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Why is it so important to use preferred lenders?

I write this because of a couple, that I helped find a new home for, decided they wanted to use a lender that they met one day before me and I had never heard of. They decided to go with this lender because he offered them a loan payment of $1864 per month versus the $1919 from one of my preferred lenders, and $1923 from another.

 Knowing I had never heard of this lender, I was willing to give him a shot for the benefit of my clients, because $50 is $50 in a client's eye. After going over the good faith estimate with my client, I didn't see anything out of the ordinary, and it looked like he was actually going to save them $50 per month.

Well, let us fast forward a few weeks, to one week before closing. The lender decides to go on vacation and didn't tell anyone. We found out by going to his office and talking to a co-worker.

Then, the week of close, we get a call from the lender saying that we are going to have to put in an extension because the paperwork isn't done yet. Imagine that, you went on vacation and came back a day before closing and couldn't get it done.

So, another three weeks pass, and we have an upset seller, an upset buyer and a transaction that I think may fall apart thanks to this guy. The sellers decide to give us one more week and then we are going to have to forfeit the earnest money and walk away. My clients are a little nervous at this point, but sign the document and do a lot of praying.

With one day to go the documents show up at closing and everyone is happy, the sellers sign and one hour later my clients and I show up to sign their life away for their dream home. That is when we see it. What do you mean that this is an adjustable rate mortgage and the payments are $3012 per month? Yes, you read that correctly! Over $1000 more than the good faith estimate that was to be at a fixed rate of 6.5%!

To make a long story short, my clients lost their home, and a $1,000 earnest money deposit all over a mortgage broker that I had never met and will never recommend again! The good faith estimate was no good at all. My client has since started working with one of my preferred lenders and is now willing to pay the $1919 per month and knows that it will close and the good faith estimate will be worth the piece of paper it was written on.

So if you are looking to buy a home and want to make sure the loan closes, I suggest you ask your agent if they have a list of lenders they have worked with in the past that they trust. Lenders have to earn an agent's trust before they will refer them to a valued client as they know their check is on the line, just as much as your dream home is on the line, so they won't steer you wrong.

Todd Clark (Principal Broker)
eXp Realty LLC
Comment balloon 61 commentsTodd Clark • January 15 2008 11:40PM


I think we have all had our buyers use a lender that wasn't proven.  I even know someone now loosing their home because they used their friend and not one of my lenders.  Sad.
Posted by Chris Griffith, Bonita Springs Listing Agent (Downing-Frye Realty, Bonita Springs, FL) about 13 years ago

What a sad, but familiar story. It took only once for me to learn. I found a great lender that could "compete" for the business. That being said, I have had unknown lenders close deals on buyers that my lender couldn't qualify.

Vickie Nagy, serving Danville CA and the Tri-Valley,

Posted by Vickie Nagy, Vickie Jean the Palm Springs Condo Queen (Coldwell Banker Residential Real Estate) about 13 years ago
I've bookmarked this post.  It should be featured. I can't stress enough to my buyers to get a lender that will be straight forward and get you to closing.  I don't care if they don't listen to anything else I have to say...
Posted by Judi Glamb, Associate Broker, ABR (Coldwell Banker Hearthside) about 13 years ago
$1000 over the good faith estimate??  Is there somewhere to report this mortgage broker?
Posted by Carol Spengel, Wheaton IL (Prudential Rubloff ) about 13 years ago
Todd - I agree with Judi that this needs to be featured and I flagged it for just that. What an important lesson for us and our clients to use a qualified lender. What a nightmare for all involved. (except the first lender who went on vacation and apparently forgot the good faith estimate he gave them!)
Posted by Linda Scanlan (A Fan of AR) about 13 years ago
Todd - What great coaching for home buyers.  It is so important to have your REALTOR® point you toward the service providers they know iwll get the job done right, the first time and on time.
Posted by Marlene Bridges, Laguna Homes|Laguna Condos|Laguna Real Estate (Village Real Estate Services, Inc.) about 13 years ago
So true...when I sold real estate I always recommended a preapproved lender.  One time a seller used one I never heard of and the closing almost did not take place.
Posted by Vincent Coccia (Construction Services Integration) about 13 years ago
Todd,  I agree with you so much.  I know this may sound radical but I suggest you have an approved lender list.  Not just the ones you prefer but all those you know of with good reputations.  If your client insists on using someone not on the list inform them you we not be able to represent them. I bet most of you clients will see to using a lender you are comfortable with because of your commitment to their best interest.  If you lose a sale it may be worth you time and avoiding this situation again.
Posted by Jimmy McCall, The Ex-Mortgage Consultant ( about 13 years ago
This is a sad story , but true more often than we think. Have heard of other similar situations when using unknown lenders. It's always a good idea to work with those affiliates who we trust and have a relationship with.
Posted by Bob & Carolin Benjamin, East Phoenix Arizona Homes (Benjamin Realty LLC) about 13 years ago
I don't know how to convey this message to people -- Often they think you are trying to pull a fast one when you first meet people -- they just don't get it!  Any suggestions?
Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) about 13 years ago
Todd- I get that all the time from relocation families. Oh he's a friend of a friend and I trust him, I don't know your lender. It is usually a nightmare
Posted by Mark Horan, "The Resident Chef" - Resident Team Realty LLC & (Resident Team Realty, LLC & Toni's Property Management LLC) about 13 years ago

It is so true that lenders have to gain our trust. Using a lender that we have had experience with, should make our clients feel at ease.

