Tired of dealing with lenders and mortgage brokers. Ed G. (Please read). (Long) - Posted by Mike

Real Estate Investing Real Estate Financing
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Posted by Ed Garcia on December 08, 1999 at 11:04:37:

Tony:

From now on when I see your name on a post, I think I’m going to leave it alone.

Yes it’s true, we do have a check list. When I teach people how to put a loan package
together, I use a standard list required by Fannie Mae, Freddie Mac.

Tony, it could really be time consuming for me to try and provide you this information
on this post. The problem is, I don’t have time this morning, and by the time I do all of
the typing I would need to do, this post will already be out of site, and no one would
have benefited but you.

So my suggestion is for you to either call me at (909) 944-0199, or e- mail me and I will
provide you with the information that your need. If you call me I will get your fax number
and send it to you.

Meanwhile, I’d like you to know that the main document in a loan package is the credit
application. Everything else is called supporting documentation. It just helps verify what is
on the application. Just remember, everything you put on an application has to be verified.

Also I think it’s important for you to keep a current loan package on yourself.
One of my main points in teaching How To Have Lenders Fighting To Give You Money,
Is for you to duplicate your loan package when giving it to the broker of your choice.

That way the first time things seem to go wrong, I can have a deal started at a drop of a hat.

As far as your list is concerned, you’ve got the right idea. Here are my comments.

1.OK, but not necessary.
2.through 8 OK.
9. Have the check stubs ready but don’t send them. Tony it’s important that you don’t
go for over kill.
10. OK
11. No, it’s not necessary for you to call everyday. Not only will that be over kill, your
going to p-i-s-s off the broker because they won’t be able to get anything done.
Call Wednesday and Friday. If you called Friday, why would you call Monday, the broker
would have not done anything over the weekend, get my point. Your list is a good start.

Tony, I can’t tell you how important a good loan package is when doing a deal. It makes the
Brokers job easier, and saves you a lot of time and aggravation.

Ed Garcia

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Tired of dealing with lenders and mortgage brokers. Ed G. (Please read). (Long) - Posted by Mike

Posted by Mike on December 06, 1999 at 20:02:46:

I’ve got to vent a little about my recent experiences with lenders in the B-C market. I’m currently involved in a deal where I am selling a house at market value. The buyers do not have good credit, so, naturally, I have to expect a much lower LTV. In this case the mortgage broker I’m working with is packaging the deal with a 75% first, 20% second and 5% down payment. These terms work fine for me and the buyer. The problem is that after spending a couple of weeks on the deal and getting the appraisal and title, he submits the whole package to the lender. The lender then wastes a few days looking at it and says, “Sorry, the best we’ll do is 65%”. Now, I can’t say I totally blame the broker because the rep. at the lender’s said they could do 75%, but when an underwriter actually looks at the deal, the whole story changes. I may still do this deal, that is, if the lender doesn’t change the rules again, but I am so tired of dealing with people that just can’t do what they say.

I’ve had numerous encounters with shady mortgage brokers that say they can get deals done, but in the end, are basically clueless. I’ve also had a couple of mortgage brokers get everyone to closing table and then, out of the blue, I see an extra $1000 or so on the closing statement that they pad with junk fees. At that point, they’ve got you. I’m minutes away from getting the deal sold, so they figure this guys not gonna back out over a measley $1000. Sure, I argue and make a fuss over it, but the question is why does a businessman insist on acting in a dishonest fashion?

Sorry for the venting. I’m sure I’m not the only person out there with these experiences, but man it’s frustrating. Ed Garcia, I remember a post from a few weeks ago where you mentioned you were setting up a program with a lender in New York that would be able to do the “hard to do deals” efficiently. Is there any progress with this? Please let us know. People like me are anxiously awaiting a competent mortgage broker out there.

