Select your lender carefully!

I have discussed, yelled, screamed and whispered with many of you the importance especially in this current market of only dealing with a Direct Lender and not a Loan Broker. The mortgage business is not what it use to be and unfortunately IMO loan brokers have become second class citizens.  If you want to insure that your loans close in a timely manner then go to a Direct Lender that is drawing loan docs locally and funding locally or as minimum is funding in Southern California. I’m in San Diego and Southern California mainly Orange County is the home of many lenders. You may not have as many “LOCAL” option but try to find and maintain good relationships with quality lenders. Here is the response that we received today from a loan broker on a short sale transaction that must close by the 28th;

“Unfortunately we can only move as fast as the investor and with rates where they are right now the lenders have tons of files………it’s in line to be reviewed and we’ll update you when we have updates”

In other words what this loan broker is saying is that he has no control over the transaction and has to wait until the investor that he is submitting the loan to gets around to providing loan docs. We are the listing agent on this transaction, we are not familar with the buyer’s lender and who they choose to use is entirely up to them but if you are the listing agent and get a pre-approval in support of the offer being submitted you have the right to question the buyer’s agent about the lender they are using.

Sellers often receive multiple offers. If the seller receives an offer approved from Joe Blow mortgage broker and another offer with a loan approval from a well known nationwide direct lender it’s going to influence the seller’s decision. Which offer is going to be more attractive to the seller?

So Select your lender carefully!

15 thoughts on “Select your lender carefully!”

  1. Alex from Maui Real Estate Search

    Good point, Alex. As below-market properties get multiple offers, a way to differentiate from others can be financing (obviously the more reputable, the better).

    1. Alex, yes it’s unfortunate but as you know, if a seller has two similar offers they have to do what is best for them. Much of the time the offers may net the seller the same amount of money but because of the size of deposit, down payment and ALSO the lender they are working with the seller may choose to pick one offer over another.

  2. Hi Alex,
    It’s not just brokers, however, at least you tend to get more answers from direct lenders. I have a deal where I am the listing agent on a very reputable direct lender deal, and yesterday marked 6 weeks PAST settlement date. 2 weeks of that was very credible, not the lender’s fault. The underwriters have gotten a bit out of control, I must say…

    1. Oh yeah, there will always be problems on the lending side. I was thinking about how you never hear about the lender until things go wrong! I believe what makes a lender really good is communication but that makes all of us much better. 🙂 It’s just that it seems to really stand out when you have poor communication from your lender.

  3. I have gone through a similar nightmare. I was using a lender who claimed underwriting was backed up with thousands of files on their desks and they were working through them in order. The house was a HUD, who charged the clients $385 for every two weeks the home didn’t close after the 45 day limit. It turned into a 120 escrow and a very difficult experience for me and my buyers. That is why I now ask that buyers switch to the lender I know and trust because using a lender that they picked is like playing a slot machine. We could lose just as easy as we could win.

  4. It is vitally important for consumers to pick the right lender. Personally, I think finding a well-known lender locally is the best idea. I could recommend asking your real estate agent for their recommendation.

  5. Hi Alex, good info however even direct lenders and banks can cause problems.

    Just signed loan docs on a a BofA REO and took the lender, BofA six weeks to get to docs, should have closed Sept 15th, they really dropped the ball, and they admitted it. Luckily the sellers agent has been understanding and hasn’t killed the deal, simply because of the communication between all parties.

    1. Oh yeah, it’s happening with every bank direct or broker. It seems like the direct lenders have a little more pull to get things done because everything is in house. Also, I have a broker who is excellent and does a great job but he is extremely thorough and knows his stuff. It’s all experience and knowing what you are doing.

      Frederic, thanks for stopping by and leaving a comment. Hope you are doing well out in the Valley!

  6. The direct lenders I work with work with 620 credit scores or above (changing to 640 after november 30th) and I had clients in the 590’s who wanted to buy a house so I found a mortgage broker who had a loan program that accepted 580 credit scores or higher with other requirements that my clients met. We all thought we had hit the jackpot. After 6 weeks we still hadn’t made much progress. My clients’ lease was expiring in 30 days and they had nowhere to go. We were supposed to have closed 2 weeks earlier. The broker kept making promises that things were moving along and blamed MetLife for not being responsive enough. Well, story short, I got my direct lender involved and he found a way to make it work for my clients (score was brought inline with what it needed to be) and 3 weeks later we were closing… Needless to say that wasn’t the best experience.

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