I have been putting together my Preferred Lenders List (changes with new requirements/programs available). I never want to offer just ONE lender. Buyers should have their choice. However, the choice should be from Qualified Lenders!

Posted by Heather Jemison, Las Vegas & Henderson, NV (Keller Williams The Marketplace One) about 13 years ago
Todd, Tough way for your buyers to learn a very valuable lesson!  What a terrible experience for them (and you).
Posted by Roberta LaRocca, REALTOR®, Broker, Salesperson, NV. Lic BS.507 (Simply Vegas Real Estate) about 13 years ago
I had this happen to one of my agents this past year.  The mortgage guy send someone to the closing on his behalf, and he ended up having a huge argument with our client.  It is unpredictable when you are dealing with an unknown lender. 
Posted by Jason Crouch, Broker - Austin Texas Real Estate (512-796-7653) (Austin Texas Homes, LLC) about 13 years ago

Rates and terms are all the same.  Really.  As long as you have competent help in the mortgage process.  The client thinks that the $50.00 is the issue.  That is the least important thing.  Delivery as promised is the key.Someone asked me to make a promise that I knew would be almost impossible.  Rather than saying no problem I said a amateur would agree with that but I would not.    If the only thing that matters is the lowest rate they need to use an order taker and not a professional.  No matter what circumstance the outcome is better with proper advice and effective service delivery.  The best rate with the a bad strategy is a bad decision. 

Posted by Roger W. Herrick, Coast to Coast Lending Group Inc. (California Mortgage and Real Estate Broker) about 13 years ago
That should be considered fraud on the part of the lender.  That is one of the most blatant cases of misrepresentation I've ever heard of!
Posted by Debbie White (Southeast Alaska Real Estate) about 13 years ago
Hi Todd:  I am in total agreement that buyers should use our preferred lenders.  When we use a lender we approve of, we know that the good faith estimate is truthful, we know the program will be there, and we know that the lender will be accountable for his promises because he knows his future business from us depends on it.  Thanks for sharing.
Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) about 13 years ago
That is one wacked out LO. I suppose he thought he could hide that figure and program somehow? What a nut case. I'm glad your client finally saw the light after losing money and time and a house. Hope everything works out now. Did they find something else?
Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) about 13 years ago

One bad apple could ruin the whole bunch.

While I agree having a strong reputable team is critical in making the process run efficiently, as a "newbie" it makes it rather hard for me to prove myself when Im having trouble getting my foot in the door because of situations like this. I wholeheartedly believe that trust should be earned, stories like this are tough to swallow.

Newer people, with limited years of service and experience arent always such a bad thing.

Some of them will work HARDER for your business because they want to earn your trust and respect.

Some will be there for you and your clients at all hours of the day 100% of the time, as they dont have a huge list of clientele just yet and are not overwhelmed with piles and piles of loans.

Some are eager to learn from the agents, I personally would love to follow an agent around for a day and ask a million questions, learn more.

Some are going to make sure they do it right and cover their butts on every little aspect pertaining to the loan as they do not want to blow it with the agent or buyer.

Then again, some dont. But being new isnt always such a bad thing. ;)

I firmly believe that this broker/loan officer was in the wrong with their performance as an alleged "professional" and I makes me ill to know this stuff happens all too often.

I hope his vacation was worth


Posted by Kim Morrow (Premier Lending Group) about 13 years ago

This is really unfortunate for everyone involved.

My question is, why would your client lose the $1,000 Earnest Money Deposit if the mortgage company comes back and says we are giving you an ARM instead of a Fixed Rate mortgage?

Wasn't the home purchase contingent upon getting a Fixed Rate Loan?

I am thinking there could have been some things done here to prevent this, but it seems like something is missing.

Bucks County Real Estate

Bucks County MLS Homes Search

Posted by Joseph Grabowski, REALTOR - (Keller Williams Preferred Real Estate) about 13 years ago


As it is now, 

has been,

and forever shall be,

the only protection the consumer has

is the integrity

of their loan originator!


