Shopping for a Loan Officer in todays real estate market

Posted under Credit / Your Fico Score, Foreclosures / Bank Owned / REOs, Mortgage Purchase Loans, Mortgage Refinance

“Am I approved yet?” says Mr. Smith.

Loan Officer - “Well, no, Mr. Smith. I need to have a complete loan application filled out before I can qualify you for a loan.”

“Why does it take so long?” says Mr. Smith “I just walked into my bank and they approved me on the spot at 5%. If you can match this rate, you can be my loan officer.”

My dear readers, if he was already approved, why he is asking me to help him is a question that I hope to be able to respond to by the end of this article. The truth of the matter is that any loan officer can quote a rate off the top of their head to win over the borrower. But until the loan is fully processed, submitted to the lender, underwritten and the rate locked, the loan is not fully approved. Here are some factors that the average borrower should consider when ‘shopping’ for a loan officer:

When the loan officer takes a loan application, within three days, the borrower must be given a copy of the GFE (Good Faith Estimate) and Truth in Lending (APR) disclosure. If the borrower does not receive these documents, I can almost accurately predict one of two outcomes have taken place. The first being, the loan officer is not following the rules of RESPA (Real Estate Settlement Procedures Act). Secondly, the loan officer does not what to scare the borrower off by disclosing all the fees upfront.

Being that the fee disclosure sheet is an estimate, these are some of the fees you can expect to see at close of escrow i.e. loan origination points charged up front, rebates paid to the loan officer by the lender, escrow, title, appraisal, credit report, property insurance and taxes to be impounded, to name a few.

Yes all these fees should be disclosed because they are indeed a cost that is involved with any purchase or refinance loan. Mortgage brokers often charge brokerage fees but banks do not. Mortgage brokers have access to many lenders who sell loans at wholesale rates. This gives the loan officer flexibility to find a loan that will work best for the borrower without being tied down to the rates of just one lender.

I know that this is a lot of information for the average borrower to consider when ‘shopping’ a loan officer. But could this lack of knowledge be the reason for so many borrowers falling into foreclosure? Could a false sense of security be driving borrowers to find a loan officer who will tell them what they want to hear? In answer to this question, all I can say is this:

Loan Officer “Mr. Smith, how much are you willing to pay for first class service? I won’t cut costs. Nor will I quote a rate that does not exist. What I will do is listen to your needs, keep you informed and provide you with service that is second to none.”

Written by Holly Leano - REALTOR and Sr Mortgage Consultant

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