Blacklisting lenders?

My office keeps a list of lenders that are tried and true. We add lenders once we see that they have done a good job for one of our clients. When one of our clients comes in with their own lender -- recommended by a friend, coworker or family member -- we do not interfere (unless the lender is on our blacklist.) Lenders join our blacklist for repeated minor offenses or any major offense.

What do we expect from lenders?

1.      Lenders need to have an organized process for applying for a loan. Most of the good ones have a finite list of paperwork that the buyer needs to provide. The lender does not ask for more, in drips and drabs. (Sometimes one more pile is necessary, based on underwriter’s questions.)

2.      Communication is important. The loan originator or the processor should be telling the borrower when important steps in the process are achieved.

3.      Attention to the borrower’s file. The loan originator or the processor must have his or her eye on the ball and be aware of upcoming deadlines and whether the file is on track to meet the requirements on time. Last-minute requests for additional paperwork or deadline extensions are a sign of poor attention. 

Minor offenses:

1.      Changing requirements. If a lender adds requirements to the approval after the application, it is a sign of poor organization. It may also mean that the lender did not do a responsible job of pre-approving the buyer.

2.      Missing deadlines with notice. This is a sign of overpromising and under-delivering. There are plenty of lenders who give honest deadline estimates. We prefer that I clients choose them.

3.      Creating drama. Last-minute reaching of deadlines, late arrivals of HUD-1 settlement statements and other signs of poor organization make for unnecessary stress. We prefer our clients work with professionals who will get the mortgage completed without the 11^th-hour bravado.

What are some blacklistable offenses?

1.      We had a lender once (and only once) who issued a loan commitment for one of our clients, then withdrew the commitment several days later, after reviewing the file. Nothing had changed; it was just that someone else read the file and took exception a condition of the property. At that point, the loan commitment contingency had passed and the buyer stood to lose her five percent down payment if the sale did not occur on time. We were able to satisfy the lender with additional paperwork and the buyer did not suffer. This lender made a commitment, in writing, then rescinded it; we do not ever want to work with them again.

2.      Poor communication with underwriters. The underwriter is the person who recommends or rejects the completed loan package. If the originator and the underwriter cannot communicate directly or do not communicate well, mortgage applications get more complicated and stressful then they need to be. When the underwriter is not accessible to the originators, this is a chronic problem throughout the office.

3.      Missing deadlines without even noticing. Pretty much two strikes, you are out.

4.      Losing paperwork. Multiple offenses indicate a poorly run office. Three strikes, you are out.

Do you have questions about what lenders do or about our expectations?