When greed and ethics cost a client money (OH, but don’t tell)

By
Real Estate Broker/Owner with Respect Realty LLC 200311024

photo courtesy zeafonsoI'm in the middle of a transaction that was supposed to close yesterday, not a big deal, just some last minute funding issues that will only delay the close by 4 or 5 days and with the way it has been lately, I will certainly be happy with that!

But, when the listing agent's clients were introduced to their mortgage broker, their mortgage broker clearly wanted to make more money from the deal, rather than keep the clients best interests at heart. (Fiduciary responsibility?)

What happened may you ask? The sellers were under the gun to find a new home, now that it looks like theirs was going to sell. We had a closing date and they went a put an offer on another home and it was scheduled to close the same day as ours, but the problem was that the mortgage broker didn't plan for any problems. She locked the clients in on a 20 day lock on a 19 day close! Why did she do this? At her own admission so she could make more money! (Oh, but don't tell my clients that.)

She thought she could get an extension if a problem came up and guess what the bank said to her...Oh, sorry no extensions on that 20 day lock, didn't you read the fine print on that lock? I'm guessing she didn't, all she saw was the dollar signs that came when she did a 20 day lock versus a 30 day lock or even a 45 day lock.

Will her clients or her agent ever hear about this? Nope, not until it has cost them money and the deal closes and I tell their agent what really happened and why the lock couldn't be extended. I feel sorry her clients, but I also feel sorry for mine as they are now being rushed to get things done because their underwriter is changing the rules during the game also.

So, please don't let greed and unethical behavior cost your clients. If you do decide to put your interests in front of your clients, at lease step up and admit what happened and pay the difference rather than have them pay for your mistake in judgment.

 



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Rainmaker
124,740
James Lockard
RE/MAX Properties - Saddle River - Allendale, NJ
Realtor, Allendale, NJ

The greed is what got us into the sub prime mess. Qualifiying people by telling them to go no doc or stated income and having the borrower say they make $150K per year!  Of course they qualify...NOT! 

Jun 17, 2008 11:57 AM #3
Rainmaker
151,854
Aida Pinto
Independent Real Estate Broker - Los Angeles, CA
Real Estate Broker (562) 884-6196

Didn't plan for any problems!

Closing on time!

Is this lender from California--most likely--sounds like it!

Thanks for sharing

Jun 17, 2008 12:46 PM #4
Rainer
122,914
Pam Winterbauer
Pam Winterbauer Real Estate - San Ramon, CA
"Providing Blue Ribbon Service"

This really sucks.  They are suppose to do what is best for the client and not their pocket book.

By the way there unethical lenders in other states too!

Jun 17, 2008 01:26 PM #5
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Todd, greed an unethical behavior can lead more people astray then you can shake a stick at.

Jun 17, 2008 01:26 PM #6
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Todd, Grrrrr!  These kinds of so called professionals drive me totally nuts.  I hat it!

Jun 17, 2008 02:32 PM #7
Rainmaker
826,134
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

TC,

Unfortunately...happens every day!!! Thanks,   Fran

Jun 17, 2008 02:32 PM #8
Rainer
82,781
Patty Carroll
Vancouver, WA

It is amazing how this is still going on especially due to the situation that we are all currently in with the mortgage industry. If people would just do the right thing in the first place most of this mess wouldn't be happening. Great post!

Jun 17, 2008 02:39 PM #9
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Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Shame on her.  Probably gambles with people's money alot, and just got caught!

I just had a similar situation with a lock.  It expired 3 days before we were due to close - title co called for the docs early, which were good for 10 days, and we slid through without costing my buyer any more money.

I was not happy with that lender.

 

Jun 17, 2008 04:15 PM #10
Rainer
208,498
Julianna Hind
eXp Realty - Tacoma, WA
REALTOR, 206-679-4768, Tacoma Federal Way, Auburn, Kent, WA

That mortgage broker runs the risk of loosing great clients from referrals from great real estate agents like yourself! Best wishes Todd

Jun 17, 2008 04:59 PM #11
Rainmaker
142,685
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

OHHHH!  This really burns me up!  I can not tell you how many unethical things like this I saw when I use to be a subprime mortgage AE!

