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What’s In a Lender’s Name? Plenty

NOV 14, 2013 4:30pm ET
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WE’RE HEARING from California where it is not only tough to be a buyer in some low-inventory markets but it is also tough to be a mortgage broker.

A San Diego Realtor was quoted in a real estate industry publication about pre-approval letters. The article was providing tips to real estate agents to help get a buyer’s offer accepted. The bottom line of the article was that a pre-approval letter should come from a major lender and not some “no name” mortgage broker.

I guess if you are a small- to medium-size mortgage broker shop in Southern Cal you might want to rethink where you get referrals from. The Realtor in the article also suggested that if a buyer wants to use a relative who is a mortgage broker to first get the pre-approval from a major lender and then use your relative. The old bait and switch after the contract is entered into. That should go over well with the seller.

We all know the drill about pre-approval letters. The devil is in the details and how thorough the buyer was vetted. Also they are not a commitment to lend. Don’t forget the old saying it ain’t over until it’s over. If I am a seller what I would really like to know is how long it will take to get the buyer’s loan processed. Since it is common knowledge that major lenders are laying people off right and left an informed seller may want to go with a buyer who is using a smaller lender.

Swinging over to the East Coast we are hearing about the ability to pay in a different context. Last week in a case brought in Federal Court (Southern District of New York) by the USA against B of A, a jury found it liable for defective mortgages sold to the GSEs by Countrywide. Now the case moves to a penalty phase where the government wants well over $800 million in damages.

The twist is the government is also asking for damages from a Countrywide executive commensurate with her ability to pay. Good luck with that amount of payment. In a different case against Wells Fargo the U.S. attorney is seeking to add a Wells VP as a defendant. Talk about stress levels.

Moving on to the Midwest we visit Minnesota and check in with the attorney general’s office. This time we are hearing about robo-signing again but with a different industry. The Minnesota AG has sued a Florida company over alleged manufactured affidavits used to collect overdraft debt purchased from large banks. Large banks sell debt packaged to debt buyers. The debt consists of overdraft fees on charged off debt. Who says we do not manufacture things anymore in the USA?

Well if the allegations prove true it means that someone did not hear about all the fuss with robo-signing and foreclosures. The AG alleges that the company cut and pasted affidavits on a large scale which were used in the debt collection process. The debt buyer may have been real sloppy because it is alleged that affidavits were signed on one date by a bank officer and notarized a month later. In case you forgot the dates should be the same. The AG’s suit relates to some 1,600 affidavits involving Minnesota bank customers.

Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at jamcd@comcast.net.

Comments (6)
I am simply going to assume that said S Cali Realtor works with a big bank and is schilling indirectly for them, I work for the nations 8th largest lender and we are not a bank !
Posted by Daniel C | Friday, November 15 2013 at 7:20AM ET
The Major Lenders are who have BK-ed America

I use ONLY Local Mtg., Bankers and Local oroviders of

services and products

John McDermott = You are a GREAT Brown-Noser
Posted by Jett | Friday, November 15 2013 at 12:39PM ET
At the end of the day, your pre-approval is only as good as the loan officer that did it....PERIOD. I've worked for a small broker, large correspondent, and the largest bank WF and it makes no difference whatsoever where you work. As long as you know the guidelines and how to calculate income it all comes down to the LO. If anything, in my area the realtors are more distrusting of the big banks because of how often settlements get delayed and buyers are turned down for financing after the process begins. This agent has evidently had some bad experiences with brokers in the past but to make a blanket statement like that is just plain inaccurate.
Posted by Todd M | Friday, November 15 2013 at 1:10PM ET
More like that So Cal realtor has an Affiliated Business Agreement with a lender and uses the fake excuse of size in an attempt to railroad the buyer to a specific lender so they can not only benefit from the commission on the sale but also the kickback scheme to the real estate company. Builders do it every day. Affiliated Business Agreements do not benefit the consumer buyer or seller they exist to circumvent RESPA money kickback schemes to real estate firms form mortgage lenders this has been illegal for decades yet the cfpb does nothing.
Posted by JOE P | Friday, November 15 2013 at 1:26PM ET
What a bunch of crap, I would use a local mortgage broker over a loan officer at a bank any day. I have worked for major banks before, and The prequal letter you get from the bank is exactly the same as what you get from a broker. The major difference in most cases is the mortgage broker may have 10, 20 or 30 years experience, and the loan officer might have 10, 20 or 30 days experience. Most importantly, I would say forget about the prequal letter, and ask the mortgage broker for Fannie Mae, Desktop Underwriter Approve/Eligible results. I would say about 99% of my loans have funded, if I had an approve/eligible from D.U. I have spent 5 years at mortgage bankers, 10 years with major banks, and 10 years as an independent mortgage broker, and I do know what I am talking about. Don't know about you?
Posted by Tracy H | Monday, November 18 2013 at 1:08PM ET
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