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Why Lenders Piss Me Off

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FAIL

The financial market is melting down. LIBOR was up this morning. The “Credit Crunch”. Short sales. Foreclosures. The list goes on and on.

Let’s face it. There is a lot of doom and gloom out there.

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6 semester hours of college accounting and 9 hours of economics do not make me a financial wizard. But I can tell you one fundamental problem with the financial system…

Lenders simply don’t have a sense of urgency, nor do they seem to care — at all — about the ramifications of their failure to execute.

I’m not saying that the entirety of the crisis is due to this seemingly complete disregard for fundamental customer service. Nor am I saying every lender has issues.  But the “We don’t give a damn how this impacts anyone” mentality from a significant portion of lenders has to be a part of the problem.

Case in point

We have some clients who’ve entrusted us to sell their lovely home as they pack up and move a bunch of memories across the country –and leave many other memories behind. We’re in the midst of a brutal buyers market but the house went under contract fairly swiftly. Things progressed as they normally do, inspections, repairs, the sort of things that are stressful on all involved parties. Meanwhile the lender is (in theory) plugging along behind the scenes securing the financing. No easy task in today’s environment. But every status report we get from the lender indicates there are no issues. The buyer is a “slam dunk”.

T-minus 3 days prior to close, and there are no loan docs at title. The frequency of calls to the lender increase from both the buyer’s and seller’s agent. “All is well” we’re both assured.

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Day before scheduled close, still no loan docs. “They will be there tomorrow, no problem!”

Closing day. One set of docs comes in, another does not. We’ve now got the number for the lender and title engraved in our memory. I’m sure the title rep hates me but I don’t really care — I’m trying to keep my client from hating me.  At 4:15pm, all the docs finally arrive. And of course the title company and the county recorders offices close in 45 minutes.

*POOF* Just like that, the close doesn’t happen as scheduled. The sellers scrambled to vacate the house in time, the buyer has things to move in. Everyone just wants the transaction to close. But it doesn’t because some bonehead at the lender failed to do his or her job.

So what

One could argue that a day or two delay in the closing is not of much consequence. I beg to differ. While transactions do fall apart or are delayed every day for a plethora of reasons, this one should not have. Ultimately one person dropped the ball, disrupting the lives of several people in the process. Their cavalier attitude is what chaps me the most. “I’m busy”. “I did what I could”. “I’ve got six other loans to process”. “It’s only a day late”.

Whatever. I don’t want to hear your lame excuses. Neither do the sellers or the buyers. Do what you are paid to do. Oh wait. You get paid the same whether or not the loan funds on time. You don’t really give a rat’s a$$ about the buyer or the sellers. You can’t even say “I am sorry”.

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You don’t care.

Maybe that’s part of the problem.

Written By

Jay is the Broker / Owner of Thompson's Realty in Phoenix, Arizona. A self-professed "Man with a blogging problem" he can be found across the Interweb, including at the Phoenix Real Estate Guy blog where he opines on all things real estate and tosses out random musings.

26 Comments

26 Comments

  1. Gary McNinch

    September 30, 2008 at 9:49 pm

    Yep, Jay happened to our team last week. 45 day close on a REO, our buyer was putting 40% down on a 570k house that used to be worth 750K. Credit over 800 and huge income (retinal surgery specialist).

    Well the lender kept saying “they kept coming in with new conditions”. Ok but you have had 38 days since inspection to get it done. They got the docs (almost all of them, but not quite all) to escrow 45 minutes before end of business one day before closing. Then lender boss said, “we’ll just use our escrow and do split escrow and the seller will have to live with it.” Now the seller is an out of state REO through a third party intermediary, using a local title and escrow company. It became a mess, because of course the out of state seller wasn’t going to allow a different escrow.

    After phone calls, emails, jumps up and down the chain of command, numerous calls to our clients, the escrow, the lender, the lender’s boss, the lender’s manager…. AND WE GOT IT DONE (of course). Two days late, but the clients are happy with the new home. Oh and the lender lost an addendum crediting the buyer with a small amount for repair costs. I guess they apologized to the clients. I felt bad for the experienced loan officer who had come over from one company that went broke and now is at this one that can’t get it right and is close to being absorbed. As the client said, “we should have had a different bank do this.” This is why we make the big money, I guess.

  2. Bridget Magnus

    September 30, 2008 at 10:01 pm

    I am soooooo glad I’m not the only person having trouble with a mortgage broker right now.

