Over the last few months, I’ve had two real estate transactions almost ruined by inept, unresponsive and/or incompetent lenders. When representing a buyer, I always stress that they will need more than just an excellent Realtor (that’s me!). They will need a “team” and one of the most important members of that team will be the lender, so a recent article in the L.A, Times by Lew Sichelman about the importance of choosing the right lender really hit home with me.

• Mr. Sichelman’s article made a lot of excellent points regarding choosing an excellent lender, including:
  • 34% of respondents to a new national poll were willing to pay more for excellent service.
  • More than half think the process is too slow.
  • A third find it impossible to track the status of their
    loan application
  • An equal percentage say it is too difficult to talk with their lender, and
  • A quarter don’t believe the advice they receive.
• The article also gives some advice on how to choose an excellent lender:
  • A starting point is to ask your real estate agent. Agents know which lenders keep their promises and close quickly without incident. After all, their livelihoods depend on it.
  • Quiz friends, co-workers and relatives about their experiences.
  • Look for a consistent point of contact. Federal regulators have already settled on this as a requirement for loan servicers — the companies that collect payments, disburse funds to cover property taxes and homeowners insurance and otherwise administer loans — so why not one for borrowers?
  • You’ll have a better experience if the lender has a way to
    get the necessary loan papers to you as quickly as possible.

• “One complaint borrowers have with the industry relates to the
  lack of timely status updates,”
  • Picking a lender that promises to provide the closing documents before closing. That way, you’ll have plenty of time to find any discrepancies between the initial quote and what’s now on the closing sheet, and to have the loan officer explain the differences to your satisfaction.
  • Asking what are the total costs involved in the loan early in the loan process? (and choosing a lender that is willing to stand behind them – some will even pay borrowers if the costs are not within a reasonable range of their estimates).

• Let me add my own thoughts to this not covered in the article –
  • Make sure your lender can provide you with a “conditional loan approval”: ON TIME! Every residential purchase agreement has specific timelines to get things done. One of the most important timelines is getting a conditional loan approval back from your lender in time for you to make an informed decision whether you can get the loan and under what conditions.
  • Make sure your lender can CLOSE: ON TIME! If the loan doesn’t close on time you could lose the chance to get the house and any costs or deposits you have put into the deal up  to that point! It’s your lender’s job to ensure this, and every lender will say they can close on time , but what is
    their track record of doing this? Your realtor (that’s me!) is a great source for this information – they know what lenders say what they mean, and mean what they say.
  • Don’t assume that the lender you had do your home equity loan is capable of doing your purchase loan. Purchase loans are a whole horse of a different color. Your lender’s understanding of the real estate purchase contract timelines and details is a key.

I can’t stress enough to anyone wanting to buy or refinance a house what an important decision it is to choose the right lender. If you don’t know who to use, ask your agent for a list of 2-3 lenders as agents know lenders who can competently and efficiently close purchases, something not all lenders, banks and credit unions can.

Realtors and lenders are precluded by law and the their own Code of Ethics to receive any gain from their relationship without their client’s (and all other parties to the transactions) knowledge and consent. The value a good lender brings to the Realtor is the ability to efficiently and effectively get the  loan done, and that means you’ll get have the best chance of getting that home that you want!

*via Potential borrowers eager to find lenders with superior service – latimes.com.
By Lew Sichelman, L.A Times, November 4, 2012