Mortgage brokers' top 5 pet peeves
Even well-meaning mortgage shoppers do things
that drive brokers and lenders nuts. You might be surprised by what
Bookstores and Web sites such as
Bankrate.com are full of advice for borrowers who want to protect
themselves from unscrupulous mortgage providers. But mortgage professionals
say there's another side to the story. They have to deal with a
few customers who bend or break the truth, and more frequently with
borrowers who misunderstand the process.
Here are five gripes that mortgage
brokers and bankers have about customers:
Different types of borrowers require different loans. Someone who
can put 30 percent down will probably get a lower rate than someone
who can put only 5 percent down. People with poor credit histories
pay higher rates.
So when someone calls or walks into a mortgage office
and says, "What is your best rate?," the question can't
be answered satisfactorily until the lender or broker knows something
about the borrower.
"I have people call me all the time and ask today's
rate," says Jim Bradley, president of American Residential
Lending Corp. in Atlanta. "They say, what's today's rate and
closing costs? They're kicking tires.
"They don't consider all of the parameters that
feed into the situation. They want to shop rates like they shop
other consumer products."
Some mortgage applicants lie: inflating income, denying credit problems,
minimizing big debts such as auto or student loans. It's difficult
to get away with outright falsehoods because most mortgages require
a lot of paperwork. Your pay stub will be compared to the income
you report on the application; the credit report will list your
current debts and recent bankruptcies.
Then there are understatements.
"You always get into the question of credit,"
says Frank Previte, owner of Alpha American Mortgage in Fort Worth,
Texas. "If someone says it's excellent, it's probably excellent.
If somebody says there may be a couple of things, there are some
land mines. If they say, 'Well, I have some credit problems,' you
know they have lots of problems."
No sense of time
"A pet peeve of mine," says a mortgage broker in Saint
Petersburg Beach, Fla., "is the unrealistic time expectations
that Realtors give customers, or customers have themselves, about
getting to closing."
A caller recently told him that he was buying a house
and needed to close on the mortgage in two weeks. "I said,
'Not with me, you're not,' " the broker says with a chuckle.
The mortgage industry is busy right now. Houses are
selling at a rapid pace, and people are still refinancing their
mortgages in large numbers. A broker might submit an application
and not hear back from the lender for a week. The lender authorizes
an appraisal, and the appraiser can't get to the house for a week
because of a backlog of work. Then the title company has to do its
job, papers have to be processed, and so on.
At busy times such as this, "30 days is pushing
it now," the broker says.
Misunderstandings about rate locks cause hassles for lenders as
well as borrowers. A rate lock is a commitment by the lender to
lend the money at a specified interest rate within a specified period
-- often 30, 45 or 60 days and sometimes longer. The borrower might
or might not have to pay a fee.
Many borrowers apply for a mortgage and elect to "float"
-- they decline to lock in the current rate in the hope that rates
will fall or remain the same before closing. Sometimes a borrower
will float, and when rates rise, demand to lock in at the lower
rate that had been offered a few days before.
It doesn't work.
"We don't allow the customer to game the
system," says Al Engel, first senior vice president for Valley
National Bank in Wayne, N.J. On the other hand, he adds, "I
never fault somebody for asking."
Finally, in the tradition of parents, teachers and bosses everywhere,
mortgage professionals are frustrated by people who don't follow
"Many times people hear what they want to hear,
or they don't listen carefully," Previte says.
Previte prides himself on choosing his words carefully,
but sometimes he finds himself in conversations where the borrower
says, "but you said . . ." and Previte replies, "No,
that isn't what we said."
The same goes with written instructions. Some borrowers
don't follow simple directions such as a request to mail original
documents or to handle a fax in a certain way.
All these are fairly minor gripes. What really frustrates
mortgage brokers and bankers are other professionals in the system
-- unresponsive underwriters, slow appraisers, paperwork errors
that aren't the fault of borrowers.
"In most cases, frankly, it's not the consumer
who drives us nuts," Previte says, and that's nice to know.