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Easy-Peasy, Wrong!!!

Mortgage and Lending with George Souto NMLS #65149 NMLS #65149

This month Patricia Feager and Kathleen Daniels are hosting the March challenge titled  "March to a Solution | ActiveRain March 2023 Challenge"  Patricia and Kathleen are asking us to share issues we have encountered during our professional career in Real Estate, which may help others to avoid and resolve. 

If there is one thing anyone in the Real Estate Industry or Lending Industry needs to get use to quickly once they become a part of either of these industries, is if something goes wrong it is always your fault no matter what.  A few years ago I

Normally in the Lending Industry once a loan is conditionally approved it is just a matter of collecting a few documents which borrowers normally do not have at the time of the loan submission such as:

  • Homeowner's insurance
  • Appraisal
  • Bank statement showing the earnest money clearing.
  • Gift money documentation.
  • Other similar documents like the one above.

If the Selling Realtor has done their job and priced the home correctly, and the Borrower has been truthful on their application, the loan will easily makes it to closing.  Easy-peasy right? Wrong!

Let me provide an example of why what should be easy-peasy, is not always easy-peazy, by sharing a transaction I had a few years ago.  This was a FSBO sale, so right there I knew it was not going to be easy-peasy.  The Seller was the mother of one of the Borrowers, and was doing a gift of equity for the down payment, and also doing a Seller contribution for all of the closing costs.  The mother was also a paralegal for the Attorney these Borrowers were using to represent them.  Further more the two Borrowers were well educated, they were School Teachers.  So no problem with money for down payment and closing costs.  The Seller was the parent, so everything should be friendly.   Seller is a paralegal for a Real Estate Attorney, so she should be very familiar with the whole closing process and what is required.  This should be an easy-peasy transaction, but not so fast.

Right off the bat there were a number of issues before the loan was approved.  The mother was involved in drawing up the sales contract with the Attorney, however, she did not sign any of the pages she needed to sign as the Seller.  There were other obstacles along the way, but we finally got to the point a Clear to Close was expected within a few days.

When I did not receive an e-mail from the Closing Department saying we had a Clear-to-Close after the loan had been conditionally approved for a couple of weeks, I asked my Closer what was the issue.  Her response was we had not received any of the additional documents requested on the conditional approval letter.

I called the Borrowers and the response I got was no one had told them they needed to provide any other documents.  I want to re-state again, these are two school teachers, and the mother is a paralegal.  It was very obvious non of them had read the conditional approval letter, or listen to me when I called them right after they received the conditional approval letter, and went over it with them.  The remaining conditions were list in BIG CAPITALIZED WORDS at the top of the conditional approval letter.

When I went over the remaining conditions on the phone with them AGAIN.  I pointed out to them AGAIN where on the Approval Letter the "Mortgagee Clause" was, and that the insurance agent would be asking for it.  So who do I get a call from the next day?  The insurance agent asking me for the "Mortgagee Clause".  He also informed me he could not send us the insurance binder until the Borrowers signed the application he had sent them.

A couple of days went by and we still had not received the insurance binder.  So I call the insurance agent and asked him why I had not received it yet?  His response was that he still did not have the signed application back.  So I call the Borrowers AGAIN and asked them when would they be sending the signed application to the insurance agent?  You may have guessed by now, their response was NO ONE HAD TOLD THEM THEY NEEDED TO DO THAT!

We finally get the insurance binder, but still no sign disclosures from the mother.  I call AGAIN and within an hour I get them attached to an e-mail with a message all in CAPS saying HERE!

Finally, everything we needed to provide a Clear-to-Close had been received, and all that remained to be done was to re-pull their credit report.  GUESS WHAT???  They had a new credit inquiry on the Credit Report. 

So once again I called them to find out what the new credit inquiry was for.  It was for a NEW CAR.  I reminded them about the conversation we had when they signed what I refer to as the "Stupid Disclosure".  This is what I refer to a disclosure which tells the Borrowers not to do anything that would create a change to their credit, employment, or assets.  In other words don't quit your job, make sure you don't reduce the money you have in the bank, AND don't make any major purchases.  So DON'T PURCHASE A NEW CAR.  Their response was I had not told them they could not purchase a car once the loan was approved.  NO I told them once we close on the loan and they have the keys to the house in their hands, then and only then could they purchase a new car.

So now the Underwriter needed to document the new car purchase and the NEW CAR PAYMENT, to make sure they did not go over the debt-to-income ratios.  Luckily they were OK.

Finally my Closer was able to notified them they had a Clear-To-Close.  The response was good, but in a very snotty tone they stated "they hoped there were no more surprises".  WHAT ..... we are the ones giving surprises???

