Lori Nodine,  in 06010

How do you feel about the growing trend of listings saying the buyer must be prequalified with Countrywide/?

Asked by Lori Nodine, 06010 Tue Jun 3, 2008

Wells Fargo? Also, is anyone seeing that loan officers names and phone numbers are appearing in the MLS remarks section?

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Robin Landis, , Langley Air Force Base, VA
Tue Jun 3, 2008
Lori, I have been seeing that more here in my area too and it surprises me that agents really think that they can steer a buyer to a specific lender! Even as a buyers agent we need to make sure to leave the final decision to the buyer, though we may suggest or recommend one or two that we have had good experiences with in the past. Sometimes I have noticed that they just want to qualify the buyer through a specific company or so they say-is that the agents way of getting business for their mortgage partner who will then try to meet or beat the original lender??

So what happens when the buyer comes with a pre-approval letter and that lender the listing agent is insisting must qualify this buyer doesn't agree??? The seller rejects the offer and then who is likely to be sued? The listing agent? The buyers agent for allowing it? This could be a big can o'worms!!!

I'll be interested to see others opinions on this one!

Robin Landis, Realtor
ERA Dennis Realty

NAR is going to have to make a rule about this before it gets out of control. I know we have all been burned on deals in the past that fell through with bad financing but it is the sellers place to reject the offer, not micromanage the entire process. As a competent buyers agent, we should be looking for financing red flag clues long before an offer is ever written by reviewing the good faith estimate from the lender. I don't want to pretend to be a mortgage expert, but I am knowledgable enough to read a good faith estimate and protect my clients!
1 vote
Lori Nodine, , 06010
Thu Jun 5, 2008
I appreciate all your comments. I too think it's red-lining and want no part of it. I feel that the Lender/Seller(s) of these REO properties have no business mandating that a buyer cannot even put in an offer without their pre-qualifying through them. Where would the advantage for our buyer clients be if all the Sellers could see their crredit score, how much money they have in the bank and that they could afford to pay more for the property than their offering. It's a total win/win for the mortgage company that has managed its affairs miserably - they get the whole picture of our clients which puts them at a great negotiating dis-advantage here.

Any good REALTOR will not waste time showing homes to buyers who do not qualify to close on the property they choose. Especially with today's gas prices and the state of the lending situation I will not bring a buyer out until I know they can close - I strongly urge buyers to go through the pre-approval process first - if I think they have a lender that cannot do the job I will tell them and offer them several names of lenders that I know have done the job well and can still do the job well despite all the changes in the market. I can't with good conscience encourage my clients to be scrutinized by a lender that has had to be bailed out for it's unscrupulous practices any more than I could try to sell them a ticket for the Titanic after it hit the iceberg...

The thing is - who is guarding the public from this? It's blatantly appearing in our MLS here in CT and I'm not aware at this point if a lot of my colleagues in this state are as outraged as I am. I've talked to a few that just shrug it off and say they just won't show those houses or they'll just try to press forward with their clients' own lender and see where it gets them. I'd like to see this settled within our industry before it becomes another black eye on our professions.
1 vote
Katina Wright, Other Pro, Atlanta, GA
Thu Jun 5, 2008
I'm in Georgia and I know that GA is a "Right to Choose" State regarding Title Company, but your comment regarding the Fees is the deterrant that keeps the buyers from using another source. I should actually clarify...I'm selling REO and generally although a buyer may choose another attorney, the seller's attorney is still involved in the closing.

In 8 years I've only had 1 buyer refuse to use the seller's attorney and I almost lost my REO client because I had to go against the grain with my asset manager because this is a right to choose State and they just wanted things handled the way that everything is handled.

IT IS RED LINING, but no one wants to talk about it. So what do you do? I'm in city where gentrification is ALIVE and ACTIVE. The County is tax assessing people out of their homes, so between the banks and the government these are tough times.

Eileen wrote: Beyond that, when the sale is a foreclosure what do you see as the advantages vs. disadvantages of using the company that currently holds interest in the property?

In the scenario I presented the only advantage was that Countrywide was showing a significant savings to the buyer over Bank of America. The buyer wanted to save money, I had no opinion about that, I thought it was a Slam Dunk. Shame on me.

It was not a matter of the buyer's credentials (720 Beacon Score) but the lender's guidelines. A Conventional Loan should be a conventional loan, it's not like the buyer was trying to go VA/FHA so the fact that the AC unit was gone and there where 2 holes in the sheetrock should have been of no consequence.

I've got properties where the wiring and copper plumbing has been stripped and the kitchen cabinets taken off the walls. So now I know to ask the lender...do you FUND in whatever zip code and are there property condition requirements?

The advantage should have been the lender's respect for market conditions and a quick closing.
1 vote
Sandra Ankney, Agent, Clarkston, WA
Wed Jun 4, 2008
Unless it's new construction and the buyer becomes part of the loan for the construction a seller may not legally require the buyer use only one lender. We have recently seen lenders, builders, and agents going to prison in Idaho - once case in particular in Boise, Id. I must take a moment tomorrow and look up the actual law and get it to you, as you shouldn't be seeing this. Nor should you be required to go to a particular title company either. Although, not using a title company that the seller has already began to use may cost the buyer a few extra dollars, it's unethical and a law is in the works to stop that and eliminates any loop holes that lenders and title companies are using as well. What state are you in? I'm in Washington and Idaho and it's definitely a red flag alert and a ticket for free room and board here.
1 vote
Katina Wright, Other Pro, Atlanta, GA
Wed Jun 4, 2008
I became LIVID representing a buyer client and the Listing Broker "Required" a pre-approval from a specific lender. They never tell you that you have to use the lender to close the transaction, just to make sure that the buyer is truly qualified to buy.