Thanks.
Mike

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Give me a break - Posted by Katie

Posted by Katie on December 07, 1999 at 11:07:16:

I am presently in a deal. The mortgage broker was told the guidelines before she even looked up the credit report, which was actually a little better than I had described. I told her that I would put a maximum of $2,500 toward all closing cost and fees, this included all pre-pays. The house needs some work, but I would buy it as is and do the work myself. I could get the sfh for $22,200 with the seller paying 3% toward closing cost, this would make a total of $3166 maximum for closing cost. The owner is very motivated and gave me a rock bottom price in as is condition. Because the home does need some work, I intend to live in it for a few months before moving on. I asked the broker very clearly whether this deal was workable. “Yes! No Problem! We should be able to wrap it up by the end of the month.” So, I make the purchase proposal, with my $500 bucks (which I will lose if the financing is not available within 30 days). I bring the proposal to the broker. When it comes time to sign the truth in lending, turns out that it will costs me about $3000 with all the prepays and fees, ect. plus the sellers contribution. Okay, I can live with that. The city certs come back with fewer problems than the seller disclosed on the disclosure form. The house appraises for $5000 more than selling price. Everything should be okay, right? WRONG! The broker gets a loan approval, but the house must pass all the city certs to qualify. I tell the broker that will cost me about $2000 and the seller will not finance these repairs. I’ll finance these repairs if I can add them to the purchase price and use the costs of the repairs as down payment. “Oh no, the lender won’t allow us to change the purchase proposal” Okay, can you find either a lender who will make the loan as is or may I rewrite the purchase proposal and you may submit it to a different lender? “Well, I’ll see if I can find a lender who will make the loan as is” This is where it stands at present. With only one week before I would lose my $500. Fortunately the seller is motivated and nice, she has given me an extension on the time, so I won’t lose my money. But, the broker is still not moving on it. If she would just give me an answer I would be able to make my next move. I do have more funds available and I can afford to pay for all the repairs before closing and still cover my closing costs. But, I don’t want to.

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Re: Tired of dealing with lenders and mortgage brokers. Ed G. (Please read). (Long) - Posted by Bud Branstetter

Posted by Bud Branstetter on December 07, 1999 at 09:45:02:

Mike,

We all have the war stories of dealing with mortgage brokers. Have you considered pulling the file and sending it over to another lender. I will defend the “good” mortgage broker. He knows what the underwriter will want and gathers the information to be able to sell that borrower. Unfortunatly there are not more good brokers.

From my experiences I believe that if the mortgage broker cannot fund at least 85% then it is better to broker the owner carried note to an institutional buyer. While the interest rate may be higher to the buyer it will net me more. I usually advise my buyers that I will fairly price the property but charge above market interest as an incentive for them to refinance me out. If I sell the 1st then there is little discount and no problem on the appraisal. You can remain more in control if you learn how to broker your note or establish a relation with more than one mortgage broker.

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Been there done that…makes you wanna kill someone! - Posted by Tony James

Posted by Tony James on December 07, 1999 at 02:12:40:

I was in the SAME freakin situation. I had two deals goin on. a nice single family Hud home for $39,900 worth $75,000. and a Duplex $60,000 worth $80,000.

To make a Long 6 month story short, I lost the Hud home because the broker was taken so long…what started out as a 100% LTV with no down payment, turned out to be 75% and I needed cash that I didn;t have…Listening to that Dang broker.

I got 85% LTV with the Duplex…but by that time I had given up. The only reason it had closed is because the seller needed the house to close for a different deal he was in…and he called the broker 3 times a day for over a month to get the broker off of his butt. I think many of these brokers are lazy, and incompitent…(not saying they all are) But many talk the talk but don’t walk the walk. It took 6 months for the Duplex to close…at an OUTRAGEOUS INTEREST RATE. And My credit it very good. I just wanted it to close so I did it.

However…It taught me a good lesson. Next time I use a broker make sure they have direct contact with Under writers. Some how make it clear in the beginning EVERYTHING that the lender may need.

It was a nightmare…everyday they needed something new, and if they would have told me upfront, I would have had it all. I guess what the main is, professionalizm. Don’t waste your time with those brokers who are not hungry…who don’t return your call, and who don’t do things they say they are gonna do.

I am also lookin for a broker who can accomplish the things they say they will do.

Sorry if I have offended anyone. I just feel this mans pain and frustration.

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Re: Tired of dealing with lenders and mortgage brokers. Ed G. (Please read). (Long) - Posted by Ed Garcia

Posted by Ed Garcia on December 06, 1999 at 23:55:03:

Mike:

I could tell you the other side of the story, but it won’t change a thing.
I can just tell you that the lender did a lot of work, and didn’t make a
dime, so they didn’t do it to waste your time or theirs.

When they see a deal such as you described, they have a problem
selling it off. It could be what’s going on in curtain geographical areas, the
lenders are questioning values, a verity of things.

There could many reasons that this happened to you, but none of them would
make a difference in your eyes.

