What to Do When Your Mortgage Broker Is Ignoring or Scamming You
A 30-day escrow goes by faster than you might think. Especially if you have any mortgage glitches along the way -- they take time to unravel. To protect your deposit, you really only have 17 days, in my area, to get a final loan approval and an appraisal, have the underwriter sign off on that and get the green light to move forward.
Now I’ll be honest, I never liked doing group projects at school. I’d end up doing all the work or taking all the risk. Real estate deals are definitely a team effort, so early on in my career, I made a big push to find the best teammates -- folks I wouldn’t have to carry and who would make my clients’ lives easier, while getting them the best rates, most thorough inspection reports and smoothest escrows.
But I don’t always get to choose. On occasion, the circumstances of a client’s deal force us to work with some vendor I’ve never met before in my natural life. In the best situations, the vendor wants to earn my repeat business or my client’s referral business, so they give a stellar performance. In others, the deal is troubled or even falls apart because of the ineptitude of a mortgage partner non grata.
The Client. One such deal comes immediately to mind. It seemed like it was coming together nicely. After an excruciatingly long house hunt, we finally found a place that had every single thing she needed and had sellers who were easy to work with and were willing to clear the pest report -- at an expense of more than $10,000. The only real glitch was that the property was about $50,000 more than my client wanted to spend.
We were aware that the city this home was located in offered a first-time homebuyers’ program featuring a $75,000 down payment boost with no payments for 30 years! Sounded like just what the doctor ordered, and it looked like both my client and her intended home met the qualifications, though some were cutting it close. Unfortunately, the city would only work with mortgage brokers from a list they had put together. Every time I called the city to try to get them to run through the file details with me, they referred me to the list and said they’d prefer to talk with the mortgage broker, not the Realtor.
So we found a mortgage rep on the list who swore up and down that he knew the program and the city staffers intimately. In fact, he said, he actually used to work for the city and helped write the program guidelines! I asked him flat out, “Could you look at the file and troubleshoot it, please? Any problems you can foresee? Any reasons this might not close and, if so, can they be worked around?” I told him up front that we were concerned that her income was on the borderline of being too high to qualify and he assured us that it would be no problem. He could call in a few favors and have the 30-day escrow done, with no more than an extra week needed to navigate the city’s red tape. I told him that certainty and closure were more important to us than being told what we wanted to hear, so to please let me know ASAP if there were any problems with the deal so we could get back to house hunting and let the sellers find a buyer who could do the deal.
For six weeks thereafter, both myself and my client -- and eventually the city program personnel -- called, emailed, left voicemails, etc., and got nowhere. Trading on my pre-existing working relationship with the listing agent, I negotiated a 30-day extension of escrow. Still nothing. Every time we called, it was, “Gosh, this is a hard file. I wish I would have been working with her from the beginning,” or “Geez, her income is high for this program, huh?” and even, “Have a little patience, I’ve only had the file a week or so!” (the latter of which was exceptionally absurd given its utterance five weeks into the underwriting process).
The Workaround. I talked with other mortgage pros on the city’s list, and they all either felt her income was too high or worked in the same office as this guy! (My client, a government employee, had actually had another cost-of-living raise during the six weeks.)
The last straw came when my client managed to get the city’s program administrator on the phone who three-way-called the mortgage guy. Without the broker knowing it, my client listened as the program administrator had her first-ever conversation with him about the file and told him in no uncertain terms that they could not approve her for the program based on her income. Within 10 minutes, we had an email from the mortgage guy inexplicably saying he was working with the city to resolve the matter and that we should stay tuned for next steps.
The Result. There was not much else I could do. I called the listing agent and let him know we’d be canceling the deal, then called the escrow office and made arrangements for my client’s deposit to be refunded. Then I took a deep breath, embraced my inner Donald Trump and said to the bad mortgage broker, “You’re Fired!” And then we went out and found my buyer another home.