Financing in 19087>Question Details

Lindsay, Both Buyer and Seller in 19087

Is it uncommon to use out of state lenders in PA?

Asked by Lindsay, 19087 Tue Jul 20, 2010

I have bought 2 houses using agents and sold one FSBO in NC, but this is the first time buying in PA. We are under contract for a great home in Wayne and I'm frustrated that I chose a reputable lender (through Lending Tree) and am running into major roadblocks.

My agent and the selling agent work out of different branches of a very well-known realty office on the Main Line. They are both acting like an out-of-state lender is just unheard of. Local custom seems to require a commitment letter with an appraisal (not done in NC, nor where my lender is). The importance of this was not made clear to me, and my lender gave a mortgage commitment but told my agent that an appraisal would take more time. The selling agent is so nervous that today (3 weeks before closing!), when we have all mortgage documentation minus the appraisal (sched. for tomorrow) and underwriting, that she said that she'd put the house back on the market if we didn't go with a local lender. I was forced to switch!

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Hi, I hope that everything turns out for you. It is often in the best interest of all parties if a local lender is used. They are generally easier to reach and more importantly they will use an appraiser that is familiar with the area. You probably wouldn't use an out of area real estate agent who does not know the local maret, Same goes for the appraiser.
Even under the best of circumstances, real estate transactions require a lot of nurturing to get to closing. Because appraisals are sometimes the culprit of a sale going south, it is sometimes best to get them ordered and scheduled as soon as possible so that all parties can move forward with some comfort level.
I am sorry you had to go thru the inconvenience of switching lenders, but hope that everything does work out for you in the end. Hang in there!
1 vote Thank Flag Link Wed Jul 21, 2010
Steering is illegal. You should choose the lender that offers you the best terms and confidence that they can perform and fulfill the transaction. Nonetheless, stay focused on the objective, ask your agent to get the situation under control, and this episode will soon be forgotten when the keys are in your hand. Welcome to the neighborhood!
0 votes Thank Flag Link Wed Jul 21, 2010
Hello Lindsay,

Steering to a particular lender is against the law. However this is a common and very difficult issue in many Real estate transactions. I did threaten legal action against a Realtor who told my client (of three years) that they would only accept an offer if she was approved by her mortgage broker. Bank of America requires all of theie REO purchasors to get pre-approved through B of A so there is a very fine line between steering and recommending. I personally think that when a threat or demand is made that the Realtor has crossed the line......I am however not an attorney.
Also a commitment letter is itself a misnomer. In the state of Pennsylvania it is illegal for me ( a mortgage broker) to issue a mortgage commitment. Most of my lenders do not issue a mortgage commitment at all.
However most realtors are not aware of the and the standard Pennsylvania Agreement of sale has a clause in there for a mortgage commitment. In my opinion the whole process is in need of a overhaul.
When I asked for a commitment I usually tell the Realtor that it is against the law for me to issue one. I forward to them the outstanding conditions that the lender is requiring them and keep in close contact with them to give them that warmn and fuzzy feeling that they are in good hands. Common sense must prevail in this situation.

Unfortunately there have been lenders that have pre-qualified buyers who did a poor job.Nor is it just limited steer you to a particular lender or impose restrictions on the type of lending institution that you use. They can choose to terminate the contract if you are indeed out of contract. You may want to consult with a Pennsylvania Real estate attorney.
Feel free to contact me if you are in need of a recommendation.....that is not illegal!
Alan Openshaw NMLS # 143960
Cornerstone Lending Inc
215 953 0800
cell 267 992 7276
0 votes Thank Flag Link Wed Jul 21, 2010
I am hearing more and more from Realtors / Broker-Owners that although they cannot (legally) require and/or force the buyer to use a local lender, that many deals have "fallen apart" when a person uses an online lender. Gone are the days where a new lender can close a loan in 7-10 days, if it is still happening it is obviously in the minority. That being said, just as you are unaware of the specific PA requirements regarding commitment and appraisal, so it was with your online lending source. Hence the reason the "locals" are so fed up with the internet lenders that do not know any different...
Web Reference:
0 votes Thank Flag Link Wed Jul 21, 2010
No, it is not. It happens all of the time. The line has become blurred between an "on-line" lender and a local lender because many of these local lenders are also Lending Tree lenders. Also, many of the large national lenders with local branches process your loan application in out of state processing centers. Perhaps the agent doesn't understand this, or is trying to gain more control over the process by forcing you to one of her lenders. The real question, and the one that you need to address with the buyer's agent, is whether you are fulfilling your obligations per the agreement of sale.
0 votes Thank Flag Link Wed Jul 21, 2010

