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Real Pre-Approval vs. Perfunctory “Prequals” at On-Line Lenders

A borrower recently came to us who had been “pre-approved” by a major on-line lender. The borrower came to us b/c the listing agent refused to accept the “pre-approval letter” from the on-line lender, and for good reason.

After we sent our “needs list” to the borrower so we could approve him, the borrower asked me if we really needed all bank statements and rental agreements (much of the borrower’s income was rent). I then asked if the on-line lender had requested those documents, and the borrower said “no.” Long story short: the on-line lender did not have a valid pre-approval b/c they did not do a full pre-underwrite. The deal would have died if the listing agent had accepted the pre-approval letter from the on-line lender.

Erin Piper in our office was able to make the deal work, but only with some deft maneuvering and only b/c rates had dropped enough to make debt ratios work.

Lesson: make sure pre-approvals are actual pre-approvals.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646