  3. Josh

    September 30, 2008 at 10:43 pm

    Ooohhh, does misery love company. I’m glad I’m finally privy to a story like the above that isn’t about me.

    Lets face it, it’s hard to get financing these days. Especially in the world I’m living in (investments). My biggest poo poo is the lack of communication. Problems arise, they suck. But they’re much easier solved when people know about them BEFORE the day escrow is to close.

    OK, I feel better.

    Jay, glad you closed at any rate.

  4. Jay Thompson

    September 30, 2008 at 10:51 pm

    “Jay, glad you closed at any rate.”

    Not yet Josh…. should be tomorrow. We’re keeping our fingers crossed.

  5. Jayson

    September 30, 2008 at 11:27 pm

    Well put – when we bought our home we were put in the same situation as your buyers, and although it’s only a day, it’s a huge hassle. Rescheduling the pod or moving van, finding a place to stay one more night, rescheduling friends and rescheduling any work conflicts are all things that add up to a huge pain in the a$#. You’d think that lenders would want repeat business as much as anyone else…guess not

  6. Dan Connolly

    September 30, 2008 at 11:43 pm

    The last one of those I went to (in August) initially said they could close in 3 weeks. After 45 days they finally had the package there 30 minutes before closing, the interest rate was a point and a half higher and the closing costs were double what was promised. There was an origination fee and a brokers fee and they disclosed the yield the lender made on the back end. The total closing costs were around 10% of the loan amount (88K). The buyer really wanted the house, he was getting it for about 50% of the assessed value for tax purposes so he bought it.

    The lender was a friend of his son. The amazing thing was he didn’t blame me or even yell at me about it. It was a foreclosure and he had paid for an extension of the closing date, with the expressed condition that they would only extend once. Had he not closed that day he would have lost about $3000.00

  7. Gordon Baker

    September 30, 2008 at 11:56 pm

    I had a buyer’s loan rep tell me that we should be glad that the loan processor worked so hard on the file to get the loan docs to title. That was 2 days after the scheduled close of escrow and loan docs were just being sent. He could not understand why I was so upset. Like you say, they can’t understand the arrangements buyers and sellers have made which are thrown into turmoil. It finally closed and the lender’s loan rep still thinks they did a stellar job!

  8. Steve Simon

    October 1, 2008 at 6:02 am

    Sounds like you have more credentials than most who discuss finance:)
    However you sound angry! Read my post on short sales on my school’s blog; the lender had done nothing right from the start, but I did find out that this young man had 150 files to work between him and one other staffer…
    Their HR assets are stretched to the maximum. There was no planning for the numbers (human resources) in these areas especially of this magnitude.
    As my poor Old Dad would say whenever I was complaining, “I am peddleing as fast as I can…”

  9. Jason Sandquist

    October 1, 2008 at 6:56 am

    It’s been whirlwind around here with these lenders. Just had one which there was had an EM dispute, bottom line put house back on the market, got another offer, need statutory cancellation agreement, nobody at the bank could find, frantically searching for it. Turns out it was buried on the attorney’s desk and got it at the last moment.

    Also was suppose to have a closing on Monday but just because it wasn’t DPA, it got pushed out to Thursday. That is ridiculous. There is just no urgency with these people and they just don’t care about anybody.

  10. Matt Thomson

    October 1, 2008 at 7:27 am

    I’m always surprised when I read Realtor rants against lenders. Just like not all Realtors are a*# holes, not all lenders suck.
    I’ve only been in the business 5 years, but it didn’t take me long to find a lender who cared as much about my clients (and my business) as I do.
    Not one, zero, never have I had a sale even so much as delayed when using this lender. Sure, I’ve had clients choose their own lenders, and yes I’ve had sales delayed and even lost one (only 1) due to a bad lender, but come on! If real estate is your business, and you can’t find a quality lender to be a part of your team, that’s a major issue (and the issue may not be with lenders).
    I don’t want to belittle your frustrations, but just as it bothers me when people say they hate Realtors, it drives me nuts to hear Realtors say they can’t stand lenders.
    There are good ones out there, and I believe it’s the Realtors’ responsibility to find them.

  11. Jay Thompson

    October 1, 2008 at 7:31 am

    Steve wrote: “However you sound angry!”

    I am angry. Really it’s more frustration than anger. My clients are frustrated, the buyer and his agent are frustrated, and the title company is frustrated. The only one who isn’t frustrated seems to be the lender.

    And that is because apparently they could care less.

    THAT frustrates me beyond belief. If they are understaffed, to be blunt, that’s not my problem. Go hire someone. There are plenty of great lenders available. Myabe they should hire someone now before their current staff all wind up getting pink slips.