It does not end there, after the closing I got an e-mail from the mother informing me I had stressed out her daughter, and I would be reading about what we put her daughter and husband through in the newspaper.   OK Go Ahead Blame Me!   Obviously all the surprises along the way were all my fault.

Lesson learned, don't assume just because a client is well educated, and the people involved in the loan know what they are doing AND listen!!!  Just because everything has been explained, don't stop there.  Explain everything over and over every chance you get.  And OH yes, easy-peasy is not always easy-peasy.


Posted by

George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Email Me
About Me
My Blog

I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing questions

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.



Kathy Streib
Cypress, TX
Home Stager/Redesign

Hi George-I've met many formally educated people who lacked common sense and/or felt they were beyond listening!  What a crazy transaction. 

Mar 16, 2023 06:14 PM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

No matter what, there is never a need for those to be "snotty". Makes me nuts.

Mar 16, 2023 06:28 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good evening George Souto ,

This was a crazy transaction! To me until every one has signed and the loan is funded it's never easy-peasy! Why don't they listen?? They are rational, educated human beings, yet no common sense.

Mar 16, 2023 07:30 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

George my friend I get it when I see what the conditions are I always cringe and push the parties to get with the program ASAP or there will not be a closing..... some look at me as if I had two heads..... Endre

Mar 16, 2023 10:27 PM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Some people just don't get it and want to blame others for their mistakes but you are right, in this business we end up taking the blame more often than we should, haha.

Mar 17, 2023 04:17 AM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

Oh my! That was nowhere near easy-peasy. And there was no reason for any of that. They must have been used to people taking care of things for them!

Mar 17, 2023 04:58 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello George - life in any industry and life itself continues to offer an everyday experience in lesson-learning.  And in many cases, there are people who choose to place blame on others rather than trying to understand how things can work better.  

Mar 17, 2023 05:15 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Great story, George. I sold one FSBO about 25 years ago and after that swore I'd never do it again! I also hate selling my listings to people who don't want buyer representation. Your story clearly explains why.

Mar 17, 2023 05:48 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi George:

Wow, that is quite a story and a bit of a mess to deal with. Sometimes even when you tell people things, as well as document it it wring (always smart) they don't pay attention, or for some reason don't comply. Glad you got them to closing after all that. Whew!


Mar 17, 2023 03:05 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

That transaction sounds like it was a real nightmare, George.  I often think there are issues when someone is "well" educated, but takes for granted how far that education will take them.  They assume too much, and forget the devil is in the details.

Mar 17, 2023 04:57 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

CONGRATULATIONS George, on having this blog FEATURED in the Old Farts Club group!  

Mar 17, 2023 04:58 PM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Oh if you could hear the thoughts running through my mind as I read this George Souto 

I like how you named the disclosure the "Stupid Disclosure".  It worked (LOL) they proved it. 

So true, "if something goes wrong it is always your fault no matter what. " 

Thank you for your first entry in the March Challenge. 



Mar 17, 2023 07:03 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

What a good entry in this month's contest showing how "easy peasy"'is this business. Not!

Mar 17, 2023 07:14 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Not only is this an excellent example of people thinking they know it all, but also a sound argument for having a rea estate agent involved  mot of the issues would have been resolved easily and on time.

Mar 18, 2023 07:48 AM
Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

I echo what Ed Silva says, and even with proper representation, the items you requested would likely be brushed aside by the borrower as more of a nuisance, not a requirement for the mortgage.

Mar 19, 2023 04:01 PM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri 314-775-2050 - Des Peres, MO

George Souto ,

Sometimes it seems like people do NOT read anything we provide as education material.

It is very sad.


Mar 23, 2023 06:42 AM
Patricia Feager, ABR,CRS,GRI,MRP
Selling Homes Changing Lives

George Souto - Congratulations on a well-deserved FEATURE and for sharing a very important lesson to all buyers and agents involved in transactions.

Never assume the intelligence of borrowers or their ability to listen to instructions. Unfortunately, many people are not willing to accept responsiblity for not following through and make it a habit of pointing fingers at the wrong people. 

What a great lesson to share. Never assume all is well and will end well! Thanks, George!

Mar 23, 2023 07:47 PM
John Juarez
The Medford Real Estate Team - Fremont, CA

Well educated, George Souto, is not prevention or guarantee for the "well educated" party not being a jerk.

Great story!

Mar 26, 2023 05:48 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Love the name of your blog, "Easy Peasy, Wrong!" ... your story was a great reminder of things that happen when "educated people" who think they know it all, get everything ll wrong!

Mar 28, 2023 02:00 PM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great post!  Thanks for sharing and enjoy your day!

Apr 02, 2023 07:24 AM