Jun 17, 2008 05:46 PM #12
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
Retired

Isn't it amazing what some folks will do for a nickel?  I would love to put them all in a boat and ship them to idiot island.

Jun 17, 2008 09:49 PM #13
Rainer
434,914
Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission.
Florida List For Less Realty, Inc. Broker/Owner. - Cooper City, FL

Todd,

Don`t know if it`s really greed anylonger or gross negligence.

This is typical across the country....

Jun 17, 2008 11:03 PM #14
Rainer
67,060
Darleen McCullen
Raleigh, NC
Broker - Raleigh, NC Real Estate

Todd ~ What would happen if you said something now? If it were me, I would definitely speak with The Powers that Be now - and perhaps something can be done. I was in a similar situation some years ago, and the mortgage broker had to "eat" the difference rather than pass it on to the client.

Jun 17, 2008 11:30 PM #15
Rainmaker
193,904
Mary Strang
Viroqua, WI

As Darleen asked, I am wondering why you could not tell your clients this right away, as well?

Jun 18, 2008 01:13 AM #16
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Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

Carol - This is a mortgage broker for the sellers and not my client, but the mortgage broker keeps calling me trying to get it to close show she doesn't have to eat crow!

January Financial - I don't think the mortgage broker will do that, but it bugs me that she is lying to everyone including the other agent.

James -
That certainly did happen a lot all in the name of the all mighty dollar!

Aida - Nope, she lives in Oregon, but I think she should be in idiot land!

Pam
- I think there are unethical people everywhere, but unfortunately this isn't my client.

Gary - It is a shame isn't it!

Patricia - I certainly will never be using her!

Fran - I bet you see a lot of this at title where people are panicking that it won't close on time.

Patty or Scott - I can't imagine that she got that much more for a 20 day lock versus a 45 day lock, so I just don't understand why people do this crap!

Virginia - Wow, expired 3 days before close? What where they thinking?

Julianna - She certainly will never be getting business for me or anyone in my office, but I'm just glad this isn't my client!

Crystal - I was lucky, I only found out one of my clients was lied to during the whole subprime thing, but I'm guessing I was just lucky working with good mortgage brokers.

Jesse - I think she already lives there!

Scott - I agree with gross negligence!

Darleen - It isn't my client and this other agent is already so much fun to work with! I think stirring the pot could actually make things worse and lose the home for my clients.

Mary
- I wish they were my clients or I certainly would be telling them.

Jun 18, 2008 01:43 AM #17
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Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Todd - it was a new home with their in-house lender!  The close date was known by all, way ahead.  I think the lender offered to lock it in cheaply, knowing full well that they would have to (get to?) charge them extra to extend it.  I called another lender, explained the situation, and had a backup loan ready.  When the IH lender realized that they would lose the loan, they came up with the 10-day window on the docs.

Jun 18, 2008 03:43 AM #18
Rainmaker
532,169
Ernie Steele
Berkshire Hathaway HomeServices Homesale Realty - Lebanon, PA
Call me, let's get started!!! 717-273-3774

I'd say something...She'd be out of work as far as I'm concerned.

Jun 18, 2008 04:47 AM #19
Rainer
68,842
Judy Tuscano
Prudential Verani Realty - Nottingham, NH
NH Real Estate Professional

Todd - It's hard to know this type of information but your hands are tied by your fiduciary to your buyers. I hope it goes well for your clients and I too feel bad for the sellers.

Jun 18, 2008 06:41 AM #20
Rainmaker
317,819
Monika McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH
Southern NH & the Seacoast Area

Wow...what a mess! I sure hope it all works out in the end. Maybe after it's all over you should think about filing a complaint.

Jun 18, 2008 12:26 PM #21
Rainmaker
116,661
Leslie Stewart
Oregon Licensed Broker with Berkshire Hathaway HomeServices Real Estate Professionals - Stayton, OR
Realtor, ABR, CRS, Oregon Licensed Broker

This is outrageous behavior by a loan officer.  Even under the best of circumstances...things happen to delay a closing.

Jun 22, 2008 06:53 AM #22
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