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.