The old 'Bait and Switch' mortgage companies - Posted by Lori Samson

Real Estate Investing Real Estate Financing
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Re: Hold the phone Mr. Mortgage Broker! - Posted by JPiper

Posted by JPiper on May 27, 2000 at 01:23:23:

Your choice. You can continue to persist in the idea that you?re ?not going to learn that business? and you will continue to experience unfortunate events. You can continue in the fantasy that ?sad state that we can’t trust the professionals in the mortgage business to do us right by?. Or you can simply acknowledge reality?.. ?professionals? are ?screwing? victims every day?.and have been since the beginning of time. I agree with you?they shouldn?t?.but I don?t base much on what ?should? or ?shouldn?t? happen.

I don?t do any repair work. But that doesn?t stop me from understanding what NEEDS to be done, how it should be done, and recognizing when it?s done incorrectly. I don?t sheetrock?.but I can recognize someone who can. My wife is an outstanding tape and ?mudder??.a real perfectionist?.not that she does it. I don?t think I could ?sweat a joint? if you paid me. But I can darn sure recognize when it?s done right?or wrong. I?ve stood watching contractors for hours?.making sure I understood the job, how it should be done and why?..call it tuition.

I call all of this part of the ?business??..knowing all you can know. I find that the greater your knowledge, the more bullets you dodge.

I have found that involvement in the financing process is vital for a lot of different reasons. For example, what would you do if a lender told you that FHA would not permit financing of a house with 7 foot ceilings. Go a different route? Lose the sale? I discovered by a reading of the guidelines that FHA DOES permit financing under these conditions?.and therefore sold a house (don?t know if this has changed, this was in 1995).

Did you know that under FHA guidelines a direct endorsement underwriter can override an appraisal eventhough the appraiser refuses to raise his appraisal? Yep?they can loan more than the appraisal under the right conditions and with the right backup. I did it once?and sold a house.

There was a time when I was running around doing a lot of ?non-qualifying? assumptions with people I was told wouldn?t do them?.because I was familiar with the FHA ?streamline program??..a program which at the time not many loan officers were familiar with?.and perhaps still aren?t. The ?streamline program? gave a method to take the loan out of the seller?s name within 6 months?.and therefore removed one of the major objections to the ongoing secondary liability associated with a non-qualifying assumption.

I could go on and on with these stories?.but to me what it boils down to is that you can?t have too much knowledge in this business. Further, I don?t even consider the idea of ?trust? when it comes to this business. ?Trust? implies that you are giving away control?.an act that is just a prelude to a ?screwing?.

I?m always happy when I see competence in others. But I don?t expect it. What I expect is competence in myself, in EVERY area of this business. When I experience something negative, I understand that I?ve simply let down?I overlooked something?.I just learned another lesson. Don?t know about you?. I don?t expect the lessons to stop?.but I sure would like to minimize them. Knowledge and control are two very important factors to that end.

JPiper

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Re: The old ‘Bait and Switch’ mortgage companies - Posted by Ed Garcia

Posted by Ed Garcia on May 26, 2000 at 20:59:58:

Hi Craig,

Sorry to disagree with you, but there shouldn’t be any mystery as to
what you are going to pay for a loan. The broker knows. The loan doc’s
didn’t just type themselves up.

Here is how the game is played:

You start off with a quote.

Then comes a Good Faith Estimate:
Now keep in mind that a good faith estimate really means nothing.
All it mean is that’s the loan that you and the broker, banker, lender,
are in reference to. It doesn’t mean you get that loan because we don’t know
if you can qualify for it. A good faith estimate is to be given 72 hours after
the application, which we refer to as a 1003, because that’s the number on the
form.

Usually with in 24 hours we’ve ran an experian credit report, and budgeted the loan.
If you’re in California, we have already compt the property to establish a ball park
value on the property. Now at this point, if everything that you put on the 1003 is
accurate, we have a pretty good idea if we have a loan, where were going to put
it, and at what cost.

Next, comes a Pre-Qualified letter. Now the customer knows if they are going to get
the loan requested, or what program we have qualified them to.

Now at this point, all we have is a warm feeling. We have checked their credit,
But we really haven’t verified the rest of the information on the 1003.

Always remember one thing, the credit application or 1003 is the main document
in a loan package. The rest of the information is what we call supporting documentation.
Meaning it verifies the information on the 1003.

Craig, this is probably boring to you, and it’s late Friday and I’m still in my office. I just looked at my watch and realize the time. I have some friends waiting for me with a steak, a glass of great wine, and want me to come over to watch the Laker game.

I was going to walk you through the process from beginning to end.

But instead I’d just like to tell you that a borrower can request to review loan doc’s prior to signing. Also, there are so many things you can do to make sure that there are no surprises. If you are having any problems with your broker Craig, call me and I will
help you deal with your broker.

Ed Garcia

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Re: The old ‘Bait and Switch’ mortgage companies - Posted by Ed Garcia

Posted by Ed Garcia on May 26, 2000 at 20:24:54:

Sean,

You are right, I was ruff on Lori. She is probably a great person.

