It's no secret that today's lending atmosphere is much different than from years back. I've been seeing a few things things as of late that are a tad bit concerning. I'll get to that in a moment.
I wrote a post recently that outlined some basic things that the consumer can do to streamline the loan process and get to the closing table faster. Lenders are going through files with a fine tooth comb these days. In fact, they're scrutinizing loan files more than they ever have... at least in the seven years I've been at this gig. Here's a few things I'm seeing that are concerning and need to addressed:
Shopping up until the very last minute: I'd venture to assure you almost everybody wants the lowest interest rate and no fees. I will be writing a post in the near future of how us mortgage folks make our money. But, for purposes of simplicity, I'll save that subject for a different time. What I am seeing is folks who are shopping (and often times nickle and diming) lenders up until the last minute, and then when they make a decision... rates may have changed, product guidelines may have changed, and all the nickle and diming that was done actually costs you more. It may cost more in rate and/or may cost more in the product you're looking for even still being available. While everyone wants the best deal, that usually is attained by establishing quality relationships and a mutual sense of urgency to reach the common goal. My advice is don't be talking with ten different lenders, you're liable to get so much conflicting feedback and quotes that it will do nothing but confuse you and the whole process. Pick about three lenders who give you a good internal feeling. Make your one choice from there. The best choice won't necessarily be the lowest rate or fees, or the person that tells you what you want to hear. A quick example of this is my Homeowner's Insurance Agent. I guarantee he's not the cheapest in town but when I emailed him yesterday to call me, my phone rang two minutes later. That's service and that's why he's my guy. Shop with service and urgency in mind, as well as those dastardly rates and fees.
The 'hurry up and close' mentality: The line is ringing and I pick up and hear a frantic voice on the other end. "I need to close my loan in the next seven days, can you help me?" Hmmmm, that's just not the way it is these days folks. Believe me, we DO want to close your loan as fast as we can. Heck, we don't get paid unless we close loans. But give yourself and us some time, especially in this atmosphere. Underwriting turn-around times aren't as quick as we'd like right now, so get that mentality out of your head. Instead, know that it may take more time than it has in the past and work together as urgent as possible, to get to the magical world of the closing table.
You don't really need that documentation from me, do you? I don't ask for supporting documentation for health reasons. What is needed or asked for, is what I get. That gets the job done. One of the best ways to ensure that your loan closes in as timely of a manner as possible is to work with the same sense of urgency as we do. While I don't usually ask for skin graphs at the time of application, if that's what the lender wants to close the loan... I'll get it. Okay, I'm kidding on that one but I hope you get my drift. Delays in getting documentation will create delays in closing and in turn could adversely affect the very terms of the loan that you were initially quoted.
In a changing atmosphere, adaptation is key. Right now, all of us have to adapt. Knowing this and doing this will save a lot of frustration from all ends.
UPDATE! One of my favorite writers from the Mortgage Side of things must have been thinking along the same lines as me. Check out Janet's Post!
Jason: this is an important post for consumers to read. The nickle and dime philosophy often fails and when they finally decide to "lock" a rate its already to late.It is a challenging time for mortgage Brokers as yourself.From what I have seen documentation needed from lenders is much tighter and consumers have to realize that it does take longer to get a full loan commitment these days.Thank you for the information.
I think we went too many years spoiling our customers and now they expect to be spoiled. Things did get tighter. Much tighter. All of the media hype caused Lenders to go away so all we are left with are tight guidelines, overly critical underwriters and a sinking feeling that we can't meet our customers needs. I want subprime back! I helped a lot of people with those "bad" loans. They were only bad if they were misused. They were helpful to many.
Lloyd - I've been trying to spread the word, everyone needs to adapt accordingly. Hopefully this reaches a few eyes and they get the drift.
Michael - I agree, there's a place for subprime in any lending atmosphere. It will be back soon enough, in my opinion. Time will tell.
