The relationship between Lenders and Borrowers is based on trust. Whether dealing with a Mortgage Banker, Mortgage Broker, Wholesale Lender, Portfolio Lender, Direct Lender, Correspondent, or Bank / Credit Union (see definitions here), a Borrower must feel that they are being treated honestly and fairly in order to successfully complete a real estate transaction with a given Lender.
In a Realtor's® line of business, we see all and hear all. When a title company or lending vendor isn't delivering according to a Buyer's expectations, we are the first to know about it.
As Consumers, we don't always know the right questions to ask or what to avoid. We make decisions based on gut feelings or recommendations we have received from others / online reviews. And sometimes, even though we receive warnings from others about the choices we make, the pain of starting over makes "rolling the dice" seem like the easier choice. Consumers who really wish to avoid pain should take heed... Here is our quick list of tell-tale signs that you might be married to the wrong Lender.
Top 11 Lenders to Avoid
- If you suspect you may have made a selection error in your choice of Lender, pay attention to your instincts. That little voice is there for a reason. Chances are, you are sensing a mismatch based on personality, competency, or integrity, and "sticking it out" can hurt you.
- If your Lender refuses to provide a cost worksheet / estimate upon demand -- regardless of what loan type you are pursuing -- welcome to the smell of stinky rat. A Lender who refuses to be accountable needs to be fired immediately.
- If your Lender advises that appraisals, surveys, and/or title policies are optional for loan approval, start questioning the Lender's policies and practices. Are you dealing with a Lender or a loan shark?
- If your Lender orders a property valuation to justify your loan amount, and won't provide you with a copy of that valuation or cannot explain the report results to you in plain English, fire them. They don't deserve your business and likely guarding their own interests above yours.
- If your Lender arbitrarily generates a new Pre-approval Letter to increase your buying budget by more than $5,000 dollars and you haven't even supplied him / her with copies of your tax returns yet, find a new lender. Immediately. Seriously. Now. Go. (You are not pre-approved and this won't end well.) #runaway
- If you Lender has to constantly BOAST about how great he / she is, wonder why. Shouldn't they be more concerned with how great you are? You might need a new Lender. (#youneedanewlender) PSST -- you really need a new Lender...
- If your Lender makes demands that alarm your Realtor® or Title Company, question it. Ask to see underwriting guidelines that make the stated request necessary. If the request cannot be substantiated with documentation from Fannie Mae (FNMA) or HUD, start digging deeper and be prepared to walk away and find a different Lender.
- If your Lender condescends to you or makes you feel that your business is insignificant or bothersome, ask your Realtor® for referrals to better Lenders. #personalabuse #zerotolerance
- If your Lender won't answer his / her phone or reply to email / text messages, that is a clear sign he / she doesn't need or value your business. Once you determine that lack of response isn't due to a health-related emergency, let that Lender go.
- If your Lender is "All About That Rate" to get your business, start looking at the fees and points they charge. Get a cost worksheet to compare against other lenders. (If they won't give you this information, see #2). Commence with looking at online reviews. Ask the Lender for past client referrals. What proof do you have that they can deliver to the promises they made? If you can't find any, recognize a bait and switch when you see one. Go with a Lender who will give you a competitive rate and great service -- as well as one who can honestly get you to the closing table.
- If your Lender cannot commit to / beat your contracted close date, find a Lender who has the concern and systems in place to care for you in this regard. You are paying good money for your lending service, and your Lender (of all people) should not EVER put you in financial jeopardy because they don't hold themselves accountable to contract dates.
Lending compliance has come a long way since 2010, and CFPB promises to introduce incremental measures to help round out variables in consumer mortgage lending. However, caveat emptor will forever be the golden rule when it comes to Consumer choice.
If you, as the Consumer, won't stand up for yourself -- who will? Demanding better and avoiding common pitfalls will help significantly reduce and remove the stress of Buying real estate.