But I had to do it Sean. I did it with intention to make Lori think.

After she gets mad at me, my message won’t go away, and she’ll
realize what I was trying to get across to her.

That message is,

An excuse, is but a good reason, for a bad deed.

She put herself in the position to allow what happened to her.

It’s the broker this time, the appraiser the next time, the attorney
the time after that. Lori needs to accept the responsibility for her
actions. The pre-pay that she said that they slipped in the loan was
there all of the time, it just never accrued to her, and she never asked
about it. Most of your Sub-prime loans have a pre-pay that can be
bought out. There was plenty of time for Lori before she even got to
the closing table, to ask to review the loan doc’s.

I don’t know Lori, Sean. But I do know that her actions were that of
someone who either doesn’t pay attention, or doesn’t have the experience
to know what they are doing. And that’s why I said, that Lori doesn’t know
what she is doing.

As for you Sean, I thank you for giving one mans opinion, and I want you
to know that I value it. It was a good opinion, and you are right.

Ed Garcia

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This one will keep you busy, Ed! - Posted by CarolFL

Posted by CarolFL on May 28, 2000 at 11:32:36:

As you can imagine, knowing me, I left NO stone unturned in informing this buy from the get go as to the situation, property, etc etc etc. The “problem” was that he was young, enthusiastic, and not that experienced… so not only did he not master all of the programs he had available, he had absolutely no sensitivity to what might be important to me… so whether he CARED about it or not was a moot point!

The guy is still around, and ‘trying hard’, but I would have hit bu77 pinned to the wall from the outset were I ever to use his services again!
love ya!
Carol

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Re: Great Posting - Posted by Lori Samson

Posted by Lori Samson on May 27, 2000 at 02:39:22:

Thanks, JPiper that was a posting worth reading! I don’t object to learning and I do have books about the mortgage business and every time I hit a wall I like to know how the wall was built so I might avoid it next time. I also can tape and bed, paint, caulk, minor electrical and plumbing etc. I do object to a plumber telling me I don’t know what I am doing in real estate because I am not smart enough to learn his plumbing business. Everything you said would have been received in the manner is was given…worthy advice tempered with some wisdom. I agree with you totally and I do hope for competence when working with people but I can’t count on it. It makes it no less wrong for the one’s who are guilty of the incompetence. It makes me WISE to over lap their areas of incompentence by learning their work but not the fool if I do not. The bible says “My people perish for a lack of knowledge” I do think that integritity and honesty are a real wealth and the more you can learn in life is your self assets.
My whole point to the posting was the lack of integretity to the business and it wasn’t to triangle the blame upon the victom. " From the abundence of the heart the mouth speaks" Over the internet you can find whats really inside a person by what they write. I have read postings and could read the heart of the person is sincere and happy and then if you read (listen) long Lori

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Re: The old ‘Bait and Switch’ mortgage companies - Posted by Craig

Posted by Craig on May 26, 2000 at 23:59:07:

Ed I really do appreciate all of your help here. I’m not trying to prove you wrong or anything like that. I know the process Ed, but I appreciate your wanting to explain it, and believe me I know you have better things to do. So do I, which is why I’m not going to pursue the topic anymore. I know that’s surprising.

I appreciate all of the time you devote to this board Ed. I always enjoy reading your input, regardless of whether I agree with you on this issue or that. Thanks for all of your help Ed.

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Re: The old ‘Bait and Switch’ mortgage companies - Posted by Sean

Posted by Sean on May 27, 2000 at 06:59:13:

Ed. It takes a “good man” to admit when he is wrong! Maybe not great, but good anyway. Probably better than I. You explained in much greater detail in your posting to Craig. Lori, take a look at that posting and heed what he says on being able to check or verify the lender and what he says, along the way in the process! Forget any feeling of insult if you can. Good luck and God Speed to both!

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Re: The God Syndrom-Ed - Posted by Lori Samson

Posted by Lori Samson on May 26, 2000 at 23:23:12:

Ed you are wrong about me! I did ask for no prepay— I’m in the option business and I know it will sell in a short period of time! It was asked for and I did ask to not have a ballon unless he told me. I was very careful to request what I wanted and at the last minute the one who had been worknig there quit. I later found out he quit because of them using the bait and switch. I am not a child and do not need a lesson taught through an example of tough love. I’m a Mom! I know all the psychology from raising 5 kids and i don’t need you mothering me. Thanks for trying though! A mature teacher knows how to teach and not insult to get their side defended. Sorry, I too smart for that and I have no pride in saying I do not want to learn YOUR business but I have had to, to protect myself. I was talking to Bryan Dunklin, a real estsate attorney that teaches real estate law at SMU, and he told me that it’s happened to him several times too. I don’t think he is given to not paying attention to details. I will let himm know that you recommend that we all should learn your business to protect ourselves! Dumb and yes, Blond… Lori

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Not the one NEEDS to add anythng to Piper’s post… - Posted by CarolFL

Posted by CarolFL on May 27, 2000 at 07:43:56:

but let me join the bandwagon. I used to moan and cry over cpa’s, atty’s, lenders… and only yesterday over an electrician who didn’t ask me to hold off on the a/c till he had done the upgrade … I learn everyday, and I’ve mostly learned to be accountable for my own success.

sure, we should be able to count on ‘perfection’ from everyone, but since it just doesn’t happen, the more we can understand and direct ourselves, the more demanding we can be with those whom we enroll to assist us.

