Why do I title this article, The Wrong Loan Officer Can Get You Into Trouble? The shady ones don’t always look like this.
I write this because of a phone call I received from a very worried woman who knew that I used to own a large mortgage company.
She had committed loan fraud and that fact was just thrown at her by the company she did the mortgage with. She was terrified over the phone call she had just received.
She was guided into it by her loan officer. At the time it didn’t seem like a big deal to her, as it was explained to her she was just fine, so she thought.
The fraud was this: she and her husband refinanced their primary residence with this mortgage company. The interest rates were great at the time, it was a smart idea, they had purchased the home years ago with a VA loan and the refi paid that loan off.
A month later they went out and purchased another home using their current VA eligibility.
The events, refi and purchase, started the fraud. Investment properties have different underwriting rules and benefits. One big difference is that there is a higher interest rate on an investment property.
They turned the home they did the refi on into a rental. Now we have the fraud.
I asked her if she had all of the paperwork signed at closing. The answer was yes. I asked if they had signed an addendum warranting that they would remain in the home as their primary residence for at least a year. The answer turned out to be yes.
But…… she said when discussing the possibilities with their loan officer they were guided that they weren’t certain at the time they would be buying another home and renting this one out. They were told that since it wasn’t certain that it would be ok.
Now I refer back to the title of this post, “The Wrong Loan Officer Can Get You Into Trouble.” As far as the Feds go the intent is obvious. They purchased a new home 0 down VA 30 days later. It’s a pretty obvious crime. (Even if they did this months later, it is still loan fraud)
The lender came to her in a panic. The loan officer no longer works for this mortgage company. They must believe that they have some liability. Loans are usually sold to an investor. The investor in reviewing this loan found the fraud and rejected it. The mortgage company is now offering to refinance the fraudulent loan to a non owner loan at their cost. They will lose over $10,000 to make this old loan go away.
I have suggested to them to be cooperative with the mortgage company, it seems like it will suffer the costs to get rid of this fraudulent loan. I also referred them to an attorney that is a mortgage industry expert to guide them through these next days, and hopefully not with future problems.
My advice to you is to always use a loan officer that is personally recommended and introduced to you by a full time real estate agent. There are a few flakes out there and this person found one. There are some great loan officers in the business and they usually work with real estate agents. Real estate agents are demanding. They want loan officers that deliver what was promised, as promised.
Take note on my statement above, “deliver what was promised, as promised.” This is outside of fraud. It refers to delivering your loan on time to stay under contract with a seller. This refers to deliver the terms you were promised. One real estate branch broker sourly told me that, “too many transactions the buyers are told all along, the loan is ok and then at the end, “sorry not ok’.
I always refer my clients to Aaron Morgan, a producing branch manager of Academy Mortgage. (801-560-8162)To follow my proposed procedure, make sure I let him know that you are contacting him.
I use the cute little fraud guy to depict the Wrong Loan Officer by license with PresenterMedia.com
Technology advances can be wonderful. That comment especially applies to those of us who sell real estate. It used to be that my favorite invention of all time was GPS. For me it has saved me hours of extra time. Not wanting to look stupid or inconvenience my buyers I used to travel to all of the locations we would be visiting the day before, just to make sure I knew the route. GPS made navigating a breeze. (Of course the GPS on my iPhone is a step up as it even talks the directions to me as I go.) Now I discover matterport camera. Matterport, What A Great Service
Well, the matterport camera may have just taken over as my favorite. Here is the dollhouse view of Canyon Road Towers 401 and the dollhouse view it creates. Even this is amazing. From dollhouse you click on a room and you are taken there. You can move throughout the come as if you were right there.
The photo below shows a room view. You can travel throughout the home, see it all, by clicking your way through the home. It functions similar to Google Streets.
It also creates a to scale floor plan of the home. Don’t ask me how it does it, it seems impossible, but below is one of my listings plans that was created by matterport. How handy this is illustrated by a text I received this morning from the new buyer of Zion Summit 1004 who requested a floor plan to scale. Hot dog, where I often have to decline as they aren’t always available, he got this. I am still flabbergasted that this was created by a camera.
Here are some links to some of our most recent Mattterports
- 2412 Mile High Drive listed by Scott Rabin
- 3419 E Gun Club Road co-listed by Tim Jones
- 11323 Portobello Rd listed by Jonah Horsby
- 940 Donner Way listed by Lisa Jungemann
- 13439 South 1400 East in Draper also listed by Lisa Jungemann
- 5023 West Dock Street listed by Adam Frenza
- https://my.matterport.com/show/?m=2dmK4ihDwf9&mls=1 One of my listings
- https://my.matterport.com/show/?m=U22fEDmpe2j&mls=1 One of my listings
My guess, is that you will insist on this service whenever you put your home on the market. It is now another of the standard marketing tools I provide my sellers. It comes at a cost to me, but it is so worth it.