Hopefully you’ll learn. Even though you’re angry I can tell by the way you have
written this post that you’ll get it together.

Brokers are no different than Doctors, Lawyers, Accounts etc. There are good ones,
and then there ones that think they are good.

VENT, get it out of your system. And then your next step will be to back up and
regroup.

If you want a second opinion, call me, I need more information, but I already have
some idea’s. My number is (909) 944-0199.

Don’t feel bad Mike, we all get frustrated when we are not in control of our deal.

Ed Garcia

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Re: Tired of dealing with lenders and mortgage brokers. Ed G. (Please read). (Long) - Posted by Jim

Posted by Jim on December 06, 1999 at 23:08:32:

Try taking him to small claims court, explain to the judge what happened, I think you have a good chance he will agree with you. It sounds like a case of duress to me.

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The Real World - Posted by Mtg. BrokerFLA

Posted by Mtg. BrokerFLA on December 06, 1999 at 22:46:27:

Garbage in Garbage out. When a broker or correspondent lender contacts a wholesale lender and gives the borrowers scenario often times it is presented in its “best case scenario” w/ a little bit of sunshine. Once the full package reaches them - “the sun ain’t shinning no more” and reality sets in. My philosophy is to give to bad news first. As a broker we spend mucho time processing loans, gathering docs, getting verifications, etc… I hate to waste my time with a deal that has no chance at the LTV. Find a broker in your area who won’t spread sunshine - sometimes knowing your potential Buyer is a dud - quickly - is much better than going the distance to find out your buyer “ain’t got no sunshine”.

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You don’t need a break. You need a real lender. - Posted by Paul Macdonald

Posted by Paul Macdonald on December 11, 1999 at 11:23:59:

Katie,

  1. Have the seller do the renovations prior to settlement. Seller uses your money from non-refundable deposit which will count as part of your downpayment. Perfect solution. You are right. Your no-nothing broker is WRONG!
  2. Raise the purchase price by 2k - than have seller fund renovations.
  3. Find a local lender that will a do an owner occ. FHA 203K. Follow this next part carefully - that will allow up to 100% (thats extreme, normal is 97%) of 110% LTV of after completion value. The only catch - and it is a big one - is that you must agree to occupy the house for 12 months as owner occupant.
  4. Buy as is and get a Title 1 home renovation loan. LTV is immaterial.

My two cents. Those are the quickest answers. There are other alternatives but find a money source with a large lender/investor base.

Lastly - ANY lender/broker who says an investor/lender will not allow alteration of a purchase agreement should be fired on the spot. (*^&$ holes like that can ruin more dreams than I can tell you about.

Good luck.

Paul Macdonald

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Re:YOUR SUPPOSE TO BE A PRO… - Posted by Ed Garcia

Posted by Ed Garcia on December 07, 1999 at 09:38:51:

Your suppose to be a Pro.

Tony, if your going to stay in this business. You have to know when you have a deal.

It’s the old case of RISK, REWARD. When you state,( at an OUTRAGEOUS INTEREST RATE.
And My credit is very good. I just wanted it to close so I did it.)

The higher the risk, the more the reward. You can have excellent credit, and still be high risk.

You can have debt ratio problems, The property could be in a undesirable area, ( They call this RED
LINING. Lenders are not suppose to do that, but they do it anyway. If the property is in a undesirable
area, the lender will compensate by lowering the appraisal, because the property will take longer to
market, if the lender takes it back ), You could have questionable stability, ( How long you’re on the
job or living in the house.) Just remember, the weaker the deal, the more information the lender is
going to ask, and then want to verify your answer.

The fact that the broker took 6 month to do your deal, is a sure sign that this wasn’t the piece of cake
that your trying to tell us it is in your story. The broker doesn’t make a dime to play with your deal for
6 months. As a matter of fact, the broker risks losing the deal the longer they take, and they know that.

Most brokers are on commission, so the attitude that borrowers have about brokers (they give you the
run around), is just not true.
What happens is when a broker runs up against time consuming problems with a deal, they go work
another deal to make a living that month, and will come back to your deal when they can.

So now you know why I teach, HOW TO HAVE LENDERS FIGHTING TO GIVE YOU MONEY.

It’s your job to learn about financing, and know when a deal is a deal, or not.

I get so tired of borrowers crying and wining about how the broker screwed them. When to fact of the
matter is, they don’t know what the hell their doing. So I say learn this business, and take the responsibility
for your actions, and when you do. You will no longer feel like your being victimized by the broker.

