Why Every Mortgage Lender Will Disappoint You

April 16, 2013 3 Comments »
Why Every Mortgage Lender Will Disappoint You

People constantly ask me if a particular lender is good, bad, or should be avoided at all costs.

They also ask who the best mortgage lender is, often citing some customer satisfaction survey or what not. Or whether they should use a mortgage broker or a bank.

And my answer is pretty much always the same – it depends on how your loan goes. You might end up hating the company or loving it, all based on how things go when it’s your turn.

So yes, two individuals can wind up with completely different opinions, even when working with the same company, and perhaps the same exact employees.

The problem with the mortgage industry is that it’s very dynamic and complex, and as such, it’s very difficult to please everyone all of the time, even with the best of intentions.

In other industries, such as the credit card industry for example, customer service reps can “make things right” if something goes wrong, usually just by pushing a button.

The same goes for your cable company, who you have to call each month to ask for a billing adjustment after they attempt to gouge you.

Aligning Expectations with Reality

Unfortunately, it is these very companies that create lofty expectations for all other businesses, whether they can live up to them or not.

So when a consumer applies for a mortgage, they often go into it thinking they can complain if anything goes wrong and automatically get it fixed. Or simply argue until fees are lowered or waived, and the interest rate reduced.

Sadly, it’s not so simple when it comes to mortgage lending. There are so many hands involved in a single loan, and so many guidelines that must be met. Many are black and white, and not up to your lender.

There are also many technical aspects, and mortgage pricing is very involved. Sure, some junk fees might be waived without too much of a fight, but adjusting your mortgage rate lower will be a lot trickier.

If you’re not a great borrower, even the best lender won’t be able to get you the low advertised rate you see on TV.

You know the old adage, “the customer is always right.” In mortgage, this doesn’t necessarily hold true, as you and your lender will be at the mercy of external forces.

Enter frustration here.

Complications Come Off as Lies

Let’s take a common scenario, where you are quoted a certain mortgage rate at the beginning of the loan process.

It is at this very moment the lender gets you in the door. After all, without the promise of a low mortgage rate, why would you choose them? They must be somewhat competitive to move forward.

You have a great conversation with the loan officer and feel really good about everything.

The fees are explained in detail, and the rate you’re set to receive is going to shave hundreds off your monthly mortgage payment!

Then, out of nowhere, you’re told your mortgage rate will be .50% higher than originally quoted.

Turns out something came up on your credit report that wasn’t originally disclosed, pushing your credit score into a lower tier, and thus raising your rate.

This is but one example of how rates can change in a flash, and it has nothing to do with the lender originating your loan. It’s not a bait and switch.

Another common scenario is an appraised value coming in low. It pushes your loan-to-value ratio higher, and your low mortgage rate isn’t so low anymore.

Once again, this has nothing to do with the lender.

Or let’s just assume you decide to float your rate, only to see rates rise. You may blame the lender for not locking your rate early on. But the exact opposite could also happen, making you a very happy borrower.

Again, your lender is not the culprit here, but rather timing. So luck is involved as well, which as we all know, can go both ways.

You may also find out that your loan is declined after weeks of back and forth with your lender. Again, things come up, and the more documentation you provide to your lender, the more things can change.

Your mortgage doesn’t operate in a vacuum. If you send in a document that happens to raise a red flag with the underwriter, everything may change in a heartbeat.

Again, it’s not your lender in many cases, it’s just reality in the mortgage world.

Lenders are accountable for mistakes made during the loan process, and so yes, they may ask for a document more than once. Or a blank page that seems entirely insignificant.

And they may ask for an explanation. And they might ask for an explanation to your previous explanation.

But it’s all done for a reason. Lenders aren’t in business to play games with you. They want to fund loans just as much as you want yours funded.

There Are Exceptions

While I just did my best to defend mortgage lenders, there are shady and unscrupulous banks, lenders, mortgage brokers, and loan officers out there.

Just like any industry, there are bad apples among the good, and you do need to navigate extremely carefully to avoid such individuals.

This is especially important when obtaining a mortgage, as a bad deal can cost you a lot more than a bad deal elsewhere. Would you rather overpay for a car or your mortgage?

You certainly don’t want to be stuck with an inflated mortgage rate for years, or a loan type that doesn’t make sense for you (hello option arm).

So ask a lot of questions, and make sure your loan rep takes the time to explain anything that might be causing confusion or concern. It is their job, and they should be more than willing to help you out.

Just remember that it is indeed a job, and they need to make money. How much money they make will depend on how well you shop and negotiate.

In other words, YOU affect the outcome of your mortgage as well. Prepare, do your homework, and put in the time to ensure you don’t walk away disappointed.

(photo: attercop311)

3 Comments

  1. Paul T. April 22, 2013 at 8:23 am -

    Hi! What have you heard about Advance Mortgage Corporation? Are they a legit company? Do they have any bad reviews?

    Please let me know as I”m shopping around to do a mortgage refinance.

    Thank you.

  2. Colin Robertson April 25, 2013 at 8:27 pm -

    Paul,

    Can’t say I’ve ever heard anything about the company, but as I noted in this post, every lender will disappoint you. And every single one will have both good and bad reviews. Do your research and prepare yourself to avoid bad lenders and bad situations YOU may put yourself in, regardless of the lender you ultimately choice.

  3. Matt A. May 2, 2013 at 6:20 am -

    Colin,

    Very good, fair and balanced article. I have been a mortgage loan officer for over a decade. A responsible loan officer tries his best to be proactive to spot any potential situations which will affect a loan. You only know as much as the applicant discloses. The main point is communication is key with any refinance. Applicants need to realize we are not “the loan police.” It is better to over disclose than to withhold info. Most loan officers are here to help you. The more information we know upfront, the better we can help. Unfortunatly, we are not mind readers and we can not forsee the future.

    Also, take online mortgage reviews with a grain of salt. As their are shady mortgage companies out there, their are shady consumers as well. Consumers are much quicker to post negatives than positives. If the loan is not approved, it is very easy to point the finger and demonize the mortgage company. However it is very important for the loan officer to clearly communicate the reasoning behind any decline and educate the consumer on what they can do to overcome any objectives.

    As you said, mortgage companies want to close and fund loans more than consumers! We take no joy in streaching out any process nor declining any loan. Sometimes I wish all consumers can be mortgage loan officers for a day and see what really goes on behind the scenes.

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