Here are two examples of the benefits because people can virtually walk through the home online. They see everything, ceiling to floor, wall to wall.
- More people can see it. I have sent the link out to 100’s of my contacts. I am getting feedback that they love it. Two have been forwarded to people out of the country. One is telling me they approve an offer being made and they haven’t even seen it.
- The second is a convenience factor. One negative thing is having people walk through your home day after day and hour after hour. Even when agents are instructed to give the seller a certain amount of notice it is not unusual to have someone knock on your door with, “I am sorry but my client wants to see it now?” Can we please do a last minute showing? Please, pretty please? What are you to say, you want to sell the darn thing. So many are just looky lou’s. Now they see it virtually on line before asking to see your home. The net result is that those that disturb you are pre qualified as to their interest.
Another Windermere marketing benefit is its international reach. We are a member of one of the premier international marketing sharing groups who have a world wide reach of buyers. This is accompanied by our Living Magazine which is targeted to local and out of our market qualified buyers.
I am committed to my clients and welcome the opportunity to assist you.
Larry Cragun – Windermere Real Estate
Condominium and Residential Specialist
About Home Inspections. In a nutshell if you are purchasing a home, even a new construction, do it, do it, do it, have one, have one, have one. Even if you plan on having one, this might be an interesting read.
Since most of you are already convinced to have an inspection this article will name some options of home inspectors for you. Below is the list our company publishes. These, like those in the How We All Win concept only stay on the list as long as we find satisfactory performance. The way our office works is a good way: if there is a complaint by an agent or a customer we get involved to verify the issue and to help get it resolved. If it isn’t handled the way we feel it should have been the inspector is on probation. One more unsatisfactory conclusion and we remove them from the list.
- Criterium Bernhisel Engineers – Scott Bernhisel – 801-466-0931
- All Points Home Inspections – Westin Cross – 801-455-7697
- Homestead Engineers – Brian Glover – 801-254-2656
- Pillar to Post – Fred Larsen – 801-281-0484
- The Home Inspector – Dan Hess – 801-466-1874
- A Closer Look Home Inspection – Tom Rees – 801- 674-4994
- J-Pro Inspections – Dean 801-915-3633 or Carol 801-635-4764
- Veterans Home Inspectors -Ryan Johnson – 801-347-5505
If you are going to use one of these, please let me know, I will reinforce to them for you what we expect in service.
An example of new construction is when Kathleen and I were about to close on s new home and we did an inspection. The inspector noticed something neither one of us or the builder had noticed, the slope of the yard was such that rain would drain down to the basement. The grade needed to be redone. Where most builders contracts don’t obligate the builder to respond to an inspection, yet provide at least a year warranty, this builder responded properly and regarded the front yard so it sloped away from the home.
I have had cases where the furnace and/or roof needed replacing. These are so serious that the seller must deal with it. After all, if you found it the next buyer would too.
I had one transaction where the seller agreed to a 3 month pre purchase rental. Therefore the buyer waived the need for the inspection, after all he was going to live in it for a few months, why pay the extra money? The move in was in summer. The closing was just as the weather turned cold. Not too many days after closing the furnace needed to be used. The furnace started, blew up, and burned the home down. It was a poor decision to waive the inspection.
Larry Cragun – Windermere Real Estate
Interest Rates Have Risen Some, What Does That Mean? Of course when an in, terest rises the monthly payment on a loan or mortgage also rises. What is the actual impact? In my case, maybe yours too, my spouse would grumble as she closely watches the monthly payment commitment amount that we make.
Aaron Morgan, a preferred mortgage lender by some builders, many REALTORS®, and myself provides a chart to help visualize the impact of a rate increase. I provide here a snippet from that chart.
So, on a $300,00 mortgage a 1/4 % rise in interest rates is almost $50.00 per month. Yes, that an ouch but beyond that what impact can that have on your new purchase?
Does it keep you from buying the home you have targeted? The answer is not usually. It can push the ratios too high to comply with the automated underwriting approval that lenders begin with in issuing an approval. In the many years that I originated loans I rarely was in a situation where we were pushing the maximum to the point a small rise in interest rates killed the transaction. My advice is if you are in a situation that is so borderline, do all you can do to get to the point where you can lock your rate in.
