Is the Letter From the Lender any Good?

A regular topic in our business is the quality of pre-qual and pre-approval letters from lenders.  This has been a serious issue in several of transactions.  I have gotten to the point that a letter from certain lenders is worthless in my opinion; while others come from true professionals.  I give a sigh of relief when an offer comes in with their letter attached.

Why is there such a difference from one loan officer to another?

Let's look at a few of the issues:

1. To get a mortgage license in our state you pay a few bucks and you are licensed loan officer.  No training, no experience, just pay the fee.  There are tons of folks walking around that have no clue what they are doing.
2. The lending side of our industry appears to be the Wild West.  They have no association like our Board of Realtors with an ethics code and enforcement.
3. With so many people wandering around with licenses and the B/C side of the business tightening, many agents are getting desperate for business.

I have seen letter from mortgage brokers that say they have a fully pre-approved mortgage, to later find they never even pulled their credit.  It happened again yesterday.

In this case it was a new client of a new real estate I am working with.  The loan officer was a personal friend of hers.  She pre-qualified the clients for $500,000.  In Hawaii that limits the selection for a single family home.  With a pre-qual and budget in hand we take off to look at homes.  The buyers found a dream home they liked and decided to present an offer on it.  Not so fast, the listing required a pre-approval letter from the funding lender.  We get the loan officer on the phone and tell her what we need and asked how quick she can get that.  We got our answer first thing in the morning:  NEVER.

Let's review the damage:

1. We just wasted the buyer's time.
2. We wasted our time.
3. We broke the buyer's hearts after finding them the one in million.
4. We did not look very professional in anyone's eyes.

It was a learning experience for the new agent.  I am sure she will never forget it.