Home Buying in 91702>Question Details

Andy, Home Buyer in Azusa, CA

Is legal for the listing agent to require the buyer to get a pre approval from his preferred loan agent?

Asked by Andy, Azusa, CA Sun Nov 9, 2008

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Andy -

I have found corporate owned properties (REOs) want the buyer to be pre-approved with their lender. Some have offered incentives to have the buyer apply for the loan with their lenders. Many times they are happy to simply know the buyer is approved with a "legitimate" /established lender.

As far as legality? Hmm...but they obviously do not have to accept any offer they do not want to. On the other hand - it is the listing agent's job to sell the home. There are strict RESPA guidelines about their being "incentives" with lenders (kickbacks etc). If I were you, I would challenge it with pre-approval from the lender of YOUR choice in hand.

CJ

http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
Web Reference: http://www.TalkToCJ.com
1 vote Thank Flag Link Sun Nov 9, 2008
Hi Andy,
Yes, it is legal for them to ask you to pre - approve with their designated loan agent.
But the law says that they CAN NOT require you to use him.
The way I handle it is to have my loan agent cross qualify with their loan agent. This way you don't have to have your credit run each time you make an offer.
Also it is easier because loan agents talking directly to one another speak the same language.
Andy, I hope this helps you.
Jonathan Starr
0 votes Thank Flag Link Thu Aug 6, 2009
From what I have seen out there is that REO's require either a Direct Lender i.e. Wells,Chase,Countrywide do the pre-approvals, because it's their bank REPO or they just want to make sure the deal will go through. I hate this part as Lender myself we get the client pre-approved and some cases a DU/DO (meaning fannie mae/fha fully approved) loan and they will not take it. They will take a paper pushers pre approval, but not ours. This is the new landscape we are in and have to adjust not only for the realtors, but the homebuyers and loan officers/mortgage professionals. In either case hang in there, I have about 4 other fully approved clients in the same boat. If you need a second opinion on loan options feel free to contact me.
Thanks
Juan
0 votes Thank Flag Link Mon Nov 10, 2008
Andy,

As far as the legality of this....you would need to refer this to an attorney. However, as previously mentioned, many banks are requiring pre-approval from their bank for REO's.

This is done to minimize the risk of the buyer backing out of a transaction because of not being approved for funding. They will know up front the financial capability of the customer.

As always, if you don't like the way something feels, you can always look elsewhere.

Good luck
The "Eckler Team"
0 votes Thank Flag Link Mon Nov 10, 2008
Pre Approval is easy to get. . . and totally necessary for you to offer on a home. We ask all of our clients to get a pre approval. It shows that you are ready, willing and able to buy the properties that we look at. Without one you could be looking in the wrong price range. It would be awful to fall in love with the home of your dreams and then find out that it is just outside of your comfort range. It is simply the best thing a buyer can do to assure a smooth closing. Pre approval is all verbal...make sure you are searching the right properties!
Ron and Debbie Albert
Coldwell Banker Residential
0 votes Thank Flag Link Mon Nov 10, 2008
At this time most REO's are required to have a pre-approval from the banks loan agents before an offer can be submitted. This is a requirement from the bank. I have noticed that agents listing short-sales and regular sales are also doing the same, I stay away from those. On the REO's I comply because it is usually a bank requirement, but if an agent just wants to be difficult before we open escrow, then I advise my client against it.

Good Luck!
Dyanna
0 votes Thank Flag Link Sun Nov 9, 2008
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