William J Archambault Jr

The Real Estate Investment Institute

Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) about 13 years ago


I'm a lender who  derives over half of my business from real estate agents and has for the past 14 years.  As such, I'll agree with everything you've written.  The important thing for REALTORs to understand is that the buyers are YOUR clients and we, as lenders, currently have no legal or contractual fiduciary responsibility to them.

That's not a license for us to steal, lie or take advantage of your clients.  Good lenders approach customer relationships like a fiduciary.  The trick is to have an open and understanding relationship with REALTOR partners.  The right lender partner makes all the difference in your, as a REALTOR, must have an active role in the client's financing. 

How should a REALTOR deal with an alien lender?  

1- ask "who are their people"?

2-  get REALTOR referrals

3- demand transparency in compensation

4- find out how they handle surprises- they come much more often than you realize. 

The right agent/originator partnership can result in a "partnership".  Communication defines the relationship from the beginning.  I strongly suggest that an agent define what their expectations are in the loan process and understand the limitations and expectations of the lender.

Happy selling! 

Posted by Brian Brady, 858-777-9751 (San Diego VA Home Loans/858-777-9751) about 13 years ago
Yep, been there done that.  Love the online lenders who don't have a clue how to business in our state.  That always works great too.  That story takes the cake as far as nightmares go though.  Hopefully someone will live and learn from their mistakes. 
Posted by Susan Manning (Realty Executives) about 13 years ago

If the loan officer  tried a switch on the borrowers  that late in the  process he  violated a number of state and federal laws concerning rate and terms disclosure.  If the rate or terms increase in any way  or the program goes from fixed to ARM  the Mortgage company is required to re-disclose (in writing) within 3 days to the borrower.

If you or the borrower fail to report this you are allowing this person to continue to ruin the lives of other people.

The one thing I did not see anyone recommend to you was  to provide your preferred partners with the "other" companies quote and ask them to match it or show why it cannot be done.  Every loan officer has access to the same rates and programs. Since it was "only $50" difference your referral partner could have matched the quote to get the loan and keep your business or they would have the opportunity to show the buyer that the quote was not realistic. 



Posted by Lee Walsh about 13 years ago
What a totally incompetent lender.  Your buyers learned a painful lesson.  Unfortunately, things like this happen too often.
Posted by Diane Bell, Hilton Head Real Estate, Bluffton (Charter 1 Real Estate, Hilton Head, Bluffton, SC) about 13 years ago
You are so right and in this day of mortgage problems, it is even more important. Thanks for the heads up and suggestions./
Posted by Al Maxwell, Real Estate Agent (Keller Williams) about 13 years ago


 I feel your pain. I just had an unknown mortgage broker (based out of a company 286 miles away from our city) ruin a deal for me. My clients were relocating from Mississippi and unfortunately it started out that they "might" be moving here, so I happily showed them a few homes when they came.  They finally did decide to move here and unfortunately I never got a signed buyer's rep (never again!). Anyway I found them their dream home and we put an offer. I told my buyers I'd be happy to recommend a trusted loan officer but they insisted on using their own. This mortgage broker managed to convince my clients the home was not worth the sales price, despite my CMA which shows otherwise and pending comps which are over $50,000 more than the home in question. Anyway, we cancelled the contract and luckily they should get their earnest money back (because we were still in the option period) even though the list agent's response when I told him the bad news was "Well they're going to lose their earnest money!" I said "no, their not, we are still in the option period." Anyway, long story short, I agree with Jimmy McCall, I think I won't work with clients anymore who won't use one of my preferred lenders!

Posted by Justin Werner about 13 years ago

IMO this is what happens when the consumer shops mortgages based on price.  Now I don't blame them because that is what the industry advertises, it's what most real estate agents focus on and the media focuses on rate, rate, rate.  The problem with this is the client usually ends up with the biggest liar. When you factor in the consumer's lack of education about mortgages and mortgage products (it could be argued that many real estate agents fall into this category too) and working with the biggest liar it's usually not a good outcome for the consumer.  This is one of the biggest reasons the industry is in the position it is now.

Of course some of the responses were why didn't your preferred lender match the rate and terms?  Why should they?  Why should your preferred lender have to match a liar's quote?  Instead, why couldn't the real estate agent give up some of their commission to buy down the rate to make the deal work if they couldn't convince their client of the importance of working with a known lending source?

One of the best suggestions was to tell the client if you work with an unknown lending source then I can't represent you.  If real estate pros would do that then the number of consumers getting taken advantage of would drop dramatically and many of these unscroupulous lenders would go out of business.  I have a handful of builders in my area that do a horrible job and really stick it to the client.  If I have a client that wants to use them I tell them of the experiences I have had and that if they want to proceed with that builder then they will need to find another source of funding.  See no matter how great of a job I do if one aspect of the process screws it up then it's likely I will never get referrals or repeat business from that client.  See the whole process will be tainted in their eyes and no matter what they say they will resent the fact that you were part of the debacle.  I've received more referrals from fired clients because they experienced what I told them and they don't want their family and friends to go through the same things that they did.

