans before.
The bank's underwriters will not be able to issue their decision and close the loan for a total time from application to funding of about six weeks.
My loans often closed in a week, never longer than two.
Keller Williams Dallas Premier
Direct: 214 503-8563