What Happens After Things Go Wrong?
$hit happens. There's some controversy around the creation of the phrase. Did Professor Connie Eble bring the phrase to written form for the first time? Was it, in fact, Forrest Gump? While mystery surrounds the phrase, I am near certain that the original use was tied to someone with a real estate license, or a mortgage professional. If you're in the real estate industry long enough, or you're a consumer who has bought and sold enough homes, you know somewhere, somehow, someday, something went wrong. $hit happens, and for thousands of reasons along the way - with so many steps to the home buying process, it's impossible to avoid, even for the best, most savvy, and luckiest of professionals and consumers.
One of the things that separates the best in the business from everyone else is what happens after things go wrong. A curveball mid process could sink the whole ship, causing a real estate transaction to fall apart completely, worst case leaving someone homeless and in a desperate place, or best case, inconvenienced and less than thrilled. Or the curveball could be whacked mid air and knocked out of the park, transaction saved and everyone left happy and popping champagne at the closing table.
Recently, we had some $hit happen on a pretty intricate new construction purchase. Our client was buying new construction, moving across country, and changing jobs (more accurately, retiring) mid-process. Plenty of opportunity there for things to go sideways or for someone to forget to dot an 'i'. And sideways things did go, but not as I expected. As it turned out, an underwriter made a clerical error that resulted in our loan no longer being approved - the day prior to our settlement date. Uh-oh.
We had an underwriter miss a clerical thing on title - taxes separated into different line items, but with nearly identical amounts (think 'one tax installment was $3251 and the other one was $3215'), the underwriter included them as one installment with a tax rate in our file at about half the actual tax rate. Whoops! Suddenly, and at closing, we no longer had a do-able loan due to debt to income issues.
How John 12 years ago (3 years into the business of doing loans) would have handled it (aka exactly how most inexperienced industry pros would handle it)
- He'd have been terrified to tell the borrower and the agents involved, instead opting to call anyone and everyone to 'fix it!' behind the scenes, even though it couldn't be fixed
- He'd have gone to the 2 places you can really do anything about debt/income ratios - the debts, and the income. The quick "fix" would have been to pay off debt. In fact, this is what the underwriter suggested. There was a student loan we could pay to "Fix" things, but this was the borrower's daughters student loan and she had no interest in paying it. If she was forced to, she'd need to make arrangements with her daughter to repay her privately, and that would have been awkward.
- He'd have let the underwriter have it. How DARE you make a mistake - you're an UNDERWRITER! YOU CAN'T MAKE THIS TYPE OF MISTAKE!!! Not because John 12 years ago was a total a-hole, but because John 12 years ago thought of real estate agents and underwriters as intimidating and infallible pros instead of people doing the best they can at their job.
- He called the customer first and let them know what the issue was immediately, and that he was working on options to get it taken care of but wanted to note the delay so everyone had as much time as possible to change their schedules accordingly. He called the agents involved 2nd to let them know the same. He didn't have a solution, but he felt it important to let everyone know the timeline would be changing so they could plan accordingly, and that there would be further communication as soon as humanly possible once a plan was in place.
- He scoured the file for opportunities - what else could we pay off? Could we scrounge up any more qualifying income that was overlooked? What would it cost to buy the interest rate down? There are always options - not always great options - but there are always options, and experience teaches that.
- Knowing quirky product offerings and details, he realized we could change around the type of PMI the borrower was paying to remove it from their monthly payment, thus reducing the monthly housing debt. They'd pay more at closing, but it would get the loan closed, AND as a bonus, their payment would go down more than $200/month as a trade off to the unanticipated expense up front.
- He knew that last option would work. He communicated to the client, agents, and title company exactly what was happening, and painted a realistic picture of the timeline on how long it would take to get changes in place and get closing back on track. Then he got to work, letting everyone know internally what had to happen, who had to do what, and suggested this be prioritized because it's OK that someone messed up, but we were accountable for minimizing the damage done, and that meant putting other things aside to focus on getting this done.
A few days later, the settlement happened with happy borrowers, a beautiful new home, and minimal damage done despite the very big last minute mess up. While this may sound like a "yay John (with a big pat on my own back)" post, it's really about experience. A decade ago, this issue may have killed the deal. I'd have lost sleep, and my anxiety would have been contagious, having the buyers and agents a wreck. Or best case, I'd have listened to the underwriter and had the buyer pay a debt they had no interest in paying, leaving a sour taste in their mouth. Experience taught me other ways, taught me that there are always options, and that even in our business of numbers and percentages, there's room for creativity. Experience has also taught me that no one is perfect. Not agents, underwriters, assistants, processors, and certainly not me. And that's OK, as long as we're willing to own our mistakes, communicate through them instead of hiding from them, and make a commitment to getting better every day.
When you work with our team, I will guarantee you mistakes will be made. Eventually. We also had a dozen other clients that month who all had loans move start to finish without issue. But give us enough referrals, and work with us long enough, and you'll see a mistake. We hope that's OK (unless, of course, you've never made one). But we also hope you'll see the importance of how mistakes, or any curve balls along the way, get handled. Because when everything goes right, it's easy. But more important than what happens when everything goes right, is what happens after things go wrong.