Until we all figure that out then the consumer really isn't getting the best representation that they could and should receive.

Posted by Kurt Jackson (KJ Financial) about 13 years ago
You bring up some very good points.  Thanks
Posted by Richard Lecinski (Long Realty Company) about 13 years ago

I have had this happen with a "legitimate" lender who is pretty large (and getting larger).  My client ended up with a 3% higher interest rate than originally quoted in the GFI about two weeks before closing (over a minor issue, that was resolved).  Fortunately, they wised up, switched to my awesome lender and got an even lower rate than before, and still closed on time.  


Posted by Chelle Gassan, NOVA Realtor and Stager (RE/MAX Regency and Staged Homes VA) about 13 years ago

Todd - It's nice to see some of the better Mortgage Contributors on this forum chime in.  I'm so sorry this happened to your client and you and this is a reminder of a few things that consumers need to do when looking for any competent and trustworthy Mortgage Professional.  Brian Brady laid it out pretty well and Bill Archambault was his typical philosophical & right on the money self......

It is vital that the consumer (who will be interviewed by the Loan Officer) also interview the Loan Officer as well.  Consumers should learn to shop for their Mortgage on referrals (by those they trust) & references (by Professionals they've already worked with and trust), in an educated way.  I may expound upon this on a post later on.

Important post Todd and on a side note, unique graphic:-)

Posted by Jason Sardi, Your Agent for Life (Auto & Home & Life Insurance throughout North Carolina) about 13 years ago

I haven't read the comments yet so just bear with me.  Why wouldn't the buyers submit an application with a competent lender the moment they found out their LO went AWOL ?  Why let it go three weeks?    I sometimes (not often) see this on the sellers side, and it impacts more than just the buyers.  Look at all the timing issues, seller may need money to close on another home,  closing on the house the seller is buying is delayed,  moving trucks, total disruption for an after tax savings of $25 a month?  Is it worth it?


Posted by David Conaway (MetLife Home Loans) about 13 years ago
Todd...  What a great post.  What a agent hasn't seen this happen.  My favorite is when they use a "friend" who ends up charging them points and fees galore.  I always give buyers a preferred lenders list.
Posted by Debbie Summers (Charles Rutenberg Realty ) about 13 years ago

Great example of a painful situation -  I can relate personally to your advice on many levels. 

When I started in the Mortgage Business in the early 90's, I relied exclusively on Realtors for referrals.  I was one of several "Preferred Lenders" on several Realtor's Lists.

Over the past few years, consumers have become much more reliant on doing research on the Internet. I can certainly understand how this proposes a challenge to Realtors as they constantly need to become familiar with new Lenders.  Some are local, some are "on-line", most know what they are doing, some don't.

Today, we are a lender that focuses on purchase prime leads we buy from Lendingtree.  We are not nearly as reliant on Realtor referrals as in the past.  We lend in 25 states and cross paths with many Realtors.

As a function of increasing the quality of service we provide, and understanding a consumer's needs, we survey all of consumers that we see who shop for mortgages online.  We survey both consumers that we closed loans for and ones that choose to go elsewhere. 

The results of our most recent survey (fall 07) told us that of the loans we closed, only 6% said a Realtor had any influence on their decision.  Of the consumers we did not close - 20% said their Realtor did influence their decision. 

Also in the survey consumers (closers and non closers) said that the #1 "trait" in the lender they chose (us or someone else) was the rate and cost offer.   

If we take the widely held number that 70% of consumers shop online for a mortgage then this tells me that like it or not the rate is the most important factor and that Realtors do not have as much influence as they did in the past. 

So my tips for Realtors faced with an unfamiliar lender are:

1 - Go to and look up the company,

2 - Do a Google search for the name of the loan officer and the company.  Maybe the Loan Officer has a profile on Linkedin, or Facebook that might tell you more about them.

3 - If you are in a state where loan officers need to be licensed (Oregon is one) see if they are licensed and for how long.

4 - Call the loan officer and ask for their contact information (get it all)

5 - Ask for referrals of consumers and agents.

5 - Ask them who their back up is or who you would talk to should an emergency arise.

There are good lenders and loan officers out there that maybe you have not heard of yet. 

After these steps, tell your client what you have found (good or bad). 

Posted by Owen Raun about 13 years ago
I get so frustrated with clients who want to save nickels and dimes and then end up costing everyone, including themselves, lots of wasted time effort and money.
Posted by Karl Burger, Pensacola Real Estate News (ERA Beach Ball Realty) about 13 years ago

"Anyway, long story short, I agree with Jimmy McCall, I think I won't work with clients anymore who won't use one of my preferred lenders!"


