Fear based lending?

I think I’ve decided that I like MY role in a real estate transaction better than the role of the Loan Originator.

Why?

Of course, there are frustrations and delays and unpleasant surprises along the way in most transactions these days . . . and the burden is on me to “handle”/manage all of the sundry personalities and quirks of Buyers, sellers, other REALTORS, Lenders, Title Companies, Appraisers, Inspectors, repair companies, underwriters . . . as many as 42 different people involved in each transaction. Somehow, I feel fortunate to be the one orchestrating 42 people and all of the juggling it sometimes takes to keep things moving forward.

My relationships (as REALTOR) tend to be deeper with the “end Client” – The Buyer and/or Seller than all of those other 41 people because I am on the front line with them . . . The Quarterback.

The Loan Originator is standing in a fire of uncertainty these days. The complexity of her job begins with the fact that she needs to have a higher volume of customers to make a living and therefore seldom has the time to foster deep relationships. Her client relationship is more (by definition) transactional.

I met with one of my favorite Loan Originators a few days ago towards the end of the day. He had taken 23 (TWENTY THREE) loan applications that day. Do you think he forged any deep relationships that day?

So Lenders begin with the “handicap” of the need for higher volume with less time to build rapport and trust dealing with the largest financial event of most client’s lives . . . and then, WHAMMO!

NOW . . . The entire transaction seems to always hinge on the financing. Even the most simple and clean deals can become quagmires these days.

Why?

Federal Regulations are changing (it seems) every hour on the hour. They are either changing or they are still being interpreted in different ways on different days.

Were you aware that the “Dodd-Frank Wall Street Reform and Consumer Protection Act” signed into law in July is 2,300 pages of written obscurity? Yes! TWO THOUSAND THREE HUNDRED pages of government regulations for “oversight of Financial Institutions”.

WOW!

Good luck sifting through that mess and feeling good about being able to stay in compliance.

The Lenders are operating in a Fear Based environment, and that is wreaking havoc in virtually every real estate transaction.

Heard recently . . . a loan originator commented that Mortgage Lenders are now becoming hesitant to write “Loan Commitment Letters” because in this fluid environment even the best looking loan can come unglued by some random anomaly that could show up day before closing. These Lenders and underwriters are so scared they’ll misstep that they are “erring on the side of caution” and turning most loans into mini “Federal Investigations”.

The problem with the Commitment Letters is that if the loan does fail . . . the SELLERS are now beginning to take legal action on the lenders saying: “YOU said this loan was solid, so I am going to hold you personally accountable for its failure and the damage that has been done.”

RIDICULOUS!

What can we do about all of this?

Here’s what i know to do . . . continue to do business diligently. Put on a set of “blinders” such that all of that peripheral garbage noise doesn’t pollute my resolute determination to do what i am here to do . . . Best serve the needs of my Sellers and Buyers of homes.

Oh!

and I love and appreciate the loan originators with whom I work because I understand their discomfort and pressure.

so . . .

Go out there and hug a loan originator today and seek to understand when things go weird with a loan. Don’t be just another REALTOR or client screaming at them for something over which they couldn’t possibly have any measure of control.

I think I rambled today . . .

I’m just sayin’

Best,

b

PS: Pareto Realty continues to build – a cornerstone of our strength as an excellent Real Estate Sales firm is our relationships with vendors (including Lenders) in our local Nashville community. They are our business partners, and we understand the value of treating them as such.

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About Barry Owen

Residential Real Estate Principal Broker and Founder of Pareto Realty, LLC. Creating the quintessential real estate firm with emphasis on "Live, Work, & Play" balance . . . and a true Performance Oriented environment for Real Estate Professionals. Serving the Real estate needs of Home Buyers and Sellers in Middle Tennessee.
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