In the mortgage business, just like any other industry, I’m sorry to say there are a few too many loan officers who are, well, less than honest. While I consider myself to be honest and forthright with my clients every step of the way (otherwise I get no repeat business), there are those out there looking for a quick buck and care little for the well being of their clients. They work for themselves only.
Case in point, I have a woman I had worked with earlier this year. She and her husband were in a difficult spot financially. They had decided to purchase a rather expensive equestrian property and start a business there. The property was in need of some major work and the borrowers took out some money on a home equity line to improve the place and make it suitable for their business needs. Being young borrowers with few assets, the rates they had on their mortgages were not great and they soon found the payments to be rather cumbersome.
They were referred to my company by a friend and I took a look at what I could do to get them better rates. Unfortunately, despite the borrowers’ good credit, I was unable to close the transaction. The loan to value was just too high and there were no good recent comparables for the home in the area to support the value. I advised the borrowers of the problems I was facing in securing a new mortgage and gave them some advice on how to better position themselves for a refi down the road and we agreed to stay in touch.
Just recently, we spoke on the phone again and she relayed the following story to me. Eager to solve their mortgage problems sooner rather than later, they had tried working with a company in Seattle. The loan officer assured them he could do the loan, and I’m certain the rather large size of the loan no doubt excited him as well. He eagerly began to work on the loan and said it would be done before the end of the month.
As the month went on the borrowers were looking at their next monstrous mortgage payment. Although they had the funds, they hoped the loan would be done in time and allow them to not make the payment as the business was in need of some more capital. The loan officer again assured them the loan would close and not to make the payment. However, as the days passed the loan did not seem to be progressing. The borrowers called again and asked if they should make the payment for the month, but were again told no. But soon the loan officer stopped calling them and did not return any of their calls. Having spent the money on things for the business, the borrowers were unable to make the payment when the loan did not fund and incurred a devastating mortgage late on their credit, a major hit. They continued to frantically contact the loan officer to find out what was going on, but never received a response.
To me it seemed the loan officer realized like we had that this was not a doable loan at this time. But rather than admit that and lose the deal, he greedily strung them out as long as he could hoping to make it work and get the big payday. When it failed, he cowardly disappeared leaving the borrowers in a bigger hole.
Tough story. That other LO was cowardly, indeed.
Posted by: Greg Perry | June 07, 2007 at 07:03 AM