A listing agent we know well called us recently b/c one of his listings died at Chase at the 11th hour – and he wanted us to salvage the deal.
I am not trying to beat up on Chase either, as we sell a ton of our jumbo production to them and we also know some talented loan officers at Chase.
BUT – there is a lot to learn.
1. “QUICKIE” PRE-QUALS DON’T WORK
It was high debt-to-income ratios that killed the deal. And yes, that happens to us on rare occasions too – but for very complex scenarios. This transaction, however, was straightforward and the issue should not have been missed. It was missed, however, b/c the bank did not pre-underwrite the loan and instead did a “quickie pre-qual.”
2. “EXPERIENCE” SAW ISSUE AND SOLUTION IMMEDIATELY
One of our Mortgage Analysts immediately spotted the issue and came up with a solution – something every experienced loan officer would have done too. But, many banks and online lenders that “buy the market” hire “order takers” who not only lack enough experience and/or training to spot issues up front, they are unable to save deals when they blow up (and this deal was easily savable).
3. SINGLE PAYMENT MORTGAGE INSURANCE SAVES THE DAY
Our Mortgage Analyst’s solution involved the use of Single Payment or Lump Sum PMI to reduce debt ratios, like I discussed in this recent blog. Paying all of the PMI up front eliminates the monthly payment requirement and thus reduces debt ratios. This is just a reminder that Single Payment PMI is not just a blog topic, but a solution we employ often.
4. “ORDER TAKERS” & ONLINE LENDING SYSTEMS WORK GREAT … FOR CLEAN REFIS
We are currently “swimming” in deals that blew up at big banks and online lenders. They blow up b/c the “order takers” miss all kinds of issues that anybody with a modicum of experience would spot, and I listed many examples when I talked about the time I caught my dog Kevin issuing pre-approvals (it was a real nightmare 😊). I did not even mention all the issues in purchase contracts that Kevin missed too, like credits for specific repairs in “as is” transactions, excessively high seller credits, and many other potentially deal-killing contract flaws.
Long story short: online lenders and “order takers” are often great for clean refis, but they all too often screw up mightily when it comes to purchases.
I am not just blowing JVM’s horn but the horn of every experienced loan officer; buyers should definitely beware when pursuing the lowest rate or the apparent convenience of using their “big bank” for financing.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
