As much as I like hearing how the big banks drop the ball - and I do believe it is more common than people know - the reality is you (real estate agents and consumers) need to pick better loan officers.
A bad file was a bad file long before it got to the Underwriting Dept. and the loan officer should have known it. Heck, our Processors know a bad file before it gets to Underwriting and won't even allow it to be submitted.
Bad LO's fall into a couple of categories:
1. Order takers and have no idea how to approval a loan. They wait for Underwriting to "condition" the file or deny it to find out there's a problem.
2. Don't take their profession serious enough to have all the FHA, USDA, VA and Conventional underwriting guidelines bookmarked in their browser. Did you know ALL of those are available online at no cost? Then they have to know their own internal guidelines. Again, the file should never even land in Underwriting if it's going to be denied.
3. Just naively ignorant.
Personally, none of those are good answers. But guess what - in all cases the consumer has the choice of who they want to work with.
Don't be fooled by the big name on the building or even the small name - it's the loan officer only that you need to be concerned with. Your money and your transaction is in their hands. Be relentless in your phone calls if you have to and if not getting satisfaction start trying to reach a manager.
Or just work with a loan officer who knows what they are doing. Sorry for the rant - it's late on a Friday and it's very frustrating to see these kinds of complaints when you know there are thousands of great loan originators out there who do not cause these kinds of problems.
Have a great weekend!
That being said, just like the other comments here; lenders have tightened up ALLOT over the past 2 years, making it that much more difficult to close even the simplest of loans. In my recent experiences, I've had a better success in getting loans closed through larger banking institutions (BofA, WF) vs mortgage brokers. I think the game is becoming rigged in that "big banks + big government" are squeezing out the little guys; mortgage brokers. I hate to see that, as competition is a good thing.
I personally think it comes down to the LO. Some just simply take the order and pass it along and are hands-off. You definitely need to find one that is HANDS-ON, pro-active and attempts to resolve issues early on, instead of the last minute crunch which leaves you with little or no options. The same can be said of Real estate agents too. It's ALWAYS best to resolve foreseeable issues up front rather than down the line, to avoid those final hour stress-fests.
My 2 cents.
However, to be honest, weâ€™ve had more issues with B of A this year than any other lender â€“ last year it was Wells Fargo. There are three fundamental problems with B of A:
(1) The way underwriting is structured
It is kind of like sending the loan into a deep black hole. Offers can be reviewed by three separate underwriters who all have different criteria â€“ there is no cohesiveness between underwriting and the loan officer â€“ in fact, weâ€™ve had situations where the loan officer couldnâ€™t get hold of anyone in underwriting to provide clarification or ask questions. And if the last underwriter â€“ who reviews prior to closing â€“ comes up with a different set of conditions (I should say WHEN â€“ not IF), itâ€™s often too late to meet the closing timeline. Then the smelly stuff hits the fan. Happens all the time.
(2) The way appraisals are handled
Because of HVCC, there has been a disconnect between lenders and appraisers. Most good lenders have figured out a way to work this so they end up with a pool of good appraisers who arenâ€™t afraid to return valuations at value. Not so with B of A â€“ the pool they use in the Bay Area are constantly coming in under value OR are coming up with a long list of â€œcorrectionsâ€ that have to be implemented in order to close. If itâ€™s an â€œAS-ISâ€ sale, these conditions can sink the deal faster than a boat with no bottom.
(3) Property Condition
The criteria for property conditions have been tightened down so much that Iâ€™m not sure the Taj Mahal would make it through. Iâ€™m totally certain B of A would not provide a loan for the Leaning Tower of Pisa â€¦
Read Bullets 2 and 3 of the following post â€“ it may be helpful:
2010 In Review â€“ Top 8 Issues That Affected Bay Area Real Estate
In reality, weâ€™ve had to go with a backup lender a number of times â€“ fortunately, weâ€™ve managed to salvage most of the deals. In fact, weâ€™ve had a number of offers turned down this year because the buyer wanted to use a B of A Loan â€“ NO KIDDING. Many bulk sellers have had so many problems with B of A loans, they refuse to go there anymore. When weâ€™ve come back with a different lender, the offers have been accepted. Itâ€™s why I wrote the following post:
I WISH You Would Use My Lender - 6 Critical Reasons Why You Should
Have had to request extension of loan approvals because bank's underwriters stipulate so many conditions, and it seems, one at a time, which makes us scramble to satisfy those conditions.
Underwriters are getting even stricter, not more efficient in meeting schedules regardless of how often we follow up.