There are two ratios that lenders consider. The first is your income vs your house payment and the second ratio adds your monthly debt payments to your housing costs vs your income. Sometimes paying of debt, or getting the payment reduced is a way to counteract the effect of an interest rate rise. A third way to deal with this issue is to buy your interest rate down. The is never just one rate you can secure. All lenders have the ability to select a rate that costs you more in fees to get a lower rate. Sometimes this is the best way to lower your payment.
People resist adjustable rate mortgages but Aaron currently has an excellent 7 year adjustable rate mortgage. It’s probable that you spend less money on a 7 year adjustable if you keep it for 9 or 10 years. This lowers your payment for at least 7 years and can be refinanced during that period should it be your desire.
We have been in a historical and artificial low rates period. In past times rates being higher were accaptable. My first home purchase was at a 10.625 rate. As rates went down I refinanced.
Treat interest rates as just a fact of life. Don’t expect to lock at the bottom. It isn’t worth the stress. Don’t get sucked into low rate advertising. Deal with a lender referred by a real estate agent. In my case I recommend Aaron Morgan. He’s dependable and if you use my name you won’t get any special deals, but use it anyway. Aarons phone number is 801-560-8162
Aaron Morgan of Academy Mortgage is a great option. Aaron Morgan Academy Mortgage.
This is an important post. It was prompted by a radio advertisement I just heard pitching a loan officer. Do not make your lender choice this way, do not!
A significant part of my career has been in the mortgage business. I was a successful loan officer for both banks and mortgage companies. I owned one of Washington States largest mortgage companies, producing between 300 and 400 loans a month. I know this business.
There are many good loan officers and many good mortgage companies. I recommend two things when selecting a lender for your home. 1- pick a lender recommended by your real estate agent. 2- Pick Aaron Morgan and use my name as reference.
These two suggestions are based on an important principle. When recommended by a real estate agent the future referral business is at risk.
Understand that no lender can control the inflow of business referred to them. Bad experiences happen when the lender gets too busy. I have seen that happen. I have seen it happen most often with online lenders and even with supposed good lenders. In Salt Lake City I have seen bad experiences when someone goes to their local branch they bank with. I have seen loans where the interest rate wasn’t locked in. I have seen situations where closings were very late. In late closings your purchase is at risk. Sellers don’t have to honor your purchase, could take a higher backup offer, or could just plainly remorse.
When you are choosing a lender based on an agent referral you become an immediate priority. You want that with all lenders. You want to be a high priority.
Aaron Morgan has not been the only lender I have used in Utah. He had to convince me by trial and experience. He is the real deal. In one condo property in Salt Lake City he is currently the only lender that can deliver a conventional loan at competitive rates.
You can count on Aaron to deliver what is promised as promised. To strengthen your position as a client, make sure you tell him I referred you to him. Whomever you choose, make sure that lender is referred by a real estate agent.
Larry Cragun Windermere Real Estate
Residential and Condominium Professional.
When Purchasing, Make Sure There Is A Real Estate Home Warranty. One of our providers claims an 80% first year claim number. About 20% of my transactions are in need of making a claim on the provided home warranty. Having one need not be costly. Not having one can be costly.
A home warranty can cover the most critical home systems, may cover appliances, When Purchasing, Make Sure There Is A Real Estate Home Warranty and comprehensive coverage can cover additional home systems.
Those of my clients have had recent claims on HVAC, a leaky toilet causing damage, a thermostat, a malfunctioning fireplace, and a garbage disposal.
To me the costs of the policy are reasonable. They can range from $345.00 to $860,00. Condominiums can be less costly depending on the insurance company. Larger homes cost more and as posted here some companies have different levels of what they do cover. Payment for the policy with companies I use is not made until closing. If the listing expires without a sale their is no premium due. If the buyers agent require a different insurance company the seller usually is not charged. This is a question to be discussed at the time of listing.
Who pays is the question. When I am a dual agent, working for both buyer and seller in a win win situation, I pay for it. The standard MLS forms make it a clear option as to the inclusion of a warranty of not and whether the buyer or seller are paying. This should be decided at the time the home is listed for sale and my suggestion is that the seller have their agent order it at once. It should cover any issues during the listing time and will usually cover an issue found by an inspector. The bottom line, who pays is negotiable.
The standard Utah MLS forms have language built in to clearly provide an option for the home warranty decision, will there be one paid for at closing and who will pay for it.
Servicing your home warranty is important. We know who follows up on claims and fights for your deserved results.
This is why I and most of my branch colleagues prefer America’s Best Home Warranty Company. Contact me for their reps info.