We had a client referred today from a real estate agent who had been driving a buyer around for 3 weeks. The buyer was prequalified by a local bank loan officer.
The client said the loan officer had called and said they needed to have a sales contract today and to lock today because the program that allowed the client's credit score was going away today.
The agent asked if we could help, because they could not find a property today. They have been looking steadily for 3 weeks, but had not found a property yet.
We talked with the client to understand what the situation was. Their credit score had been 612. They were looking for a Rural Development loan, 100% purchase. They had followed their loan officer's advice to improve their credit, while they looked for property.
Our loan officer asked questions about their employment, their income, their debts. Satisfied that maybe we could help, she pulled credit.
The 612 score was gone, dropped.
The client has failed to tell us about a $500 car payment that actually put their debt ratio well over 65%. The client's husband is just out of bankruptcy and will not qualify for the loan.
The fact though is that the client was never qualified. The program that ended today, that supposedly allowed Rural Development loans below 620 credit scores, did not matter. The client's debt ratio was too high, yet the previous loan officer had issued a prequalification letter. Based on that prequalification, the agent and the hopeful buyer had spent 3 weeks looking for homes.
BTW, the advice given to the client to improve their credit - pay off an old tax lien. The client borrowed from a finance company to pay the lien. The lien has not updated, but when it does it will probably reage the reference and further lower the score.
As it is, the new finance company debt has already lowered the score.
And no underwriter has reviewed the file.
This loan officer has wasted the agent's time and gas and has left the client in worse financial shape with bad advice.
What is a real estate agent to do?
What is a buyer to do?
This was a loan officer from an established bank.
Pick your loan officer well. Require that your loan status be fully explained and you know what has been done, what still needs to be done, and why are we waiting?
Here is a checklist with some information that I hope will help:Homebuyer Help
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Thank you for visiting. This is the professional blog for |
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Stearns Lending, Inc |
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Cell phone: 423-280-0345 Email: Richard@HomeLoansChattanooga.com |
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Visit my website: www.RichardSmithHomeLoans.com To inquiry about a home loan Begin Here |
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Read my most recent articles in Scotsman Guide. |
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. |
I think as their agent you should advise them to find another loan officer!
Richard~ That is the kind of thing that drives me crazy! Why in the world would the loan officer ever even tell them they were approved inthe first place?
PT Barnum said thst there is a sucker born every minute. You just proved that axiom.
Vickie,
I just noticed that you are approaching a very significant 200,000 milestone. Three blog posts will do it. You go girl.
Richard
David,
This is a distressing situation. Things happen all the time, and it is getting tough out there. But LO's cannot just flat out miss such basic requirements.
Richard
Diane and Bob,
I wish getting a new loan officer would get them approved. But it won't get them approved. Now we need to get them some good advice so they can work towards getting qualified.
I just do not know what buyers and real estate agents can do to protect against such as this.
Richard
this is why I send my buyers to a MORTGAGE BROKER ( not banker) who I have used for many years and have NEVER had a problem.
Although paying off a tax lien may not improve the FICO upfront it is a good idea to get the IRS out of your life (separate subject from home purchase)
Scary that they spent that much time with them without knowing the whole situation.
Michelangelo,
I appreciate the compliment to our mortgage broker industry.
Richard
Heather,
It is scary and sad.
Richard