    This isn’t a short sale situation that involves an overworked and underpaid loss mitigation specialist. It’s a straightforward conventional loan to an extremely well-qualified buyer (those are the lenders words — “extremely well qualified”, “slam dunk”. There may have been a “No brainer” in there too). The funding is there, everything is ready to go. We’re just waiting on simple paperwork that could have been done weeks ago.

    It’s the general apathy and flippant attitude that frustrates me. If they had simply said, “It’s going to be close Jay. We’re doing everything we can to close on time, but it may slip a day or two.” But no, instead they feed us sunshiny pablum saying all is well — up until 45 minutes on the scheduled dau of closing. Tell me the truth, not what I want to hear. Do your job so I can do mine.

    Why is it some lenders can docs in ahead of schedule every time and others can never seem to get it right? Competence helps. So does caring.

  12. Holli Boyd

    October 1, 2008 at 8:13 am

    LOL, I had a closing supposed to take place yesterday – they told us on 29th that papers faxed to them on 16th were never actually received, all kinds of pissed off people around. 🙁

  13. Thomas Johnson

    October 1, 2008 at 8:47 am

    The way these Mortgage Brokers run their business, they will go the way of the dodo bird. The only lenders left are the banks, so if we are going to subject our clients to crappy service, missed closing dates, why not let them save the origination and other fees for the same amount of aggravation? I have been learning about: Owner financing, credit unions, local banks that hold loans in portfolio and of course Wells Fargo. All have lower fees, more competitive rates and sometimes even gratitude for the business.

    Mr./Ms. Mortgage Broker: Why should I put my family’s livelihood and survival in your hands, when I have to sweat your ability to do what you say you can? If I order a #1 at McDonald’s, I get a big mac, fries and a drink in a timely manner even at lunch hour when it is busy. If you can’t even do what McDonald’s can do, ie what you say you will, why should my client trust you with their biggest transaction?

  14. Jay Thompson

    October 1, 2008 at 8:50 am

    @Matt – I agree that not all lenders suck. I even said so in this post — “Nor am I saying every lender has issues.”

    I know several lenders who care tremendously and do remarkable work. I’ve got a handful I recommend to clients that have never, never gotten docs in late.

    But since we are representing the sellers in this transaction, we have zero input into who the buyer uses for their lender. I’ve never been in a transaction with this particular lender before. Just as we have a list of fabulous lenders, we also maintain a list of not-so-swift lenders. I don’t think I have to say which list this lender will be placed on.

    And sadly, that list is far longer than the good one.

    Yes, this was a rant. But maybe just one lender will sit back and reflect on their ways. Maybe it will result in just one buyer asking their lender of choice, “How many times have you had docs late to title?” If either of those happen, then in my opinion is was worth the time it took to put this rant to “paper”.

  15. Lisa Sanderson

    October 1, 2008 at 9:07 am

    Jay: This kind of stuff has been going on for years. But to think in this current environment that they aren’t bending over backwards for strong borrowers is incredible. Maybe they don’t have to make good business decisions ’cause they know there is a bailout available if they can’t make a go of it. Oops, did I just say that out loud?

    Make friends with your hometown banks, people. They are where it’s gonna be at for awhile. Plus, their performance is tightly tied to their street rep, so they have more incentive to do things right.

  16. BawldGuy

    October 1, 2008 at 12:04 pm

    Jay, feelin’ your pain big time. Obviously most of us here are livin’ the same life, more or less.

    Over the decades I’ve learned to have fun with it. The problem, much of it anyway, can be found in something you mentioned — they don’t care. The zillion dollar question, is — why don’t they care?

    Could it be due to the fact 99% of lenders’ employees get paid for showin’ up daily, as long as they don’t moon the boss? They’re eerily analogous to postal workers who resist all attempts to make their jobs/pay merit based.

    Here’s how I had fun with one lender, years ago.

    After a local lender screwed up yet another transaction, I sent an email to the office manager. He replied with excuses, saying who was I anyway? Excellent point. So I reminded him who I was for the next two years.

    Every time a sale or exchange escrow closed, I emailed this office manager with the exact dollar amounts of the loan(s) he wasn’t asked to deliver. Since a large minority of my transactions are exchanges, they necessarily require several loans per exchange.

    My emails, as they piled up, allowed him to know who I was. I was the guy giving millions in loans to guys who weren’t him.

