Home Buying in 95758>Question Details

J, Both Buyer and Seller in Sacramento, CA

What's my agent doing? Why does he want me to sign loan papers before we have the house?

Asked by J, Sacramento, CA Sun Jul 20, 2008

Hello,

We have been placing offers on a few houses and my agent wants me to sign loan papers and Im not quite sure why. Our offers have not been accepted. I assume he's getting a kickback from his loan broker. I believe we got locked into him as areal estate agent/broker when we made the first offer.

We have a GFE from two lenders and I've told him I want to shop around. I'm not going to sign a 20 page loan document just so we can get it out of the way.

Is this normal, him asking us to sign loan paperwork before we have an accepted offer?
Can I be locked into a loan broker?

Thanks,
J

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Answers

14
Jim's right!

Most likely it is initial loan application that need to be filled out. I would have to question why this is being handled by your Realtor and not the mortgage professional. This is perfectly normal and in order to prequalified you need to start the process before a house is selected.

I would also agree more than likely a "kick back" is not involved. Most likely your Realtor has a good working relationship (pretty darn good since he is having you sign the loan paperwork) with a lender.

I would caution you on how many times you give your information (social security number, date of birth, and so on). Not all mortgage professionals are alike. Too many pulls on your credit could affect your score.

On a final note.. If you are not comfortable with the agent you feel you are "stuck with", I am not sure you want to start a relationship with their lender. That is just me! Buying a home should be a good experience and it sounds to me that you might not think your current Realtor is a good fit. If that is the case... it is OK to maybe look at other options.
1 vote Thank Flag Link Thu Jul 24, 2008
Semantic Policeman Jim here.

Loan Industry and Real Estate people define loan documents as the papers that a borrower signs at the escrow company the day before or a few days before the close of escrow.

A consumer that writes that they are being asked to sign loan "documents" is probably referring to a lengthy set of loan application papers. In the days of full disclosure and full documentation this set of loan application papers frequently ran to 20 pages. From memory these were the FNMA 1003 - 5 pages, an affiliated business disclosure 2 pages, requests for verification for employment, deposit verifications, rent or previous mortgage verification requests, authorizations to disclose information, serivcing transfer disclosure, sale of loan disclosure, etc.

These forms are part of the initial application package, they are not final loan documents.

Most sellers these days will not look at an offer without a pre approval. I infer from your question that you do not trust your agent. You wrote that you assume that he is getting a kickback from his loan broker. That is legal only if he discloses compensation from the loan broker through an affiliated business disclosure. Did he disclose that to you?

My answer to your question is: It is proper and normal for an agent to help his buyer obtain loan approval.
It is proper for the agent to receive additional compensation for the loan if he discloses that he will be compensated for doing so, and using the proper paperwork to make that disclosure.
1 vote Thank Flag Link Mon Jul 21, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
He wants to make sure that you are qualified. I don't think it is a bad idea. In fact I think you need to take care of your money first then go looking for a home.
Web Reference: http://GetPrequalified.com
1 vote Thank Flag Link Sun Jul 20, 2008
The new laws have changed the playing field for loan companies. When a lender takes a loan application they have to have GFE estimate within 3 days. Signing it acknowledges this took place. You can still change lenders.
I
0 votes Thank Flag Link Sat Feb 28, 2009
Dear J,
Its your money so it should be your choice of lender. You should not "have" to use the lender your Realtor suggested. Talk to your current bak, they may offer you a better rate as an incentive to keep all of your business. Secondly, if you don't like or trust the Realtor you most likely have the recourse to let him go and find someone you can work with. Read your copy of your Buyers Representation Agreement and verify the details. In Texas you can fire a Realtor for any reason or no reason. I wish you the best of luck with your purchase!
Sincerely,
Betina
0 votes Thank Flag Link Tue Nov 25, 2008
Waiting For Common Sense in Rosamond wrote "once you sign your GFE, you have made an agreement to those charges if you use that broker."

This is not technically true, signing the GFE is acknowledging receipt of the disclosure. The GFE is therefore not legally binding upon the borrower.

