Why Your Deals Should Never Fall Apart!

I've been in the housing industry for a little over ten years now, and have been a loan officer for almost five years. I still keep hearing Realtors I know say that their deals are falling apart, and I am astounded! At least four Realtors in four weeks time have shared with me their recent horror stories or what could lead to horror stories. I was corresponding with one Realtor and asked her how things were going and she said,

"Horrible! Every deal we've had going on this month fell apart. I'm going to have to look for another job."

Another Realtor called me for a second opinion about a client I had previously told I was concerned she likely wouldn't get approved until she did A, B, and C, and the Realtor shared that the LO who approved her said, "I'm confident she'll get approved, I'm not really worried, we'll know for sure when we get her in underwriting (they already had a property)." I asked her if the underwriter had seen the file at pre-approval and she shared that the LO said the underwriter doesn't like to do that, that they only like one touch per file...

I met with yet another Realtor yesterday who when I explained that I always ask the Realtor or client to call me prior to making an offer so that I can look up taxes, estimate payment accurately before an offer is written to make sure the buyer is comfortable and that the debt to income ratios work, and I figure out prorations to make sure the Realtor asks for the correct dollar amount, she said, "Well, this has been a problem with another LO- often we get to the table and the payment is worse and the buyer needs several hundred more into the transaction that they don't have."

I have been talking with a close realtor colleague about a potential borrower that has been "approved" at another company, but we don't know the details of the approval, if the client's profile has been through computer automation or not.

In one regard, I'm shocked that these weak pre-approvals are still going on in our industry, but on the other hand, I'm totally not surprised. Sales people in our industry, both Realtors and Mortgage Consultants sometimes get a really bad name as just that- just sales people.

The problems above are so easily preventable! Formal pre-approvals, reviewed by a human underwriter and processor may take a little more time on the front end but will save a lot of time in the long run for the Realtor, the borrower, and the loan officer!

Doing thorough pre-approvals seems like such common sense, but these stories above convince me that alarmingly a lot of LOs are still handing out their own pre-approvals. Here's a tip that the pre-approval was not issued by and underwriter- the loan officer's name is on the letter!

I'm certainly not suggesting that I am perfect or that 100% of my deals close, but I will tell you that in almost five years, truly only two of my purchase deals fell apart that weren't because of a seller issue. The first was an applicant that I met with during training with my supervising LO present and driving the bus. She asked the client to bring in loan documentation and failed to have her bring in W2s! At this point in my career this seems so basic, but one week into lending, that commonsense eluded me. The client did not have a history of income to support her current income, no education to substitute for job time, etc., and her loan was denied. After watching the client fork out over $700 in appraisal and inspection monies that she could not afford to lose, I vowed that that would never happen again to one of my clients! The only other deal I've had fall apart was due to the unwillingness of my clients to follow the rules. I had one family formally pre-approved multiple times over the past year. They were hesitating to buy. The last time I ran a merged credit report was in April. They finally found a home in August, about one month after their credit report expired. All parties agreed to not run their credit again until they found a property for fear that too many pulls would lower their marginal score. Once the offer came in, I re-ran credit only to find his score had dropped to a mid of 470! I asked the borrower's wife what happened, quite honestly wondering if they had been victims of identity theft! Well, unfortunately, in the time between the two credit reports, they had decided to us a "debt management" company to pay their credit card debt. The "debt management" company uses tactics such as encouraging debtors to cease all credit card payments for three months to get negotiating power with the banks! This is just one reason I am not a big fan of "debt management" companies- they have their place, but not in the middle of a mortgage transaction! This situation could have been avoided if the customer would have followed the rules.

Quite honestly, my processor/assistant and I feel like we throw up on customers with information. We give them a Dos and Don'ts document that actually spells out such commonsense as "continue to pay all bills on time". We always hesitate to give this to families for fear it will appear patronizing, but we explain politely some of the horrors we've seen, and we empathize that people not in the industry just may not know the logic of why or why not to do something. This family as all others was given this information and explained the information.

My processor and I have a line that we use behind closed doors, "This isn't Burger King, you can't have it your way!". Yes, when it comes to customer service, you definitely need to abide by the motto that the customer is always right, but when it comes to mortgage rules, we have to teach them that the underwriter is always right and what that means.

It is our job to take the time on the front end to encourage the customer to come in prior to finding a property and to review their last two years W2s, 30 days paystubs, 2 months bank statements, most recent retirement account, etc. It is also our job to make sure this information supports what we put in the application and to get the entire scenario through a computer approval system and/or in front of a human underwriter depending on program.

I truly believe that if more LOs operated this way, I wouldn't hear agents saying that their purchase transactions were falling apart.

What do you think? Please share with me your input or stories!