    See? Gotta have fun. 🙂

    Taking lenders’ poor performance, apathy, and/or plain ineptittude in silence encourages them. Demonstrating in terms of dollars, how much their attitudes and performance has cost them, hits home.

    Then they care.

    Good stuff, Jay.

  17. Elaine Reese

    October 1, 2008 at 12:25 pm

    I have a great guy that I recommend to my buyers – he always comes through and when he tells me the clients are ‘good to go’, I know that they are. However, when I’m on the listing side, it’s always a crap shoot. In this market, I’ve found the banks to be the worst at meeting due dates and messing up the paperwork. They’re very unresponsive, work on THEIR timetable (banker’s hours) not the due dates of the Contract, and don’t seem to care whether the loan gets approved or not.

    Now the out-of-state or online lenders … well, BIG red flags all around!

  18. Chris Butterworth

    October 1, 2008 at 12:30 pm

    We’ve all been there, Jay! And you, along with the discussion above, hit on a couple of key points:

    1. most of the people working for the lender are salaried, and quite often they are overworked. Your file is just one of 50 (or 100), and every file is screaming at them. They’ll get to it when they get to it, but they don’t have an incentive to work through lunch & stay late at night.

    2. while the loan officer, manager, and owner have a more vested interest, they will most likely still get paid when the file closes a day or two late. (unless we’re in a domino transaction, and mulitple deals fall apart because of one slow lender!)

    These points lead to others:

    3. The loan officer isn’t going to hire more admin help, that’s the owner’s job. But the owner cuts his own profits by hiring more staff.

    4. We need to support lenders (and thereby owners) who do the right things – the same things we all preach on our blogs. Top level customer service might mean making a little bit less on each transaction, but building up enormous good-will and repeat/referral business over time…

    Thanks for sharing this one.

  19. Russell Shaw

    October 1, 2008 at 12:37 pm

    Jay, I believe you hit the nail on the head – does the person care. I used to always dislike dealing with mortgage brokers and continued to feel that way right up until we happened across one who really cared. That was about 4 years ago. We use her every time we can and NEVER have any problems. The marked differences between her service, being able to depend on what she tells us and most every other lender we “wind up with” because we are on the listing side is quite a contrast.

    I have a transaction manager that follows up on every detail of the files from beginning to end. One that we had (only for a few months, years ago) would call the lender and “wait” for a return call. I knew something was wrong because she could finish all of her work in about a third of the time that it took my other personal to do the same work. When we discovered that she wasn’t really following up but waiting for them to call her back (when they didn’t), her response was, “they were supposed to call her”. I told her if all of the lenders and title companies did what they were supposed to do – she wouldn’t have a job.

    The real difference in the results we desire is simple: caring.

  20. Matt Stigliano

    October 1, 2008 at 2:50 pm

    BawldGuy – And I thought you were funny and interesting on Twitter. That story is awesome and made me laugh. I love it!

  21. BawldGuy

    October 1, 2008 at 3:40 pm

    Much appreciated, Matt.

    Still not receiving Christmas cards from that guy. Go figure.

  22. Missy Caulk

    October 1, 2008 at 5:49 pm

    Jay, I am ditto to Elaines comments, not all will work with her and shop but when they do we have not had any problem. Matter of fact, she picked up 2 files recently that other lenders drop the ball on and closed them in 4 days.

  23. Shailesh Ghimire

    October 1, 2008 at 9:39 pm

    Jay – sorry to hear of your bad experience. I think what you said about communicating is important. In this climate even on best of case scenarios – things sometimes will come up. The good loan officers will let all parties know that – hey – something came up and act to correct it in a timely fashion. The bad ones hide from it and ignore the issue until it affects the closing. While its sometimes hard to pick up the phone and tell the agents or the good borrower that such as such is having issues – it’s still a whole lot better to do it with time on your hands then hope and pray the issue goes away. In my experience I’ve found that people appreciate upfront honesty like this and will do what ever needs to be done to help you get that document or that signature or whatever is needed. They’ll see that you as a lender are working for everyone and wanting to get things closed.

  24. Jay Thompson

    October 1, 2008 at 11:37 pm

    What I find interesting is the lenders we’ve used that are bright, personable, and seem to genuinely care about everyone in the transaction always seem to have the docs in on time, or if they don’t we’ve got a full explanation as to why with no sugar-coating and obvious effort to complete the job.

    The ones that botch the docs, or the entire transaction, seem to always have lousy “so what” attitudes.

    Coincidence? I think not.

  25. Paula Henry

    October 2, 2008 at 10:56 am

    SIGH………….

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