But the Other Guy Said I Was Approved...II Not All Lenders are Created Equally

But the OTHER Guy Said I was Approved...II Not All Lenders are Created Equally! The Triumphs and Challenges of Getting a Loan for a Home can be Maximized and/or Minimized, Depending on WHO YOU CHOOSE to Do Business With (And: I Don't Necessarily Sell Houses--I Really Find Solutions to Challenges)

This is a continuation of a blog from the other day that started out as "But the other guy (loan officer) said I was approved..." Go ahead and read it. http://www.activerain.com/blogsview/531340/But-the-OTHER-Guy It's short and basically says that there's a big difference between a Buyer being pre-qualified and pre-approved.

Today, I'd like to address an instance in which I recently was in conversation with a nice guy/Buyer. He said the above about being "approved" with a loan officer. After some discussion, I learned that he and his wife even went with an agent (I'm not sure if that agent was a REALTOR or just a real estate agent), looked at houses, and put an offer on a home. Then, after a little negotiation, this gentleman decided to bail on the whole transaction for reasons of his own but basically told me that he was dissatisfied wtih both the loan officer and agent. THEN, he contacted me to work with me due to my real estate expertise. (Keep in mind that I DON'T have a big ego and I'm not saying I know everything about real estate but that's why he told me he contacted me.)

So, when this gentleman said he wanted to work with me and needed another LO, I of course had one of my lenders from my network/team give him a call. Without going into the whole thing, the lender told me the guy and his wife (one or the other--I'm not sure which) have some issues on their credit and are marginal for getting a loan anyway. She told me it's her professional opinion that this couple would be best served by being completely pre-approved (have their loan scenario run through an automated desktop underwriting program to see if they can actually qualify for the loan in the first place) and, THEN, go out and look at homes. I was reminded again that I as an agent don't necessarily just sell houses; I truly get paid for solving the challenges of my customers who otherwise wouldn't be able to solve the issues on their own.

I enjoy working with the particular lender I just wrote about b/c she under-promises and over-delivers, saving the Buyer/Borrower LOTS of time/energy and saving me lots of time/energy, too. I like this lender's approach in this instance b/c this couple will NOT get their hopes up by finding the right house only to be let down at the end of a long 4-6 weeks when a situation that is lose-lose and can't possibly go through results in what is natural for a lose-lose situation--they get declined for the loan. This loan officer only says that a transaction can go through when it will definitely go through; if the Buyer/Borrower is marginal--she is honest with them and says, "Okay. This is the situation. It might be fine and you might be able to get the loan. It might not be fine. Why don't we do this--we can put the loan scenario into the computer and see if we have a chance of getting a loan or not..."

What I mean is that there is a lot of mis-information and incorrect information floating around out there that is spread by loan officers and real estate agents alike. And, yes, I know that I've said some things that I didn't fully check out but thought were true that turned out to NOT be true. I make mistakes, too. There have been other instances when one loan officer said one thing to my customer that I know for sure was incorrect. What was said was: "Yep. You CAN qualify for this (conventional) loan, even though you've had a bankruptcy 26 months ago. Oh, and by the way, you don't qualify for that FHA loan you want, so you have to come up with 5% down payment." This was from a loan officer to this one other couple that clearly qualified for an FHA loan--That particular LO just didn't have the tools to complete an FHA loan. Or maybe that LO didn't have the knowledge and expertise to guide that Buyer through a loan scenario that was in their best interests. Oh, BTW--that other couple not only got an FHA loan, they also got ALL their down payment and closing costs paid for them!)

My rant with the Part I of this blog was that I talk with SO many potential Buyers who have spoken with loan officers that, with VERY little attention to details and very little actual pre-QUALIFYING, they simply tell the customer--"Okay. Based on what you've told me over the phone, you are APPROVED for $X to buy a house." I personally have absolutely NO problem with that, as long as the loan officer follows up with explaining that this number is just an imaginary number but a good, educated guess and that the Buyer/Borrower will need to bring in paperwork/proof and get their credit checked to verify that this pre-qualification price is correct or pretty close to being correct. And, sometimes even if the loan officer DOES go the extra step and explains the process to a "T", the Buyer/Borrower sometimes either doesn't pay attention to that explanation or simply doesn't understand what they've been told. The main issue I think is that: NOT ALL LOAN OFFICERS ARE CREATED EQUALLY. Just as with ANY other field, there are some good ones and there are some not-so-good ones.

Another thing I run into a lot are Buyers that have gotten a pre-qualification or pre-approval from an out-of-state lender as opposed to an in-town lender. There are pros and cons to working with in- or out-of-state loan officers. I will say, though, that when challenges arise (and they DO) with the loan process/buying process, I would tend to want to use the services of someone that is local so that, when a problem occurs, I can call them and they are at least in my same time zone or I could even show up at their office to fix a problem or generate a piece of paper quickly/easily. But that's just me and my opinion. I want the Buyer/Borrower that I am working with to make their own decision about who they choose to work with concerning the loan for their prospective house. On the other hand, I also want to see them getting a good deal on their loan terms. (And a loan is not just about the percentage rate, either! Whether it's a good loan or not depends on many, many factors--not just the percentage rate.)

I've also seen Buyers given Good Faith Estimates that I am positive had discrepancies on them for typical local fees and the Buyers wanted to stick with that company "just because" and not get a second opinion from another loan officer. What?! This situation (strange fees on GFEs) may happen with local and non-local loan officers/companies. I'm not bashing anyone; I'm just saying that I've seen it happen with local loan companies and with non-local ones. I would think, though, that getting at least one second opinion on your loan costs might be a good idea, if you're a Buyer. But not everyone agrees with me. I know that I may get some flack from loan officers on my opinion of having Buyers I work with getting a second opinion about their loan and loan fees--but I DO think it's a good idea. I work with a LOT of good lenders. But most of the people I work with do not and not everyone gets along with certain personality types, so I generally will give a number of names and contact numbers for lenders b/c I can't know who the Buyer will be the best match with in terms of loan officers.

And do not get me started on, with the way the market is currently and many people's perception that it's a tough market, the fact that some loan officers are working at lending only part-time, are getting out of the business altogether, or whose companies are merging with other companies or just tanking. If you want to buy a house, do you think it's better to work with a seasoned loan professional who is still transacting business in this market or someone who simply cannot cut it on loan officer pay and is doing some part-time other work?

So, to sum up: Not all loan officers are created equally. So, what challenges and what triumphs have you or your customers faced with respect to loan officers and their professionalism with getting the job done to the best interest of the customer?

(A later blog may address: Not all real estate agents are created equally.)