God help us.
Thanks for sharing your experience. This happened to me too in another sale situation. I represented the buyer. Buyers completed everything earlier than the 17 days. BOA sat on the file for 3 weeks afterward, delaying the closing. Finally that buyer got fed up, and decided to purchase the property with cash. We were able to close eventually. Finally BOA approved the buyer's loan a whole month later................which shows they do not care about closing on time or the inconvenience to the parties. The delays are not only on short sales & reo's but with regular sales too. I've had them all...................could it be they are understaffed, and undertrained in the processes? That's what I hear anyway.
Michael did have a good point -- it should all begin and end with the loan officer, but that is not always possible, unfortunately. Seriously, I would love it if it was, but let me show you two recent examples of why/or how it does not always work.
My first is with a popular Western Bank. Excellent bank, one of the more conservative lenders out there to be sure. They had a box where you would believe that if it fit (i.e. their guidelines) it would go. But this is not accurate. More than once conditions (as interpreted by the underwriter) came back either over-conditioned or completely different than what was listed in their guidelines.
The second was with our topic of discussion today (as they have been mentioned before). I spoke with their VP who wanted to hire me on. The man was a gem. Very honest, direct - he answered all my questions. The one that was the catch, however was that they would have trouble guaranteeing an approval within a month. That is not closing the deal - that is just getting to the approval. 45-60 days (as he put it) were the status quo. I will never forget the favor he did me by being honest. That institution is lucky to have him.
This is the very reason I left to join a correspondent lender as opposed to just being a broker or staying with a single bank. You don't have control once the loan is sent to any of those major lenders - regardless of what anyone says. The underwriting department is king and how they choose to tackle each broker loan is highly subjective. And once they have made a decision, it is fairly done at that point. They do not "hurry" a loan - because timelines are not a concern. They want to be sure that they have a saleable loan (I can't blame them there) so timelines are second to that in priority.
With a correspondent lender/broker we have the wonderful benefit of having underwriters in-house (big difference) that underwrite for BofA, Chase, Wells, GMAC and many others. The timing alone helps me represent my clients with the very best, but it doesn't hurt that I can shop and compare rates, either.
Beyond that, I can go directly to my underwriter, his/her Supervisor - I even went once to the CEO of the company (trying doing that with any major lender) to ask for help in closing a loan. There is flexibility in that and something that is absolutely critical to providing my clients with the utmost in professional service, speed and the one thing we all want for our clients - the transaction to close.
Michael sounds like a true professional and I respect that. We need more like him in this industry.
The truth though is that I have taken loans through Fannie/Freddie approval only to have an underwriter change/alter/intepret those guidelines in a different manner than might have been intended. Loans are rarely black and white. I would say that 75%-85% of loans are entirely gray -- there are just too many variables in terms of job times, employment income calculations, credit history, citizenship status, property condition, interpretation of both pest and property inspections, and much more that can and often are subjective from one underwriter to another Without a reliable chain of command - and access to the same, I would not have the success I am currently experiencing.
Again, referencing Michael's comments - a good loan officer is a must and should be foremost in a buyers mind before moving on any home purchase. A good loan officer can make a huge difference for any buyer.
But -- you can be the best, most informed, well educated loan officer and still face an uphill climb on any particular loan due to the underwriter and/or the lender. Control is everything.
You state: â€œthe reality is you (real estate agents and consumers) need to pick better loan officers.â€
Thatâ€™s nice â€“ in fact, itâ€™s why I wrote the following post:
I WISH You Would Use My Lender - 6 Critical Reasons Why You Should
However, at the end of the day, no matter how hard we as Realtors push to direct our clients towards a good loan officer, IT IS STILL THE BUYERâ€™S CHOICE. And choose they do. And the irony is this: many choose B of A because of pre-existing banking relationships. And they end up with VERY good loan officers â€“ who then put the loans into underwriting â€“ WHERE THERE IS ABSOLUTELY NO CONTROL. And then the stupidity begins.
Iâ€™ve encountered both good and bad loan officers â€“ and believe me, I know the difference. However, to state that we need to pick better loan officers is, quite frankly â€¦ a bit naÃ¯ve. As stated throughout this thread, it is UNDERWRITING that messes things up when we have solid gold client and a terrific loan officer. And mess them up they do. Iâ€™ve seen B of A underwriting ask for three separate lists of things that are required during one transaction â€“ some of which are totally ridiculous. Iâ€™ve also seen this from Wells Fargo.
