“There is a real reason why I never recommend internet and out of area lenders… This is specifically the reason why. There is no one who can be held responsible for their actions.”
The above is from an email from a friend and fellow Realtor, and he says it as well as I ever could. With all respect and friendship to the lenders I know personally around the country ….
If I could force my clients to use only local lenders, I would. In 2011, I will do whatever it takes to make this a reality.
Why? We are accountable to each other. They know our market, our people, our idiosyncrasies.
The local lenders I recommend sometimes make mistakes; we all do. The difference is that I know and trust them to acknowledge and fix said mistakes. I recommend people I trust.
The “out of area/internet lender” battle is one I have fought my entire career.
As I wrote in 2006:
“Picture this – client comes in pre-approved by an out-of-the area lender. Great, right? Not necessarily. I express my concerns to my client but the client has already started the process and does not want to start over. Lender asks for my recommendations for attorney/title company, appraiser, etc. (local lenders tend to have pre-existing relationships to take advantage of) I consult with my client to ensure that he approves, and proceed. Time comes for closing – and no closing happens. The lender answers questions with “maybe, “probably,” and “hopefully,” regarding a closing timeline. Both sides – Buyer and Seller- are thrown into turmoil. The house is vacant. The buyers are living in temporary housing, desperate to purchase the house they want. Hopes and dreams have been smashed because an incompetent, unknown lender does not have any reason to work harder, does not have any relationships to maintain, has no concerns regarding accountability. There will always be another internet lead.”
If it’s too good to be true, it probably is.
I work from horror stories and extremes. Here’s another potential “horror story” :
Great buyer clients are working with a local lender. All is going well. Until. 13 days before closing, the lender says that he can’t do the loan. Game over, right? Nope.
He calls another local lender with whom he and I both have excellent working relationships and passes the package over to the other local lender. Lender #2 pulled a big one out of the fire and we closed on time. And the buyers were thrilled. They went through stress they didn’t need, but in the end, all was good. Would this have happened with a Lending Tree lender? I’m hopeful that I will never find out.
Reputation matters. I’m inclined to do whatever it takes (so long as it’s moral, ethical, legal) to ensure that my clients are taken care of. I’m not inclined to work with anyone who doesn’t take care of my clients.
Jim, how many of the people who call themselves “local lenders” are actually lenders and how many are brokers with the actual lenders sitting elsewhere? How does one go about finding out whether a person claiming to be a local lender is a lender or a broker? Or, is this is a naive question.
It’s not a naive question at all. I think the definition may differ based on whom you ask, but my answer is this:
– I don’t care where the money is coming from (so long as it’s not illegal); most money being used now is backed by the government, which itself is using money borrowed from other countries.
– A local lender (to me) is:
– one whom I can have coffee with
– one who is going to attend my buyer clients’ closings.
– one whom I can call on Sunday afternoon. On his or her cell phone.
– one who I know will acknowledge a screw-up – to me and to my client – and then do whatever it takes to fix it.
– one whom I know. Have met, who is involved in the community.
– One who will explain what is going on, in a non-condescending way, to my clients.
– Bottom line, one who I know will do what is necessary to assist my clients as professionally, as ethically as compassionately and as educationally (I made that up) as possible.
That is a very good question. What qualifies someone as a “local lender”? I don’t know if it makes any real difference, but I’ve found using a local closing attorney seems to make the process smoother.
Local closing attorneys are a much better choice than out of area attorneys. For many of the same reasons above, including a few more. (more coming in a future post)
It’s not a naive question at all. I think the definition may differ based on whom you ask, but my answer is this:
– I don’t care where the money is coming from (so long as it’s not illegal); most money being used now is backed by the government, which itself is using money borrowed from other countries.
– A local lender (to me) is:
– one whom I can have coffee with
– one who is going to attend my buyer clients’ closings.
– one whom I can call on Sunday afternoon. On his or her cell phone.
– one who I know will acknowledge a screw-up – to me and to my client – and then do whatever it takes to fix it.
– one whom I know. Have met, who is involved in the community.
– One who will explain what is going on, in a non-condescending way, to my clients.
– Bottom line, one who I know will do what is necessary to assist my clients as professionally, as ethically as compassionately and as educationally (I made that up) as possible.
Excellent post Jim, I’m embarrassed that I didn’t write this sooner myself. I always cringe when the lender isn’t local, simply because because I’m painfully aware of the lack of accountability that exists. The lender isn’t looking for my repeat business, and they don’t have enough skin in the game to be worried about doing a great job with the client or transaction partners.
Ha. There are so many of those posts out there that I wished I’d written, it’s not even funny. If I can walk into a lender’s office, look him or her in the eye, and ensure that the problem will be fixed, I’m much more apt to recommend that lender.
Hey there – Shannon Harrington here.
Just came back to Charlottesville, where I am from, after some years of successfully helping buyers and sellers in the Richmond area. I am now very active in both markets, and seeking to grow a network of reliable, local pros who appreciate referrals and love what they do.
Would you be willing to list a few mortgage folks and attorneys that you have had positive experiences with here? If that is something that you would feel comfortable with, I’d sure appreciate it, and I bet others would too!
Thanks, Jim. I enjoy reading your stuff!
Shannon
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Great point! I completely agree on the importance of using a local lender, which is best for everyone, including the client.
I happen to be one of those local lenders, and I will gladly work with your clients with full accountability and responsibility. And I’ll offer them a $250 credit toward their closing costs. Please give me a call (975-LOAN x 152) and we can make it happen. KT
And my cell phone number is 434-906-2206. This past Sunday afternoon, I was attending open houses to chat with potential buyers. Give me an opportunity to show you what I can do, and I’m confident you will be very happy with the service I provide. Thanks for all your great commentary on the local real estate scene, Jim!
From an offline commenter:
Please work with legit lenders & good real estate associates that care about you and one that is not afraid to tell you that you are not financially ready to purchase a home. The legit lender is not afraid to tell you to wait and to seek financial housing counseling until the time is right. The good real estate agent is one that is proud to have helped someone into their first home and glad to see that they can afford it. The buying and selling of real estate is really a team effort-housing counselor, lender and real estate associate. We have learned over the last 3 yrs that this is not about just making the loan or getting the sale, it is about sustainable homeownership. Thanks, I support local legit lenders and good real estate associates.
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