I called the Department of Banking and Finance....no help.
I called my Broker....no help.

The seller has every right to require that a pre-qualification is obtained from thier source of choice. NOW, on a ridiculous note I had a buyer purchasing a Countrywide Foreclosure, using the required Countrywide approval the buyer decided to let Countrywide close the loan. The two properties that Countrywide owned, did not qualify for Countrywide lending guidelines due to being in "a declining market" as noted on the appraisal.

I became ill.

The person who's name and telephone number is in MLS is supposedly expecting calls and able to crank out approval letters....NOT Always the case.

Lenders want to put the rest of the world through paces now that deviant practises have revealed themselves as less than good ideas.

Choose your battles, it's not worth any energy...have the buyer go through the paces and close with thier pre-ferred lender. No more aggrevating than "Seller to choose Closing Attorney".
1 vote
Eileen Musser…, Home Owner, York, PA
Tue Jun 3, 2008
One builder that I work with has decided to have all buyers qualify with a certain loan company. They state clearly that the buyer may coose to work with any lender they want as long as they have this "back-up lender" in place if the first cannot provide the money at the last minute..
The reason for this is that we sell many homes to people who are moving in from another state. Many of those buyers come to us with a letter from a lender who does not know the specifics of the taxes here in our state. As a result they often OK a purchase price that is not realistic when the real tax burden is taken into account.
I just had an out of state lender letter for the nicest lady, saying that she could qualify to purchase a home in the $185,000 range. That would have qualified her for a small new home in this builder's community.
Unfortunately when I checked the real numbers against her income levels I felt that she needed to stay under $160,000. That meant that she needed to be looking at an older home, or a townhome, not new construction, detached.
She was skeptical, and then very disappointed when she found that my numbers were more realistic. We had a good ending though because she found a teriffic property that somebody has remodeled so that it looks and feels brand new. Yeah!!
If I had not known from long hard experience that lenders from her area often over qualified buyers for my area, we could have found ourselves under contract for a home that she could never have got through closing.
Even worse is the case where a buyer does not find out that their loan will not clear until they are sitting at the settlement table. (Yes, that has happened all too often.) We can argue until the cows come home as to who is at fault in that sad case, but that is why the seller wants to stipulate that a lender he knows and trusts has to confirm the ability of the buyer to purchase his homes.
I can't answer the question as to the legality, or if the practice would hold up in court, but I certainly understand the reasoning. As long as the actual lender is not mandated, I don't mind having my clients comply as long as there is no charge to the buyer.
It sure beats having the moving truck sitting in the driveway, but no money at the table.
1 vote
Lori Nodine, , 06010
Tue Sep 15, 2009
Robin, I know it's been some time since I posted this question. I was reviewing the comments and want to thank you for your input. Here's is how I see this problem ....

My buyer client has hired me to represent his/her best interest, including fiduciary responsibility and privacy. So when I see a property that may be appropriate for my buyer how can I with good conscience open my client up to the srutinizing eyes of the seller who happens to be the banker? This is not protecting my client. If "Mr & Mrs Smith" say ... I won't accept your offer until I see your credit score, bank account info and entire life we would all have a fit and say it is wrong, very unethical. How is it different when Countrywide, Wells Fargo or Bank of America want this same information?

This whole mortgage mess does not mean that we should abandon our responsibility to our clients who need our protection.

I will show such properties to my client but warn them that I do not want them to subject themselves to this scrutiny and that if they want me too I will fight to get an offer placed without giving up their very private info. Certainly, if any seller does not like the lender that a buyer is using they can reject the offer based upon that alone but to insist on seeing the whole identity of my client is just not going to happen at my recommendation.
0 votes
Derick Willi…, , Lithonia, GA
Thu Jun 5, 2008
When I wear my buyer agent cap, I tend to agree with most of the comments from other REALTORS posted so far that it is redlining and I am not in support of that. As we all know, the law allows us as agents to give our clients options to choose from. On the other hand as a listing agent for VA owned properties, when you get offers on your properties and it is then taken out of the market and come a day or two before closing and you are told that buyer was denied, it is had to believe that a loan officer or mortgage company would pre-qualify a buyer and then get denied only a day or two before closing. I am speaking from personal experience(s) in the last couple of months. Therefore it is beginning to become part of my company's policy to request that buyer(s) be pre-qualified first by one of our own company lenders which gives us some kind of confidence that buyer can close. please note that I did not say that buyer(s) have to use our own lender, only to get pre-qualified. It is a catch twenty two situation.
0 votes
Eileen Musser…, Home Owner, York, PA
Thu Jun 5, 2008
Lori, when you wrote your question were you thinking about any loan, or were you seeing the lender approval requirement on foreclosures.

Katina reported: "The two properties that Countrywide owned, did not qualify for Countrywide lending guidelines due to being in "a declining market" as noted on the appraisal."

Doesn't that sound like the old "red lining" that we all know is illegal?

Beyond that, when the sale is a foreclosure what do you see as the advantages vs. disadvantages of using the company that currently holds interest in the property?

My personal preference for a buying client is to let as many eyes as possible look over the documents and the property so that flaws are more likely to come to light. So.......I would probably encourage using a different lender. What input do any of you have that would convince me otherwise?

Eileen's Green Team at Gateway
0 votes
Myke, Home Buyer, 89449
Tue Jun 3, 2008
As a buyer - I would be a little peeved if someone told me I *HAD* to use a perticular lender for the home.
Really kinda raises some questions - is that even a proper/ethical thing to do?
As long as I can close, and the seller gets a check at closing - do they legally have any right to say "we don't do business with X lender"?
I think if I saw that on a listing, it would be a bit of a red flag, and make me very disinterested in the home.
0 votes
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