This is good information for consumers to read. There are some people who want a bargain price heedless of what the bargain is costing them. I've known people who spent hours searching and lots of gas driving around town in order to save $5 on a $50 item.
I am thinking this would be a great reblog - since I have been reblogging lending info - this hits the nail on the head - you rock - so nice to be back in touch with you and all the others that provide such great info for the consumer - nice job and congrats on the gold star
Jason,
Very on target advice...telling it like it is...anyone shopping rate alone to select a lender needs to go back to square one!!! Thanks, Fran
Colleen - Good point there. Personally, I look at a fair price when shopping for anything. As far as gasoline, I know I really won't find a fair price right now so I just go to the place nearest to my home.
Thesa - Reblog away my dear. It's good to have you back. Thank you.
Fran - You are telling me, my man... you are telling me.
Oh you take the cake. Thank you for mentioning me in the post. Great minds think alike...and all that. AND you got featured!!! I love it! congratulations on another great post.
AMEN!!! We have a client who is suppose to close on the 15th. We've documented that we've requested information from them 26 times since the beginning of August... do we have it? No. Is he going to close on time? Probably not... Will it be my fault?? Oh yeah.
Yeah....hurry up is not an option ...we do it right in this industry or fail.
When I meet a customer for the first time, I get his financial information at once (loan officer's name and phone number). I will call the l/o and ask if he has met the customer in person. If not, have they pulled credit on them yet. At least, we know if they are credit worthy.
Then I will need a pre-qualification letter (some are good, some are not). We will have to find out eventually if there employement information is good and if there supporting information will let them get a loan.
I tell the customer that having a working loan application will make him a stronger buyer, in the event we are competing with another buyer. I ask them what monthly amount they want. I can pretty easily figure PITI/MI with this basic information.
If we are closing within 30 days, and they are fine with the contract provisions, I ask that they go ahead and lock in their rate. I usually comment that they cannot shop anymore with another lender. I mention that rates go up and rates go down, but they have a fair rate guaranteed.
Janet - Don't think I've forgotten about 'Cakewalk Mortgage'. Perhaps I'll hand a script to Hollywood for a reality show/sitcom based upon the Lending Industry and that can be the name of the show:-)
Eleanor - That's part of why we make the big bucks, being scapegoats. I truly want folks to understand they are more important a part of the process than they think.
Hi Jason,
You're so right. So many of my clients assume the lending business is the samas as it has always been! There are so many changes and restrictions now that most clients don't realize. Great points on the ever changing market.
Jason,
I'd rather work with someone like you who is truthful and follows up even if it costs me a buck or two more.
good stuff Jason! You said it, and I hope people understand they need to deal with competent folks who over communicate. We end up with borrowers not knowing what is expected of them and that is awful when we are put in the position of answering questions during the loan signing that should have been answered way before that.
I've had some buyers go through this. They've spent so much time listening to the "consumer advocates" that aren't really connected that they just assume we are trying to pull stuff on them. I have never dealt with a mortgage broker that wouldn't say "don't lock yet... we've got time" when it was a good idea... because it makes them look like a hero.
Jason,
You point about shopping until the last minute is dead on. Rate and product changes occur so quickly that a customer can easily lose more money than they save. Further, competent mortgage professionals are absloutely worth the money. We have a shady, dishonest, lousy lender here in town whose name alone makes me cringe.
Good post Jason - We don't have the luxury any longer to sit on the sidelines and patiently wait for clients to get their documentation to us, if we are to close their purchase in 30 days. Not only are turn times longer, but underwriters are scrutinizing all files, and often times asking for more documentation than our DU findings indicate. Time now is certainly of the essence!
Sis - That's key but for too long folks were spoiled because you could get away with it.
Stan - Now you seem EXACTLY like the type of person I'd love to work with! Moving to Pennsylvania anytime soon?
Tracy - Thanks. Adaptation is key to business and life.
Neal - You should buy a vacation property here in Pa:-) I hear you though...
