can a home buyer be required to use a specific mortgage lender (list lender on contract?)?

Asked by Jt, Tracy, CA Tue Jun 12, 2012

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Ruben Orozco’s answer
Ruben Orozco, Agent, Chicago, IL
Tue Feb 26, 2013
This is clearly steering, they say that they want to make sure the buyer "really qualifies", but if the buyer already has a lender's pre approval letter, who is the seller to doubt it? I have gone thru this headache with Wells Fargo too many times, they WONT consider your buyer's offer unless they get pre qualled, but when we call the loan officers, they say they don't do pre quals, only pre approvals and thus have to re run the credit report, they won't accept the buyer's existing credit report - .
The reality is, they want to forcefully get the opportunity to get the loan business, cause your buyer's credit score to drop, add an inquiry to the report (which can cause problems if the buyer is being approved by automated underwriting), but of course they use the excuse of saying that they just want to make sure the buyer really qualifies...
This is unethical, and should be a subject on the IDFPR's table soon.
0 votes
Taj Weldon, Agent, Tracy, CA
Mon Jul 16, 2012
All of the answeres here are correct.

Bank owned properties frequently require the buyer to have a pre-approval from their bank and sometimes a specific person at the bank or lending institution.

Alot of times your current loan officer can just forward over your 1003 application and copy of credit report to their specified lender.that way your credit will not have to be pulled twice.

I hope that helps.

Taj Weldon
REALTOR (R)
209-740-4176
Tajweldon@connectrealty.com
DRE 01816152
0 votes
D'Adrea Davie, Agent, Stockton, CA
Fri Jul 6, 2012
It is not uncommon for sellers of banked owned properties and some investment properties to request the potential homebuyer to acquire a pre-approval through their trusted lender. The purpose is to assure that the potential homebuyer is truly qualified to purchase the home at the offered price. Now, the qualified homebuyer is not required to use that lender, they can still utilize the lender they initially were pre-approved through.

So, to answer your question, there are no requirements for you to use a specific mortgage lender or agent for that manner. That is against the law...you do have choices. However, depending on the seller, you may be required to get pre-approved through the lender of the seller's choice. A tedious process, but is used to weed out those homebuyers that are not qualified.

If this is an issue for you, I would suggest being more flexible to the different type of homes on the market. Sellers of short sales or HUD Homes, typically do not make this a requirement.

If you are interested in purchasing...I work with my mother, Rosemary Brooks as the Mother & Daughter Realty Team. We offer a weekly FREE List of active HUD Homes on the market. We also specialize in listing and purchasing short sale properties. Like us at http://www.facebook.com/motheranddaughterrealtyteam for updated market and purchasing information. Feel free to contact us with any further questions at 866-543-0462.
0 votes
Rocky G.H. H…, Agent, Ripon, CA
Tue Jun 12, 2012
On some bank owned or investor owned homes it's more common, particularly because there happens to be good and bad lenders. Lenders that provide a quick pre-qualification have caused trust problems in the home purchasing process. In some cases the buyers actually do not qualify. As a result, going through a Pre-Qualification with a seller designated lender has become more common. Not to worry. You can stick with your existing lender. If the pre-qualification with the seller specified lender is declined, you should discuss this with your existing lender right a way.

Ultimately, it’s best to take time in carefully selecting your lenders and for that matter your Real Estate Agent. A solid agent will have experience, credentials and designations and can guide you to a terrific lender. If you’re in the business you know how to get the job done for our clients.

I hope this helps!

Rocky

Rocky G.H. Hawrysz | Prudential California Realty
(209) 444-6610 – Direct | Rocky@PruCalifornia.com | http://www.TeamHawrysz.com | License No. 01468373
“Without Question, Committed to Your Success!"
0 votes
I undersand that this is common, but is it legal if any shape or form? Just because something takes on the form of "normal" doesn't make it legal. Just ask BoA and some of the other banks that started to do "common" practices and were fined "uncommon" fines. This is steering, what agent is driving around a buyer who isn't pre-qualified/approved already? Who wants to go through the process twice. It should be the responsibility of the listing agent to bring buyer and seller together. If additional validation is needed, then request it from the buyer's lender in order to consummate the deal. There was a request made to have a pre-approval from the "sellers" preferred lender, but we found out that the Listing Agent's face was plastered on the Lender's website, Can we say conflict of interest? All this will hit the Attorney General's office real soon and hopefully the Division of Professional Regulation as well. This has got to stop.
Flag Wed Jun 5, 2013
Cindy Davis, Agent, San Diego, CA
Tue Jun 12, 2012
You shouldn't be required to use any lender. What is common through is for sellers to require a pre-approval from their preferred lender. These are two separate things...

Listing agents usually have lenders they trust so they want someone they know and trust to review the buyer's qualifications - that doesn't mean you are REQUIRED to use them...you just have to submit your paperwork to them for a review.
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Tue Jun 12, 2012
If they actually wrote you must use their lender they can be in a lot of trouble. Seller's can have you double app or prequaled as a requirement but they are not allowed to enforce you to use any specific lender. That's against the law and you should seek legal council as I am not an attorney.
0 votes
, ,
Tue Jun 12, 2012
Hi JT...

I have seen where a Seller will require you to get pre screened through a preferred lender to ensure qualification but never a requirement. You are allowed as a buyer to shop for service providers that meet your needs.

Call me anytime with questions!

Brian
Web Reference:  http://www.loansquawk.com
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