Cutting off the nose to spite the face 

The phrase is believed to have originated from a (probably fictional) event that was said to have taken place in AD 867: Viking pirates from Sjaelland and Uppsala landed in Scotland and raided the monastery of Coldingham. When news of the raid reached Aebbe the Younger, the Mother Superior, she gathered her nuns together and urged them to disfigure themselves, that they might be unappealing to the Vikings. In this way, they hoped to protect their chastity. St. Aebbe accomplished this by cutting off her nose and upper lip. The nuns proceeded to do the same. The Viking raiders were so disgusted by the scene that they burned the entire building to the ground.

Rather than dismissing potential clients who don't share your opinion of your  lender, take the time and have a conversation with their lender.  Look at what they provided your buyer. Explain to your clients why it would benefit them to use someone that you prefer.  Who knows, you may find someone who can provide better service and programs than your suggested lender.  I could be wrong. 

Posted by David Conaway (MetLife Home Loans) about 13 years ago

Todd, It is so unfortunate that this takes place all the time. With the emergence of mortgage companies over the internet offering unbelievable deals (this is where they hook people) the public is at risk of falling for their "fixed rate loans". They are usually fixed on some index rather than a conventional fixed rate as most expect. I am bookmarking this post for future cusomers to read prior to choosing a lender.

Congratulations on the feature - you are deserving.

Posted by Judy Tuscano, NH Real Estate Professional (Prudential Verani Realty) about 13 years ago
Todd - Holy Cow, you're clients learned a very expensive lesson.  I always recommend two top local lenders and two top national lenders.  I've worked with all of them and trust their programs and ability to close on time and as promised.  If a buyer is going to insist on a mortgage broker, then I insist on seeing GFE and speaking with the lender.  In almost all cases, it's a BS quote and a bogus lender.  Luckily, this doesn't happen often.
Posted by Irene Morales Ward, Realtor - e-Pro - Northern Virginia Real Estate (REMAX Distinctive Real Estate, Inc.) about 13 years ago

Wow, all these comments and feedback, but no more responses from the author. hmmm


I think we all agree what happened here is unfortunate and could have been prevent. But Istill want to know why your client lost a $1,000? 

Posted by Joseph Grabowski, REALTOR - (Keller Williams Preferred Real Estate) about 13 years ago
Joeseph - Not that Todd needs defending but he posted this at 11:40pm yesterday and my guess is that he doesn't even realize yet that this is a featured post!  Secondly, and I'm aware all contracts vary from state to state and jurisdiction to jurisdiction, but our regional sales contract has a financing contingency period.  If after that period the buyer has been informed by the lender that all is fine and they even issue a commitment letter, the problem then is between the buyer and lender if there is a change of terms and/or commitment.  Under the terms of the contract, that is of no consequence to the seller and they are entitled to the earnest money deposit as this then constitutes default (I'm assuming on this, of course since I don't know all the facts).  The lender is not a party to the contract and a dishonest broker isn't going to give a hoot about "deadlines" for contingency periods.  Obviously, this lender wasn't being honest about the situation and that was the responsibility of the buyer to resolve.  Again, expensive lesson learned!
Posted by Irene Morales Ward, Realtor - e-Pro - Northern Virginia Real Estate (REMAX Distinctive Real Estate, Inc.) about 13 years ago

An estimate is only as good as the professional giving it. The above blog proves this again. Todd, I'm sorry that happened to you. Your client got what they asked for didn't they....a journey. They didn't listen to a professional like yourself and you, the seller and everyone else involved got pulled along into their mudd.

One of the many reasons people are in trouble today is they "shopped rates" and they got what they asked for....(the neg am ARM at 1% or found  internet bucket or responded to the bogus mailers out there) and now are paying the price.

If your client likes to do "their homework" that's fine then at least tell them to shop the professional not the rate why? An estimate is only as good as the professional giving it. Price should not be the topic it should be "the plan" and the program to fit "the plan". Find the right program, then your mortgage professional will shop on their behalf for a competitive pricing model.

To suggest a person go to a like minded professional known in the community and expressing others that followed this path had a positive result is done in every other profession (in the world) without fear and it is a suggestion. No gun. I refer clients to realtors, cpa's, 1031 experts and so on. My clients know the drill and they know they can go elsewhere. Sometimes they do. I'm held to the same RESPA standards the real estate community is and I manage my business accordingly.

Then of course there is the client that knows everything and we have had them (over and over again) that will readily take advice from old Uncle Bob who owns a couple rentals before they listen to you or me....that's always fun particularly the part where we should be working for free because after all we make "too much"! Sometimes I throw them back and wish them well.

Time is as valuable as gold and oil particularly in todays market. Again, I'm sorry that happened to you good luck this year.