Greg - I find myself addressing this and driving it home from the very start. I'll also remind people along the way. We've got to stay on top of things, now more than ever.
Lane - "Consumer Advocates"... aren't we all.
Jason - Whatta mean you require documentation? You won't just give me a loan because you like me? : -)
You should also add "timeliness" in getting the required documentation to the lender. I have had loans almost delayed because the buyer did not really think it was necessary to get the information to the lender quickly. Then they got upset with the lender that they loan might be delayed. Hey, not his fault.
Erik - "Rate and product changes occur so quickly that a customer can easily lose more money than they save." My point exactly, well put.
Donald - That's right, time is of the essence and folks applying for a mortgage are an important aspect of making that time well spent.
Sandra - Who said I like you? Kidding...
It's a line to walk because I hate to come off as pushy but I'm just trying to ensure for a process that flows as it should. It's our job to do that in a polite but point blank way.
You have some great stuff here. Its important to get across to people that deadlines are important to meet and there is urgency but no one is trying to force anyone or rush them.
I love that last one. As an escrow coordinator I come upon that one all the time. PLEASE sign & return. : )
Jason... I guess many of us are writing topics of this nature. Mine wasn't exactly like yours, but it was the blunt of why so many fail prior to closing. But you make some great points. The only problem with even shopping and picking 3 lenders is that all 3 might even be wrong. Sure, that could be some strong odds with that happening... but it almost did with a current client of mine, who went to two lenders previously to me... both told her that she was either approved or that they could help her in 30 days... I said no, I need 6 months... Overall, some great pointers..
Jason, thanks for sharing this concise update for us. It will be a great tool for us to use with our buyers who may not understand today's mortgage market. Well done!
Jason,
It's the same thing for agents. Too many people shopping around for the best "deal." If your "agent" is rebating you 70% of the commission - how much help can you expect? I've had people tell me "I've been out with 10 agents already." My response is "Have a nice day!" I'm not about to go out and spend my time with people who say things like "if I find the place myself I'll strike a deal with the listing agent and save some money!" That's just nuts. Everyone wants service - they just seem to want it all for FREE.
I have never been fond of the dictatorship the lending industry tries to force feed consumers. Often times people are very well qualified and only need to show a fraction of their assets in order to obtain financing. Underwriters need to understand the credit reporting system offers a fine indication of a prospective borrowers character and should adjust the documentation requirements to suit the customer.
Shane - Exactly. It's sometimes a hard thing to juggle, but a necessity to get the job done.
Chris - Oh, I can only imagine:-)
Jeff - Yeah, one could get unlucky with the three that they choose... but I think that as the herd thins out, there will be less of that stuff happening.
Diane - Grazie! Hope it helps.
Ruthmarie - You are exactly right there. When I write the post about how us Mortgage Folks make money, I'll be expanding on that point you brought up. I was thinking that exact thing just yesterday.
Dan - I don't totally disagree with you there. However, as they say here in Allentown, "Don't hate the player, hate the game:-)" Many were too lax before and that is part of why we are seeing the opposite other extreme now.
Jeff,
You guys are all on the same page today! Great post. It's our responsibility as lenders to tell our customers what it's going to take to close them yet the customer will run to whomever tells them what they want to hear...
and in the end they come running back for us to save them- or worse they are too embarrassed to come back so they lose the deal!
I haven't read all the replies but did want to comment to Dan, any good lender will make those adjustments. If I know I have enough documented reserves I don't ask someone for an additional 401k statement even if I see the deduction on their paystub. Like Jason said, if we ask for it, it's because we need it.
Gerry Suarez, Jr.
Your HUD Loan Pro!
It won't be long......
Subprime servicing giant Ocwen Financial Corp. (OCN: 7.06 -1.53%) took the unusual step of launching a press offensive Thursday, touting a recent drop in subprime delinquencies among the loans it services. The company's portfolio covers a significant portion of the subprime market - through its subsidiary, Ocwen Loan Servicing, LLC, the company services approximately 350,000 mortgages
Gerry - Good points. It's kind of weird that Janet, Jeff, & I all wrote relatively similiar posts within minutes of each other.
