Find Out How And Why Some Lenders Lie Just To Get Your Business
Vinnie Apostolico is one of the good guys in the home loan industry.
Vinnie is a staunch consumer advocate, and invests heavily in educating and empowering consumers, similar to my mission here on this website.
Last week, Vinnie posted this very familiar story on Facebook:
HOW EMBARRASSING – The level of incompetence is at EPIDEMIC PROPORTIONS in my industry. Folks, this happens way more often than you could possibly imagine. I get a call from a person 5 minutes ago. He has a pre-approval letter from a lender for a $450,000 home purchase, gets his offer accepted, $7,500 down in earnest money deposit, appraisal paid for, home inspection paid for, and the lender who pre-approved just called to say he cannot qualify.
Why did he not qualify? Lender forgot that the assistance program he needed to use had a Debt To Income (DTI) cap of 45%. What was his DTI? 52.5%.
So now what? Borrower is 22 days into loan processing….the loan officer told him and his real estate agent it was safe to sign off on the loan contingency…..so now he will likely lose his $7,500 earnest money deposit... wasted $450 on an appraisal... and $300 for home inspection.
His choice in lenders just cost him $8,250 AND, not to mention all of the time and energy invested in looking for homes. Now, the buyer has to beg his landlord to let him stay in the home he gave 30 day notice on, and has to tell his 3 kids that they are not getting the home with which they already bonded. I feel sorry for the guy.
I am so embarrassed to be lumped in with so many bad loan officers who care so little about their borrowers, and real estate agent partners, and refuse to do their due diligence……what a horrible way to end the day.
Misinformation and lying lenders is more common than it should be.
Why Do Lenders Lie?
I know that “lie” is a pretty harsh word, and I believe that in most cases, there is not a preconceived plan to mislead, or lie to the consumer. I do believe however, that poor training and possibly even pressure to meet sales quotas could cause an inexperienced loan officer to say “Yes”, when in fact they do not know the answer to your question.
Last week, I wrote an article about an email that I received with a very similar story to the one that Vinnie describes above.
I received an email from a homebuyer who was in loan processing on their dream home, only to be told at the 11th hour that the $12,000 in buyer assistance they were expecting, is not available.
The lender actually told this trusting homebuyer that they “just missed” a change in the program that no longer makes them eligible. That was a flat out, blatant lie.
There was never any change to the program, and the homebuyer never qualified for the assistance they were led to believe was available to them.
The laws of statistical analysis would tell you that these instances that we know about, represent a wide spread occurrence of misinformation that is being propagated against unknowing and trusting consumers.
How It SHOULD Happen
Like my friend Vinnie, I am an expert in buyer assistance programs, and I would go so far as to say myself, and my team are experts at mortgage lending. We go to extreme lengths to stay informed about changes in underwriting guidelines, loan programs, and specifically buyer assistance programs available in Virginia.
For this reason, I get these types of phone calls and emails all of the time. The most common story I hear that scares the heck out of me is this:
I’m pre-approved already, I have the down payment, but I need money for closing costs...
"I am pre-approved, but I don’t have the money for down payment or closing costs." My reply is the same reply that I give to every single one of these phone calls, or emails, and it is this: "You are NOT pre-approved if you do not have the money for down payment or closing costs. Period."
Is it the consumers fault that you are being lied to? In a way, yes. As an empowered and informed consumer, you have free and open access to the truth, but do you really want to hear it?
There is a mentality that I see among consumers that if one person tells you “NO”, keep looking until you find someone that will say “YES”.
If you refuse to believe when someone tells you that cannot qualify for a certain program, and you keep calling around until you find someone that says you can, you actually asked for it.
You didn’t take “NO” for an answer and continued to search for until you found an uninformed, inexperienced, “willing to lie to you” lender that cares more about commissions and quotas, than they care about consumers.
How to Avoid Being Lied to By Your Lender
A lender that is truly looking out for your best interest will not just tell you what you want to hear, we will help educate you, and show you that there is always more than one option.
A lender cares about you making an informed decision. She or he will provide you links, guidelines and options so that you have all of the facts, and can determine for yourself, which is the best option for you and your family.
A lender that is committed to educating and empowering consumers shares this information freely, without charge, so that you have the tools you need to consider all of the benefits, and possible downsides to every option available to you.
Do not take it for granted that the first person you talk to is telling you the truth. If the first person you speak to gives you the data and guidelines to back up their recommendation, continue to do your homework to confirm for yourself that these options are indeed available to you.
Buyer Assistance Basics Everyone Should Know
At a glance, here are a few of the absolute basic qualifying guidelines that will keep you from wasting time, money, stress, and frustration.
Buyer Assistance Qualifying Basics
- Minimum Credit Score – 640
- Maximum 1st Loan Amount – $417,000
- Maximum Debt to Income – 45% DTI
Another common condition of most buyer assistance programs is income limits. These income limits are most commonly determined by the County you are buying in, and usually the number of people that will be living in the household. Make sure you see the income qualifying charts and understand these limits for yourself.
Working With a Creative Lender
Knowing just the basics, as I’ve outlined here, will help you to quickly identify whether or not your lender has experience, or an expertise with using buyer assistance programs to help folks purchase a Virginia home.
When researching Virginia homebuyer assistance loans and grants, the most important thing you can do is understand the qualifying guidelines, and the qualifying process so you can prepare financially, and mentally for what lies ahead.
As a direct lender in Virginia, Vinnie Apostolico and McLean Mortgage pride themselves in being on the cutting edge of creative financing solutions. When I say “creative” I mean that we know our guidelines, and they know how to fight through the hurdles of complicated situations that others may not have the experience or patience to figure out.
Moreover, my team and I are more than REALTORS. We stay up-to-date on loan programs and lending guidelines so we can guide our buyer clients to homes they can afford with ease, and avoid homes that would send them pinching pennies.
You can text or call me, Erick Blackwelder, to talk about homes and loans at 703-677-1120.
You can search for homes in and around Woodbridge Virginia on my website.
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8998C Lorton Station Blvd
Lorton, VA 22079
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