Wednesday, August 12, 2009

The Wisdom in having a back up Lender in 2009

In all of my transactions this year there has been one HUGE
glaringly obvious similarity in any deal that has gone down
to the wire--LENDERS and most specifically Mortgage Brokers.

It has happened more than once that I am waiting the day before
closing on an approval---doesn't that seem wrong? My clients,
want to buy this house, have been told that it is going to be
possible,even to the point of passing their financing deadlines
and the day before closing, and we are still waiting on an approval
from the Broker. This is a bad, bad spot to be in so this is my
new advice in the 2009 lending/real estate world: ALWAYS have a
backup lender--
In a world where lenders are now facing daily changes in rules and
regulations it pays to have your eggs in more than one basket.

For example: One new rule is that once fees have been disclosed
to a borrower the file CANNOT, under ANY CIRCUMSTANCES close
for 7 days--what does that mean for you as a buyer?

Well, say that Broker #1 strings you along until 3 days until
your settlement deadline and then stops returning your calls(
I have seen it happen, multiple times) you hold onto hope that
he or she has had a medical emergency and that they aren't just
screening your calls. But with some hesitation you start calling
some of the other Brokers that didn't make the cut originally or
desperately ask around for recommendations. You find another Broker
#@ that you think MIGHT get the job done this time and he says that he
can FOR SURE get it done for you, but your settlement deadline is
in 3 days---now it is extension time and this is a really bad spot
to be in--now your earnest money is in danger, your dream home hangs
in the balance and you will have MANY sleepless nights until the deal
is closed--AT LEAST 7 days later(realistically 2-3 weeks)

BUT if you have a backup lender waiting in the wings that you can call
on when anything feels fishy with Lender #1 you will be better for it.

NOW: Mortgage Brokers work on commission and will NOT like being the
backup broker, so depending on your situation, your relationship with
said Broker and how up front you feel like being I might just go through
the process with both brokers or just simply let them know that
they are, in fact, your backup--however you want to handle it--you will
do yourself a lot of good to have a B team waiting to rush in.

Now this usually isn't a problem with Banks--usually just Brokers that
offer really low rates--that has been the issue with many of my clients--
They are chasing those low rates and get a dishonest or under experienced
(or overconfident) broker. DO NOT be afraid to ask questions--even really
basic ones and make sure they give you a solid answer that you can understand.

If you start getting nervous do NOT hesitate to call your reserves, seek a
second opinion or to ask for an extension BEFORE your earnest money is
at stake--Bottom line: NO ONE CAN BE TRUSTED in 2009's lending atmosphere
and DEALS DO FALL APART for highly qualified buyers that just picked the
wrong broker.