Perhaps waiting for common sense is referencing a loan salesman who refers back to the GFE to remind the borrower that he knew what he was getting into when he started. But it is not legally binding on the borrower
0 votes Thank Flag Link Sat Aug 9, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
Listen to your instincts even if you don't know why you have them. Also be careful with those GFE's. Brokers will not make a big deal out of it, but once you sign your GFE, you have made an agreement to those charges if you use that broker. There are more tricks they use and if they are not explaining the process to you, chances are they are betting you will not press further. They depend on that to make more money off of you. I recommend educating yourself on the whole industry (like a book about mortgage rip-offs and money savers). It saved me a lot of money. Knowledge is power.
0 votes Thank Flag Link Fri Aug 8, 2008
Hmmm... you've "been placing offers on a few houses".... Have any of these offers been accepted? If not, why not? I doubt that the agent would risk the huge fines and imprisonment for a measley kickback. No. You have Good Faith Estimates from TWO lenders? Why two? Yes, getting a letter of preapproval is crucial if you want to present an offer that wiil be taken seriously and accepted. There will be other deadlines once you have a contract accepted. Listen to your realtor; he is trying to help you to be successful in buying a home.
0 votes Thank Flag Link Fri Aug 8, 2008
J,

Your not stuck with either a real estate agent or a mortgage professional! The only way this can be possible is if you have an exclusive buyers broker agreement in which the agent will be representing you and looking after your interest. In the mortgage professional scenario you would have had to pay an origination fee this is how sometimes they trap you every bank has their normal fees so this is something you should look into find out what these fee's are most of these fee's are already on the GFE.

To answer the rest of your question its not normal to for them to push for a full application with out you finding a house or having a contract in place. What is normal is for them to ask you question such as your SS# for the credit check, how much down payment you have (this is how they get the LTV ) how much your earn any assets and this helps them give you a pre-approval. Based on these questions they will also determine what kind of program you fit in. In todays world or mortgages they are requesting more paper work or documentation in what they call full documentation loan so be prepared.

Last if you don't trust your agent or mortgage professional get a new one our business is based on trust and rapport some real state agents can do both services they just have to disclose this to you. So I hope I answered your question.
0 votes Thank Flag Link Wed Aug 6, 2008
Since we can't see what documents you're referring to, we are only guessing here. We also don't know what kind of loan you're going for. If it is a government loan, the processing can take a long time, and some lenders - Bank of America for example - require almost the entire application to be processed before they'll give a PREAPPROVAL. This is all in line with the crazy mortgage shifts we're having, and it is to protect you. But, it should be explained to you. Are you asking questions of your agent and whomever he/she is referring you to? You should. And, I think the majority of people in business today are professional, ethical agents... but if you don't trust your agent not to violate federal laws or ethics, then you are doing yourself a disservice. If you are locked into using that brokerage, talk to the broker about switching agents. Your agent must be able to represent your best interest, and chances are you're not giving them enough information to do that if you have a natural distrust for that person. In addition to experience and professionalism, designations and memberships, etc. etc. , You and your agent must "click". If you don't, figure out how to change that, either by opening up the dialog or by talking to the managing broker.
0 votes Thank Flag Link Thu Jul 24, 2008
Your agent may want you to be pre-approved. It makes for a much stronger offer. Also, your agent may be uncertain as to what you'd actually qualify for. All of that is--if not standard, at lease--not unusual. On the other hand, you certainly aren't required to do so.

I assume you asked your agent why he is suggesting that course of action. What was the response? If you haven't asked, you should.

If he's suggesting you use a particular lender or mortgage broker, the most likely reason isn't kickbacks, but rather that the agent has experience with the lender and knows the lender is good at getting applications approved. Yes, the agent does have a major incentive...but it's not a kickback, it's the commission from the transaction. So the agent doesn't want to risk that by having you go to an untried lender, or selecting some lender online that no one's ever heard of. Still, you have the right to use anyone you choose. Ask your agent for additional recommendations. Or ask your agent about the lenders from whom you've received GFEs.

And, finally, if you're still not comfortable with your agent after going through the above steps, then you might be better off considering another agent.

Hope that helps.
0 votes Thank Flag Link Sun Jul 20, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Hi J,
Something smells fishy. I have never known a lender to draw docs without a signed contract. I don't know how they could without an address. I certainly wouldn't sign them.
Good luck, Walter
Web Reference: http://ocnorth.com
0 votes Thank Flag Link Sun Jul 20, 2008
Did you sign a buyer broker agreement with him? If not, and if you are uncomfortable - move on. You should definitely keep looking until you find a loan broker that you are comfortable with. By the way...it is illegal for us to take a kick back from a lender. I certainly hope this is not happening. I have friends in Sacramento in the business if you need help. Good luck!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sun Jul 20, 2008
Cindi Hagley, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Absolutely Not! While you may be required to show proof of financing at various points of your contract period, nothing prevents you from going with whatever lender you want. All you are required to do is be at that closing with the funds necessary to pay for that home. In fact, sometimes, it can be a good thing to run a loan through 2 lenders. You can lock your interest rate at one place, while floating it at the other. If rates drop, go with the second lender - if rates rise, go with the first. While it can be a good convenience to work with the "in house" lender, nothing prevents you from going with whomever you please. In fact, if you want another GFE, you are welcome to contact me. I can have one for you in 10 minutes.

Good Luck.
Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com
0 votes Thank Flag Link Sun Jul 20, 2008
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