I also understand the idea of â€œgarbage-in, garbage-out.â€ Itâ€™s why we work so hard with our clients to make sure all the bugs are worked out LONG before our offers go into escrow. We do a very high volume of transactions so we know how to prep and â€œclean upâ€ our buyers so we donâ€™t end up with problems in escrow.
However, the point of this thread is to explain that the underwriting process at B of A is horribly flawed â€¦ and I have many dear friends at B of A who will affirm this. And any number of great Realtors out there who will agree as well.
Itâ€™s why I ALWAYS recommend a loan officer who has direct access to underwriting all the way through the transaction. Reality is, if you do enough loans will B of A, you will eventually discover that what we are saying is very, very true. Iâ€™d say Michael Koenig has been very lucky. So far â€¦
Others have provided you excellent information that aligns with my experience.
The most chronic issues with BofA have stemmed from the buyer using BofA online loan services. Issues have dropped substancially when a buyer is encouraged to use a LOCAL lender or a LOCAL BofA broker. In essence, I want to be able to knock on their door when they drop the ball. The local folks have been excellant....even showing up for closing! Should the buyer choose to ingnore this recommendation of their agent, the purchase agreement will contain a $150 per day fee for each day beyond closing. This really opens the door for their agent to remind them of the conversation they had when getting pre-approved. That conversation should have included, "If we can not reach out and touch the broker, very little REAL accountability exists. Here are a few lendors who won't let you down, will deliver within the estimate, close on time and are very competitive."
Things are most certain to get better...right?
Wow you guys are so helpful and supporting. Can't tell you how much your comments helped to reassure me . I was feeling really bummed about this situation. It was as if you read my thoughts. Yes, I too have noticed so much 'tightening up' from banks, BOA in particular, and do many pages of conditions in the last two weeks of escrow, which put the client off and make them disinterested to pursue the property. That is what happened , and I'm still getting over the shock from it.
Michaels comment 'I personally think it comes down to the LO. Some just simply take the order and pass it along and are hands-off. You definitely need to find one that is HANDS-ON, pro-active and attempts to resolve issues early on'.................you hit the nail on the head!! Now I am very hesitant to use BOA again until they get their act together, or until more positive feedback of them turning things around. Thanks to all of you for your comments.
I feel the underwriter and underwriter manager working on my buyer's loan should be fired because they failed to do their job by not asking for a letter of explaination nor calling the employer for verification instead declining the loan shattering the dream of owning a home by an educated, young professional...
The underwriter and underwriter manager are supposed to make decision based on facts, instead they became robot like by depending on computer generated command! They forgot their business is to lending money and taking the lowest risk...instead they eliminate all the risks by declining loan. BoA deserves better employees than the ones that handled my buyer's loan.
I now will not recommend anybody using BoA because of incompetent underwriter and underwirting manager shattering the American Dream.
Some banks may be easy to deal with in getting a loan, and impossible when it comes to short sales.
Wells Fargo is getting to be as difficult as Bank of America when it comes to short sales. It boils down to luck of the draw -- one day you may be getting an outstanding set-up specialist and an outstanding negotiator. The next time, you get either simpletons or totally unsympathetic morons.
Thanks for all your professional opinions. Great people, great comments. You've been most helpful.
I can't imagine ever telling a real estate agent or client that my Underwriting Dept. screwed something up. And I think most good loan originators would respond the same.
The originator should know long before the file gets to Underwriting whether there is going to be a problem or not and I can't believe you are accepting that scenario.
Any other agents care to respond? Do you have "great" loan originators that can't get loans approved because of their Underwriting Dept?
The context of my comment about agents and consumers picking better loan officers was that I suggest you put the focus on the individual originator not the company they work for. I'll bet there are some loan originators at BofA who rarely, if ever, have a problem with Underwriting - because they know their company's guidelines.
I'll bet were not as far apart on the issue as these posts may indicate but I'm having a real hard time accepting that you think a "terrific loan officer" has their hands tied by Underwriting. A particular bank's underwriting may be flawed but the "terrific loan officer" should be able to tell the agent and client the loan is dead on arrival long before it gets to Underwriting.
I read your "6 Critical Reasons Why...." post supporting your loan originator and it brought me back to my original question about why am I being naive? Your post supports my contention, not refutes it. You are emphatic people should use your recommended originator and that if he says the deal can be done it will - just like I'm suggesting. Your guy gets the job done. Period. I don't see anywhere in that post where you've qualified all your recommendations with "...unless his Underwriter screws it up."
Good luck and let me know if I can help.