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Risk of Using TWO Lenders; One as “Back Up”

We often have very, very tough loans that seem to “panic” both borrowers and Realtors alike. And, in their panic, they often go to other lenders as a “back-up precaution”. This more often than not screws up our transactions altogether.

Example #1: We had a loan last summer in which the selling agent insisted that our client use his lender at Wells Fargo. Wells sent their appraiser to the property right away, so the listing agent turned away OUR appraiser, thinking the appraisal was done and there was just some confusion. Wells could not do the deal after all, and our appraisal was so delayed that the transaction closed late (it was a 15 day “rush” close). The selling agent then had the audacity to try to make us pay the per diem. We said “no”.

Example #2: We were “re-scoring” a borrower to get her credit score higher. Right when she was on the cusp, she went to another lender, who pulled her credit twice, pushing her score below the 680 number we needed for “preferred pricing”. Her error cost her dearly in rate.

Example #3: We were prepping a very complex file for submission when the borrower went to another lender. The other lender submitted the file before we did to the only lender that could have done the deal. The other lender did not prepare the file properly (did not do letters of explanation and memo “explaining” the deal), as a result, the deal was denied. There was no going back. That deal stayed dead.

Our point is that “tough deals” abound. If your lender is competent, going behind your lender’s back “as a back-up” often does far more harm than good.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167