Posted by Kirk Williams about 13 years ago

We have a list of 3-4 lenders depending on specific buyers, properties and needs, of these all we can recommend and feel comfortable that our buyers will be treated best and given a loan customized for them, after the sale is final everyone is happy and we look like heros because we had our list of "white hats".  Why even suggest someone who has not proven themselves or hung a buyer out to dry?

We have all had similar experiences and learned from them.  All we can do is recommend and give names its unfortunate some buyers choose to choose the one lender thats bad for them. 

Posted by Cathy & Gary Elmore (Coldwell Banker Tomlinson N) about 13 years ago


True, but they could have worked something out.  I am not looking for Todd to defend himself, I am just trying to figure out if they came to some sort of resolution, if they could come to any. I think this blog has focused greatly on the problem, but what about the solution? I am not talking about the preventative actions that could have avoided this, but where do they go from here. From what Todd posted, his clients lost their earnest deposit money, and the seller did not sell the home. If they worked together, they could have came to an agreement. I doubt that because of this problem with the lender, that the seller decided he wouldn't sell the home to the buyer.

But yes, this is an expensive learning experience for all involved.




Bucks County Real Estate 

Bucks County MLS Homes Search 

Posted by Joseph Grabowski, REALTOR - (Keller Williams Preferred Real Estate) about 13 years ago
Todd- Amazing.....And can you tell me why a Lender, or Mortgage Broker isn't held liable like we are?  Maybe if they were you wouldn't have so many that are incompetent.........those just make everyone else look suspect.
Posted by Kathy McGraw, Riverside County CA Real Estate (CELLing Realty) about 13 years ago

It's an unfortunate situation, but your clients did the right thing by walking away.  History will continue to repeat itself unless borrowers simply refuse to sign documents on loans where the LO has used a "bait and switch" sales tactic.  When borrowers find out at the last second that they aren't getting what they thought they were getting, they must walk away.  By agreeing to the terms and closing the loan, they make this way of doing business a viable and profitable model.

At least this lender didn't get rewarded for their misdeeds!

Posted by Kevin Hancock, The Hancock Mortgage Team (Evergreen Home Loans) about 13 years ago

WOW! Ok, I don't know what happened here, I leave for a few 12 hours and my blog has been featured and taken over! I will respond to everyone, slowly, but I will get a comment or response to everyone.


Chris - I have been lucky I haven't had the friend mortgage broker yet, but I have heard of the nightmare stories.

Vickie - That is why I have a list of 3 or 4 preferred lenders and never just give one name. Each lender is different, but sometime things like this amaze me.

Judi - Turns out is was featured obviously sometime after your comment. But thanks and I hope it helps future buyers!

Sherry - In our state the only place to really report someone like this is the BBB and my buyer says they plan to.

Linda - I was just shocked, I did everything including met the lender, read the paperwork and then they tried to sneak it in at closing without telling anyone! I guess thanks for helping get my blog featured. I was certainly shocked when I got to A/R this morning and saw this.

Marlene - I give everyone permission to use this blog in their buyers books as long as you give me credit for writing it. I think it is that important for buyers to know what can happen.

Vincent - You are lucky in your case that it did!

Jimmy - I don't think I will be telling any clients that if they don't use my preferred lenders that I won't be working with them. In my state that is illegal to try to force someone to use someone you recommend. All we can do is suggest they use from your list and let them call and pick which one they like best.

Bob or Carolin - I think the problem is more and more people go for the amount they save, not the amount they get.

Joan - I wish I knew what to say and I really think this broker didn't see the possibilities. Over one client that they tried to sneak on over on they are never going to receive any business from me, my clients or any of their friends either. Not very smart!

Mark - That is exactly what this was, it was a relocation client.

Heather - I have a list of between 3 and 5 depending on what they are looking for. I know some don't offer FHA or VA loans and I have clients that insist on them.

Roberta - I can deal with it, I'm tough! I'm more worried about them losing their hard earned  money over this.

Jason - An argument with a buyer, that is unbelievable. Certainly won't be getting your business in the future!


OK - Got to go make some money, but I will be back later and respond to everyone slowly but surely.



Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) about 13 years ago

Todd... Congrats on the feature! It was funny talking to you just now and you just discovering all these comments! As we spoke about, the fact that mortgage lending has no licensing requirements is a huge mystery to me. We're talking about the biggest purchase most people ever make. What happened to your clients (and so many others) should be a crime!

See you soon!! (cherry or grape?) 

Posted by Jennifer Monroe, Real Estate REALTOR®/Broker in Beautiful Charlotte (Savvy + Company Real Estate) about 13 years ago
This is a pet peve of mine. I know they are trying to save money but at what cost? Being the fact some people just dont trust us in the first place they have to be stung once(or in some cases twice) before they listen to reason. What an expensive lesson.
Posted by Robert L. Brown, Grand Rapids Real Estate Bellabay Realty, West Mic ( about 13 years ago


This is music to my ears and I agree whole heartedly.  Thankfully, with the markets like they are, many of these "thugs" have left the industry.  I hope they keep going. 