Jason, recently at Inman Connect in SF, I saw Laurie Manny speak. I envied her position because of all the leads she gets. Basically the 1st thing she asked a new lead was "Are you Pre-qualified Yet?" If the answer was no, she would ask "Are you willing to get pre-qualified with my lender right now? If the answer was either yes or no, she would politely tell the lead to call back when they were pre-qualified. Then on to the next lead. It would be great to be in a position not to have to fight for every lead. AJ
Hi Jason,
This is great information for consumers. Many waste too much time shopping rates when they should also be shopping for service. You do a good job of setting expectations so the transaction is as smooth as possible. :)
Nicely done my young friend. Seems every time you steel my ideas your posts are featured! LOL
Truer words have never been spoken - 'In a changing atmosphere, adaptation is key. Right now, all of us have to adapt. Knowing this and doing this will save a lot of frustration from all ends.' Amen my young friend, Amen!
Hi Jason-my post is in response to:You don't really need that documentation from me, do you? I don't ask for supporting documentation for health reasons.
Last month at my Open House I met a prospective buyer who wanted to put an offer on the property I was holding open for another agent in my office. Anyway, he asked me if I could represent him as he was not working with anyone else. I said sure. I asked him if he spoke with a lender yet about financing, and he said no. So I explained the process of what is involved when purchasing a home, and he did not believe me that he needed a pre-approval letter from the lender. He said, my bank knows that I am in good standing. I said yes, that's fine...but the bank you are submitting the offer to does not know that, they need proof. He said OK. So the next time I called him to see how it went with getting the pre-approval letter he still questioned me. (why do I need one?) I said unless you have all cash, and can verify POF we need a pre-approval letter to submit along with the offer. (I then said if you don't believe me, ask your Wells Fargo rep.) After that he never answered or returned any of my calls.
AJ - I've spoke with Laurie and her web presence is outstanding. That's where a lot of those leads are probably coming from. I'd venture to guess her screening process is pretty astute and this allows her to concentrate on serious buyers and sellers only. I hope to someday meet that wise soul.
Suzanne - Let's hope so. I'd be curious as to what affect this has on any consumer coming across this post.
Geary - Somebody has to articulate your wisdom. I was actually thinking about this and several other things on my drive home last night. Seems that I do some of my best thinking when I'm bitching at dealing with the rigors of other, more offensive drivers. I have a load of material that I want to churn out, hoping to dispense some wisdom from the Sardi Synapses.
Denise - I'll check out your post. Sounds like you know what you are doing and have a firm grasp on the process. As far as that gentlemen you were working with... he'll learn, maybe.
Jason, getting an approved mortgage is all about business and I like how you were pragmatic about it and that these are the rules and you better follow them or you can forget about getting a deal done. Congratulations on the feature.
Indeed the rules are changing minute by minute and long closings are scary for both buyer and seller alike. We used to worry about someone buying a car and affecting their ratios or credit scores....now there is a whole lot more to worry about.
Jason - more time is needed for appraisals today, too - especially if it's a unique property. Then sometimes the underwriter will ask for additional comps - again, more time. We need to be realistic in setting a closing date and allow for some contingencies.
Gary - Yup and that's my point. We can whine about it or get the freaking job. Thanks man.
Yvette - Adapt and react accordingly. You gotta study Aikido to survive and thrive these days.
Sharon - That is a very good point as well. Appraisers used to be like, "What the heck?"... now they almost expect it.
As the seasons change so does real estate, mortgage etc. Stay focused, educated, adapt, and communicate...great article:) Seems like every day is a learning day even after 10 years!....don't know if I'd want it any other way---U?
