What's a Realtor and a Buyer to do?

We had a client referred today from a real estate agent who had been driving a buyer around for 3 weeks. The buyer was prequalified by a local bank loan officer.

The client said the loan officer had called and said they needed to have a sales contract today and to lock today because the program that allowed the client's credit score was going away today.

The agent asked if we could help, because they could not find a property today. They have been looking steadily for 3 weeks, but had not found a property yet.

We talked with the client to understand what the situation was. Their credit score had been 612. They were looking for a Rural Development loan, 100% purchase. They had followed their loan officer's advice to improve their credit, while they looked for property.

Our loan officer asked questions about their employment, their income, their debts. Satisfied that maybe we could help, she pulled credit.

The 612 score was gone, dropped.

The client has failed to tell us about a $500 car payment that actually put their debt ratio well over 65%. The client's husband is just out of bankruptcy and will not qualify for the loan.

The fact though is that the client was never qualified. The program that ended today, that supposedly allowed Rural Development loans below 620 credit scores, did not matter. The client's debt ratio was too high, yet the previous loan officer had issued a prequalification letter. Based on that prequalification, the agent and the hopeful buyer had spent 3 weeks looking for homes.

BTW, the advice given to the client to improve their credit - pay off an old tax lien. The client borrowed from a finance company to pay the lien. The lien has not updated, but when it does it will probably reage the reference and further lower the score.

As it is, the new finance company debt has already lowered the score.

And no underwriter has reviewed the file.

This loan officer has wasted the agent's time and gas and has left the client in worse financial shape with bad advice.

What is a real estate agent to do?

What is a buyer to do?

This was a loan officer from an established bank.

Pick your loan officer well. Require that your loan status be fully explained and you know what has been done, what still needs to be done, and why are we waiting?

Here is a checklist with some information that I hope will help:Homebuyer Help