Ed Garcia

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Ed, can you suggest… - Posted by Lorna…FT. Worth, TX

Posted by Lorna…FT. Worth, TX on December 11, 1999 at 14:46:30:

to a “newbie” where to start in learning about financing. Is your seminar “How go get lenders…” available for purchase?

Thank you.

Lorna/

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WOW Ed…you hurt my feelings!!! - Posted by Tony James

Posted by Tony James on December 07, 1999 at 20:22:30:

Just kiddin ED… I take it as tough love. But your right! I didn’t know what was goin on. It was my first deal, and if I would have known more about the proccess, it would have helped out allot. I would have known what the under writer wanted. And you are right that the property is in a bad area… we call it “DA HOOD”. Also my credit is new. Even though the interest rate is high, I still got money at closing, and I suppose that is what counts. It’s not like I live there paying the mortgage payments, the tenants do.

However, I would like to find a way to learn how to do it properly, and put myself in a position where I can close deals in a timely fashion, and give the Lenders what they need off the top.

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Re:YOUR SUPPOSE TO BE A PRO… - Posted by Randy D.

Posted by Randy D. on December 07, 1999 at 13:12:00:

Ed,

I’ve had the same problems that Tony is talking about in fact It’s happening to me as I speak so how about putting out a book or course to teach us how to deal with these #%@#$ lenders?

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Re: WOW Ed…you hurt my feelings!!! - Posted by Ed Garcia

Posted by Ed Garcia on December 07, 1999 at 23:12:31:

Tony:

Thanks, that’s how it was intended.

You know it wasn’t meant to be personal. You were sharing the problems you were having with
your deal, and I was trying to make you and those reading your post, to realize that we can’t
allow ourselves to be victimized by a Realtor, Broker, Lender, or anybody.

To put the blame on others would be of no use. We put ourselves in a position to allow ourselves
To be victimized when we don’t learn from our mistakes.

If we really intend to make a living in this business, we need to understand the ins and outs of
Financing.

Financing is the key. It can help you buy property and it can help you sell property as well.

Tony, I can’t tell you how frustrated I get when I hear people complain about brokers.
Not because I care about the broker, but because I don’t understand how someone will not
see the value of understanding financing when it’s so important to their deal.

It’s like playing a game and not knowing the rules. If you don’t know the rules, then how
can you expect to play the game.

Tony, anytime you want some help or a second opinion, feel free to call me. I’d be glad to help you.

Ed Garcia

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Re:YOUR SUPPOSE TO BE A PRO… - Posted by Jim IL

Posted by Jim IL on December 07, 1999 at 13:37:27:

Randy,
Ed and Terry Vaughn do have a seminar that they gave a few months back about this.
As Ed stated, it was called, “How to get lenders fighting to give you money”.
I regrettfully missed it, but from reading the posts here afterwards, it was worth every penny it cost to attend.
If it is offered again in a few months, you can BET I’ll be there.

Ed is one of the nicest people you will EVER have the HONOR to read, talk to, or meet. (if you are lucky.)
So, take his words from that persective. He shares his knowledge and experience freely, and is always right on the money.
He is a nice guy.
AND
He knows his stuff.

Happy investing to you,
Jim IL

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ED…would you add to this list or make corrections as needed? - Posted by Tony James

Posted by Tony James on December 08, 1999 at 03:14:39:

I want to look from the point of view of the underwriter, and the broker. I want to know what makes the underwrite want to take a deal, so that I can make effort on looking my best when the broker sends in my information. So far I learned from my last experience,

#1 Have some kind of Capital to show for Down Payment…even if the broker says 100%

#2 At LEAST have a strong two year work history

#3 Last 2 years of Tax return…show as much income as possible

#4 Bank statments

#5 Pest inspection on property

#6 Insurance

#7 Appraisal

#8 Purchase aggreement that is complete for best interest

#9 Send in Check stubs every 2 weeks even if not asked for

#10 Show All sources of Income including Leases from Tenants

#11 Call EVERYDAY to check progress with the broker to make sure he is doing his Job correctly…Some times they forget because they are so busy.

ED, if you could make your own check list from your experience, and share it with us FRUSTRATES BORROWERS…I think it would help out allot. Financing is the first thing most of us investors must master. And I think we hurt ourselves by not knowing how to finance properly.