Jason, I had a closing today on my listing. The purchasers were so mad at the lender because they needed all kinds of documentation at the last minute. I would venture to guess that they waited until the last minute to supply documentation to the lender. The purchasers, unbeknownst to me, changed lenders midstream as well. I just listened, but you know there are two sides to all stories. No more magic tricks, we all just have to have sea legs and ride the storm out. Congrats on your feature!
Jason, love the quip- You don't need those docs do you, I'm working on a deal looking for test pit datathat proves the lot to be build-able and get the same DUH! look from the seller "do they need that" No they are comfortable paying 150K for a piece of dirt you may or may not be able to built on? I'm asking for mental heath reasons!/? Steve :)>
Jason, I think that most people have no real clue about how to compare the various offerings from mortgage companies. I think you have to find a loan officer you trust and do what he or she says.
I agree with you, Jason... it's all about developing a relationship with ONE consultant and letting them find you a product that fits your financial needs in the short term and long term. Great post. JB Brookman Ladera Heights, CA
"Shopping up until the very last minute" "The 'hurry up and close' mentality"
Both represent a sense that many people do not trust us and rely on their own sense of what to do, which unfortunately represents the worst side of human nature...
Complicating this is the fact that loans, appraisals and reviews are taking longer so folks need to be committed and not just expect everything to "fall in place". I am urging my clients to get PRE-APPROVAL before we start looking and when presented an offer on a listing, the first thing I ask the buyers agent is "Are they approved, if not how far along is the process. Thanks for great insights, agents in your area are fortunate to have you as a lender!
Diana - I was told when I first started out that one of the great things about our industry is that we learn something new everyday. Isn't that the truth.
Audrey - Eeek! I hate hearing that kind of stuff but tis the nature of the beast.
Steve - Lol, yup. I have actually used that line with clients, most laugh and get the hint.
Patricia - That's a fact. That's the reason we shouldn't necessarily be shopping for a mortgage per se, but a relationship.
JB - Thanks JB. Have a great weekend.
Russell - You seem to have a pulse on things. I look at it this way, my mechanic is my employer's best friend. If he says he needs something or to do something with my car, I just do it. Personally, I'm about as mechanically inclined as <insert your own analogy here>. I relate that same mentality to the clients I work with and for.
The documentation thing always gets me. We say.. I need this in a few days and then you dont get it. Now I say I need it today or in a few hours then I have more room to wiggle.
Nice Jason! This is certainly worthy of the feature :)
I've had a few buyers who played the 'whoever is cheapest" game and they've lost time and potentially a lower rate lock because they stayed on the fence too long. It's the Lending Tree mentality that is very difficult to overcome or educate around. It's difficult to explain why a relationship is even required when they envision this transaction as a one time deal. They forget that they may need to re-fi one day, or sell and buy again. So I explain that even if it IS a one time deal, you still need someone who will answer the phone and personally escort your loan safely to the closing table. Then I ask what that's worth to them. So you see sweetie? You're still kind of an escort after all! ;-))
The dramatic urgency of now. It still amazes me that people making the largest purchase of their life take the work involved on their side so lightly. Someone asked me today why I needed an updated bank statement. They said and I quote "the client didn't spend any of that money so the June statement is still good".... UGH
Shane - This is about focused educating. You hit the nail enough, eventually it comes to a head.
My Jennifer - You understand this business, I'll take some credit for that;-) As far as the escort thing, nobody is going to regulate my hourly wages;-)) Astute comment, by the way.
Forbes- Sounds like somebody is in operation desperation. While I empathize with the frustration, sounds to me like that someone you are mentioning deserves the oft-mentioned, "UGH!"
To bad this post wasn't placed in this group, ... http://activerain.com/groups/mortgagenetworking because I wanted to feature this in that group.
Belonger - "UGH"... if you insist;-)
Jason...great points. Mortgage shopping is not all about the rates. Especially in this market where underwriting guidelines are changing daily. In this market you really need good service as well and if you can also gain a trusted adviser in the process, that is priceless!!
Debra - As we move forward, I'm certain folks will slowly but surely understand.