mortgage lenders

The Fate of an Appraiser is Worse Than an Internet Mortgage Lender

sacramento agents talk to appraisersA friend promised yesterday: tomorrow will be better. Well, honestly, tomorrow will be different but it won’t necessarily be better because there is always room for stuff to get much worse. And tomorrow is already here. The important thing is to keep a sense of humor about the roller-coaster ride called Sacramento real estate. Because managing real estate transactions as a listing agent involves sometimes jumping into the middle of a tornado, even if it’s not necessarily your job to fix the situation.

One of the biggest problems we’re facing right now is a shortage of appraisers. We are selling about 80% fewer homes than we were 10 years ago but our pool of appraisers has shrunk. A bunch already dropped out. Plus, many appraisers are aging, getting older, near retirement, and I think they’re leaving the appraisal business because of the way the business is moving:

  • Being plucked out of an appraisal pool as nothing more than a number and not based on value or experience, and
  • Getting their paychecks sliced by at least a third because the appraisal management company needs to get its cut, and
  • Now, with all the new regulations, especially collateral underwriting, the same job takes 3 times longer.

Who wants to be an appraiser anymore? Being an appraiser is a sucky job and it’s getting much suckier.

There’s like one appraiser left standing on the face of the earth in all of Sacramento, and nobody can find that guy to do an appraisal for several of my listings which are so far past due for a contingency release it’s insane. Throw into that mix an East Coast internet lender, and I don’t think I have to tell you which company, and we’re lucky if the loan ever closes. There is something to be said for dealing locally and not using an appraisal management company out of Ohio or Pocatello, Idaho, or American Samoa.

When will buyers wake up and realize that no internet lender is going to give them a break or some special deal that a local lender cannot provide? There is nothing magical about getting a mortgage loan unless you end up with a person managing the file who doesn’t pay attention to detail. Doesn’t hit all the marks when the marks should be cleared. Lets things slip through without noticing. It’s all the same bag o’ money and rates can change hourly. Don’t get suckered by slick websites and false promises.

Pick a local mortgage guy you like and trust and stick with that person. You very well might find that your Realtor is recommending a mortgage lender for a reason. That mortgage lender can find you an acceptable rate. You don’t have to hop online to find some stranger who can mess up your transaction ten ways from Sunday in exchange for waving a low interest rate in your face. You can get the best rate available and competent service if you choose a local lender with a strong track record.

But no, buyers go with the fast talker they found online who works several time zones away and is accountable to no one. By the time they figure out they had made the wrong choice, it’s too late. Instead, listen to your buyer’s agent. If the agent is recommending a lender, it’s for all the right reasons.

What is a DU and Why Do Home Sellers Ask to See a Buyer’s DU?

A DU shows more than credit scores for a home buyer.

A DU shows more than credit scores for a home buyer.

Putting a home into escrow these days is only the beginning, the truly difficult part is getting that home to close when the buyer is obtaining financing; sellers deserve to know the buyer’s qualifications. The pre-qualification letters or those parading as preapproval letters are a start, but they are not the “be all and end all” for buyer qualifications. It means a buyer has contacted a lender to discuss income, credit and debt. It does not mean that income, credit nor debt has been verified. That’s the kicker.

What’s a seller to do? A seller can ask the buyer’s lender to deliver a DU. What is a DU? That’s short for desktop underwriter. Now, you would think that most lenders would automatically run a DU on borrowers, but they do not. How do I know that piece of trivia? Because 9 times out of 10 when I ask for a DU — no, make that 10 times out of 10 — I get a document dated today. I can’t recall ever receiving a DU dated a few days back.

What is a DU to you? A DU shows debt ratios — both front end and back end — meaning the percentage of income to the mortgage payment and the percentage of all debts, including the mortgage, against income. Those inching toward 50% are red flags. It also shows creditors, unpaid balances and FICO scores.

Sometimes we will receive a DU with all of the pertinent information blackened out. Sometimes, lenders send only the front page. Sometimes they don’t send a DU at all but deliver another credit picture with more lenient scoring attributes, especially for those with fewer than 2 years on the job. And we often hear the words “our mutual client” from the mortgage lender. I want to say stop with the lingo and salesmanship. The difference, of course, is the buyer is a client to the Sacramento Realtor but the borrower is typically a customer instead to the mortgage lender.

Mortgage lenders, just like real estate agents, come in all shapes, sizes, experience levels and ways of doing business. If a buyer gets a difficult mortgage lender, one who doesn’t want to cooperate with the seller and the listing agent, it doesn’t fare well for the buyer. That’s one of the reasons why some buyers are not buying a home today.

 

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