I think the problem you are running into is that agents on the Main Line have experience of on line or out of state lenders who have left borrowers high and dry, in several ways in the past year or so. The PA contract/agreement of sale allows so many days for the mortgage contingency, we also have a time is of the essence clause which many out of state lenders do not have in their own states. Local lenders today can be just as competitive rate wise and fee wise so there is little need to use them. As has been mentioned most good Main Line agents have relationships with several local mortgage providers who they know will meet deadlines and also have the money at settlement.

Personally I have several local mortgage providers, and one of my prerequisites is that they will be at settlement as I want them there to answer for themselves if there are problems. So far I have had no problems.

Your agent is there to protect you legally, and make sure you reach settlement, just as the sellers agent is there to protect their client, the seller and make sure they reach settlement as well. Many lenders like to give a commitment without the appraisal and this last year we have seen many bad appraisals from appraisers from out of the area, a local lender will try to make sure this does not happen. As you are three weeks from settlement and the appraisal was not done and probably the mortgage provider was not being communicative the selling agent had every right to put the house back on the market as you were not meeting the terms of the agreement of sale. Hope everything works out.
0 votes Thank Flag Link Wed Jul 21, 2010
I don't necessarily share the same opinion as you regarding Lending Tree. That being said, while my preference is to have my clients and buyers of my listings use lenders that are local and that I know, I have still had some great experience with out of state lenders. To me it is less about location and more about process, I can usually closely monitor what is going on to see if there is enough concern to recommend a switch. I don't really feel you should have been forced to switch with three weeks to go, but I can understand the concern of those involved, and remember, they do have your best interests at heart.

As a rule, I feel that it is important no matter who you use for your real estate transactions(lender,attorney,title, etc) has a strong level of accountability. For me that means they have an office I can walk into, and someone there whose hand I can shake. That policy never fails for me. However, If I can't do those things I find there is a lesser chance of getting done what I need to and I don't like those odds when money is involved.

Clearly you can see the other opinions of other professionals who do this daily, and without question, local resources are important for many reasons. At the moment, I would just focus on the fact that you are buying a home that you are excited about and that there are many people involved that care about you having a great experience. Hope that helps.
0 votes Thank Flag Link Wed Jul 21, 2010
Hi Lindsay,

Real estate is all about relationships. I can't stress this enough. Note that I am not taking any 'sides' here, BUT....if I have an out-of-state buyer that I represent, I am going to do everything in my power possible to make sure he not only uses a local lender and attorney, but one that I know and I can recommend to him.

Back to relationships. I have mortgage brokers on my team that will do anything in the world for me short of committing murder. They handle my clients with utmost respect and professionalism. They return calls. They hold their hands. They confirm EVERYTHING in writing with cc emails to me. They keep their promises. They control the process. They don't forget that this is my client and not their client. On the flip side, they do not send me gifts. They don't pay me commissions. They do their jobs and get the transaction DONE. They know that if they drop the ball on my deal with you, that's the last ball they get from me. Real estate and all peripheral support businesses are all about service and relationships.

I'd listen to the local agent and put my faith in them. If you want to know why your agent is forcing you to change at the last minute, call her broker and ask.


Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Wed Jul 21, 2010
Guess my question to you would be why not use local lenders who know the market, and who will likely use appraisers who also know the area, and who know the local requirements and practices.

It's been a thorn on our sides when an out-of-state (read: online) lender is used. That means the lenders (or the representative handling the loan) is hard to reach, and can't be reached after hours or on weekends if necessary. There is no personal relationship, no sense of urgency, no empathy. We can't push to expedite --- heck, we're just a number to them!

I always advise my clients to use local lenders with whom they can have a personal relationship, whom they can call on the celll phone, email and text them. That's part of their service. Invariably, whenever we run into a problem or delay, it's at the loan underwriter's end. As such, a lender who is totally invested in the buyer's well-being will be lot more responsive and responsible. That lender can investigate, follow up and implenetat wwhat needs to be done to get the loan documents drawn up and the loan approved.

Good luck!
0 votes Thank Flag Link Tue Jul 20, 2010
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