I have a few agents who are very direct.  They will say, " You are pre-approved by WHO???  Never heard of that company.  You must get a second opinion by Sherri."  This not only helps to ensure that their loan closes, but I can counsel the buyer in asking the right questions and getting the documentation from that so-called lender to make sure they are on the high road...if they choose to stay with that lender.  Most times it has gained me a new client.  I can't tell you how many times I have detected bait-and-switch or something "funny".  These LO's are not in the industry to build a referral business of life long clients.  They are only in it to make a fast buck on that transaction.  Drives me crazy... 

Posted by Sherri Sherpy, NMLS #287770 (iLoan) about 13 years ago
I think that we ALL have our share of war stories about this topic.  Bottom line is when they say they have "a friend" you need to start getting nervous!
Posted by Mike Klijanowicz, Associate Broker @ Cummings & Co. Realtors (Cummings & Co. Realtors) about 13 years ago

Amazing.....And can you tell me why a Lender, or Mortgage Broker isn't held liable like we are?

Simple- There is no exclusive right to finance contract.  As long as buyers are able to submit applications to more than one lender, they will get treated like a "mark".  the answer is to establish a Borrower's Brokerage Agreement much like your Buyer's Brokerage Agreement. (by the way, that exclusive right to finance agreement is illegal in California, Kathy)

That could require licensing and accountability from lenders who are unable to perform.  Kathy asked the right question (I wonder about it often) but the system is such that  the borrowers have such an advantage that lenders won't dedicate the appropriate time to them.

I have a question for the REALTORs.  Would you rather have:

a) a contractual agfreement with an originator guaranteeing rates and fees (and performance)...OR

b) afford your buyers the freedom (and pitfalls) of the free market? 

Posted by Brian Brady, 858-777-9751 (San Diego VA Home Loans/858-777-9751) about 13 years ago

Michael - Thanks for the congrats! And I seriously doubt it for the tax write off.

Roger - I think they really regret not listening to me now, but I've asked and they wanted me to post there story, so it doesn't have to happen to anyone else.

Debbie - I wish they could be in our state, but there is no authority to have them report to.

Karen - EXACTLY!

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) about 13 years ago
I had a very similar situation.  Two weeks later we finally closed.  I camped out at the attorneys office for two days.  The paralegal and I made it out job to sort though the b.s to get the loan closed.
Posted by Katie Evans (Keller Williams) about 13 years ago
You said it all, that's why we use our lenders. If a buyer goes and finds one on their own, this is a perfect example of what can happen.
Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) about 13 years ago


I know that buyers and borrowers can use who they would ultimately like to work with.  Unless they have a previous experience or relationship with them that is the unknown.

The difference in the quote is actually the least important issue. 

All lenders and brokers should be able to produce the same or very similar results if they know what they are doing.  If you have the similar situation in the future you should ask them if they have ever used them before to obtain a loan.  I have many clients that are not looking for a new lender and will come back to me again and again. 

Most realtors try to steer them but the client demands to work with me.  So if they have had actual experience with that person or lender they should stay with them as they have already proven themselves and the realtor "should" not disrupt their actual relationship.  However, if they are going by price and not actual experience you need to give them the name and number of this client and have them understand directly from that clients experience how the $50.00 actually cost tens of thousands. 

I know there is a balance of clients desires and the completion of the process.   Good luck and keep that clients number so others can contact them.  I would hope that if you were to look me up you would be left with the impression that I would deliver as promised and would feel comfortable that the process would be completed on time. 

Posted by Roger W. Herrick, Coast to Coast Lending Group Inc. (California Mortgage and Real Estate Broker) about 13 years ago

Celeste - I think we have found them something now and hopefully we will be closed by the 1st!

Kim - In your case, I would target other newbies that just got in to real estate and don't have a list put together yet either. This will get your foot in the door and when they befriend other newbies they will give them your name.

Joseph - As I'm sure you are aware contracts are different everywhere and here they only have 5 business days to secure financing. After that if it is lost do to financing problems than the buyer loses their earnest money and I think it would help if mortgage brokers were licensed and had check and balances as we do.

William - Well said!

Brian - I had most of these in place on this one, but certainly didn't expect the big change on the day of closing! That is why I have a personal list of about 10 brokers I love, but only give a list of about 3 or 4 to my clients depending on their situation.

Susan - All my lenders actually come to the closing table with me, this way if a problem should arise they are their to answer any questions and hopefully fix it on the spot!