Keep truckin’ !
Carol

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Funny thing - Posted by Laure

Posted by Laure on May 27, 2000 at 07:02:12:

I always got terribly high bids on roofs. Then, two years ago, we did our own roof. Not that we wanted to, but it was our personal home, and figured let’s just do it! The next year, I needed 5 roofs done on my RE. Because I could talk the talk, and knew about roofing, I got bids that were in half of what I got the previous year !!! By the way, I don’t roof anymore ! LOL I am on to HVAC… Tired of getting screwed on replacement units. Right now, I’m getting quotes on a house ranging from 5500.00 to 3800.00. That’s including all the ducting. They can shove their 5500.00 !! I just found someone to do the ducting for 10.00 per hour plus materials. He’s a carpenter by trade and has done work for me before. I trust him, plus I’ll learn how to do it myself.

Laure :-0

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Re: The God Syndrom-Ed - Posted by Craig

Posted by Craig on May 27, 2000 at 24:35:56:

Lori, I think you’ll agree here that your initial post lacked enough information about your specific situation, for anyone to give you any accurate helpful advice. I suppose it would have been best if myself or others would have asked you to be more specific before responding. I don’t think anyone here is talking down or trying to offend you.

One thing I forget to do quite often is put myself in the other persons position. If you can do that with the mortgage brokers you’re dealing with then you can figure out ways to keep something like that from happening again. And I think that’s kind of the main point behind what Ed is saying. The more you know about what your broker is doing,and he about what you’re doing, the better you and the broker can help each other get things done right. And Ed’s right, most people go through life grumbling and complaining when things don’t go their way. They have all kinds of expectations and many times they make no effort to see that they are getting what they expect, before they jump in. I’m not implying that you’re one of those people.

I don’t think that I knew enough about you’re situation before I jumped in and gave advice so I should have asked for more. I’m not sure if you knew enough about ours, to give us the information that would allow us to give you the best advice.

I hope you’ll do two things Lori. Learn more about real estate finance and the loan process, and find a mortgage broker you can really trust. Both will help you tremendously. Good luck.

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Re: Time does have a way of teaching - Posted by Lori Samson

Posted by Lori Samson on May 27, 2000 at 10:37:52:

Yeh, I am in a reduct job myself. A hundred year old home that needs the whole attic ducting redone and the units upgraded. It’s too hot in Texas to not know a little about the repairs or you can spend a pretty penny getting too much or not enough work done. I have been using a guy who finds me scratch and dents that can’t really be warrented. We have all our property tenant/buyers buy a home warrenty plan and that solves the repairs later. I had several bids last fall for a new heater and got a scratch and dent unit to replace it with and saved 1000. from all the bids that came in. Sometimes these repair men think that because I’m blond they can pull something over on me.

Still learning by experience. I still don’t think it’s a good excuss for bad service if I don’t know some area. (my opion hasn’t changed regarding Brokers-in general- but, not all. I do have a few that I have high regards for their integrety) Lori

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Re: The God Syndrom-Ed - Posted by DT (NY)

Posted by DT (NY) on May 27, 2000 at 03:49:58:

I really hate to jump into this one but I wanted to add a few things…I understand what Laurie is saying as this happened to me at few closings . The 1st time I just signed the papers and took my slap on the wrist but the 2nd time I said screw this There was an interst hike because of a 2 point sell up… You have to watch those sell ups because each percent the broker jacks you they get a 1% kickback from the bank. So a 100,000 laon would bring the broker an extra 2,000 from the bank if he increased your rate 2 percent… I walked away fom the table and before I got out the door they called me back to the table and we set up a closing date for the following day to reflect the ORIGINAL agreement…You have to keep in mind the Broker wants the deal to close just as much as you because otherwise he wont get his commission. ED pointed out you need to know your Broker and I think what everyone was trying to explain is No you need not study to be a doctor when you are sick but you should study every angle of your Industry… Before I became a fulltime Investor I was a realtor for a year then I allowed my license to expire since my only reason in getting a license was to learn the Real Estate Agents ins and outs …Then I got a position as a loan officer for a Broker and ran with that for another year…But I am the kind of person that wants to know every angle of everything…

In closing I just want to say Laurie yes there are some shaddy Brokers out there and there are some honest Brokers out there as in any business and if you plan on being a fulltime Investor you should eduacte yourself to everything that is a part of the Industry… Even Appraisals, so you can assist in the Appraisal by educating the Appraiser to the comps he might not take the time to find… With the MLS Listings the Appraiser now uses that as his way of running comps…Me I go to the county and do my own comps and meet the appraiser with the documentation when he/she does my appraisals as Owner Financed and FSBOs usually generate higher comps and help get you a higher Appraisal…

I hope I didnt step on anyones toes here just thought I would contribute

DT