Lee - My clients have tried reporting it, but the state says there is nothing they can do since in our state mortgage brokers are un-regulated.

Diane - I'm not sure incompetent, but I'm guessing greedy.

Al - It was a sad situation that hopefully a future client will learn from.

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) about 13 years ago
WOW.....3000 a month. I would have probably passed out if I were the buyers. What a horrible thing to happen. That lender should not be working anymore!
Posted by Christy Powers, Pooler, Savannah Real Estate Agent (Keller Williams Coastal Area Partners) about 13 years ago

Justin - OH, I won't ever do that! In my state that would be breaking the law telling someone that if they don't use someone I recommend that I won't work with them.

Kurt - I was really hoping they were going to give my agent a chance to match the quote, but they went just on payment and despite me warning them decided to proceed.

Richard - Hopefully it helps one of your clients in the future.

Chelle - You were lucky that you were able to close on time! That was a quick lender and I hope you took them out to dinner.

Jason - I got a call from Jennifer and you have my full permission to expand as long as you link back, but send me the link and I will put it as an update to my blog. I've seen your blogs and I trust that you will put it out in plain English and trust what you have to say!

David - Believe me I tried to get them to switch when the lender went AWOL, but they said "He has done so much work at this point, I don't want to do that to him" - WHAT? He just left you high and dry? They even said they wished they had listened to me.

Debbie - The friend lender who is doing his first loan for this friend and plans to pay for his home off the fees he charges the friend. (THAT ONE?)

Owen - You are so right, we try to influence a buyer's decision, but in the end it really has nothing to do with who we recommend.

Karl - The sad part is we are now finding that to find the same house, we are going to have to probably pay about $10,000 more, just because of the lack of inventory in their size home they are looking.

David - I'm with you, why would you do that? We are in the helping business and like I said before here I think it is illegal if I told someone that.

Judy - Good point, I'm not even sure what happened here and I wasn't about to wait for an explanation! That was just ridicules and should have never happened to anyone.

Irene - I did that and it all looked legit and the numbers were correct, but he just changed the program without asking anybody before closing so he could make more and the client would pay more, I think hoping no one would notice.

Joseph - Sorry, didn't get back. It was posted late and I had meetings in the morning, didn't even check AR. I was shocked when I got a call about the feature and all the responses. I can't spend all day on Active Rain, I make my money on the street and in houses. Yes, I get leads from AR, but I can't spend 24/7 here.

But, now for your question... In my state our contracts only allow 3 business days to obtain financing and after that the earnest money will be giving to the seller.

Irene - Well, I guess I should have read your comment before answering Joseph and just said please refer to Irene for my response! - Thanks for defending me.

Kirk - Thanks and I'm so glad that my clients decided to let me write this blog to warn others and let them hopefully learn from their mistake.

Cathy or Gary - Being a relocation, it is hard to earn trust so quickly and get them to trust you as well as your lender. Some people are just professional BS'rs

Joseph - The seller did end up getting an offer on the home in less than 2 days and it is scheduled to close later this month. But, the reason they didn't want to continue with this buyer is because they were livid that the buyers just didn't sign and then refinance later. They needed the money to buy a home and they lost the home they had an offer on because of that and said they would never extend it again and get their hopes up. I even tried to personally meet with the sellers and explain the situation, but they didn't want to hear it and would prefer to find a new buyer that as the put it "KNEW WOULD CLOSE!"

- I think they should be, they have more to do with a buyer's money than we do! They control a lot and can steal a lot more, it is just done over time.

Kevin - That is exactly why they walked, they were not going to reward him with a fat check for trying to rip them off!

Jennifer - I enjoyed talking to you too and look forward to Jason's blog! (CHERRY)

Robert - I think sometimes the media puts it in buyers and sellers minds that we are there just to rip them off, when in reality most of us are just here to help.

Sherri - Thug is a good word for it, I'm sure in the past two years he had done this plenty of times and not got called on it because with multi offer situations buyers were afraid of losing their dream homes if they didn't sign.

Michael - AND I DO!

Brian - I would love to see brokers be held accountable like agents are, but for know I don't see that happening yet. I know they are trying to do things in this state, but the way they are going about it is just wrong.

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) about 13 years ago
Good point, well I won't work with them without a buyer's rep. anyway!
Posted by Justin almost 13 years ago

Katie – Good for you!

Missy – It really can end badly if you don’t know who you are hiring.

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) almost 12 years ago

Roger - If the buyer has had experience with a lender I would never try to steer them away from that lender, I see it as an opportunity to meet a new lender to add to my preferred list. But, if is someone they just found on the net in another state, then I certainly will get them to call my lenders.

Christy - I agree and I just checked and guess who isn't in the business anymore?

Posted by Todd Clark, Principle Broker Oregon (eXp Realty LLC) almost 12 years ago

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