When a Lender Keeps Changing Terms and Closing Dates

[Michael Manchester]

Business purpose real estate lending is often referred to as the "wild west" of finance. In many ways that is true, especially if you go back to the days immediately after the 08 recession. 

Capital is plentiful. There is no shortage of lenders out there, all who promise to move heaven and earth to get your loans closed fast and with the maximum leverage because they tell you - they understand, they know how hard it is and are there to help you scale. Sound familiar?

Then you get a term sheet and it looks great. You order an appraisal. You pay for title. You've got a signed contract with COE date that is a week after the lender says you will be funded. Then the nonsense starts. You get conditioned for things you've already sent them. You get questions about things you've already answered. Nobody can give you any updates - usually just friendly words - but sometimes they just ghost you. 

Then they back down the leverage on you. Raise the origination. Change the rate. Tell you it's going to take two more week. OR, and I've seen this way too much, spend 4 weeks to tell you the loan is denied. Yes, money and opportunity are lost. But so is TIME, and what is more important than that. 

So what do you do?

Find a loan officer or a broker you actually like speaking to, one who can prove that they are able to execute, and follow them wherever they go. 

It's generally not so much that a lender is just a mess organizationally, although that is sometimes true. It's that the people you've been working with don't know their own guidelines, don't understand investing, don't understand YOU. They just threw out numbers to get you to commit and deal with the fallout later. It's terrible and it's why nobody generally has a good feeling about lenders in general.

A good broker or loan officer is a limited commodity and they are worth their weight in gold. When you find one. Don't let go. 

[Erik Estrada]

Quote from @Michael Manchester:

Business purpose real estate lending is often referred to as the "wild west" of finance. In many ways that is true, especially if you go back to the days immediately after the 08 recession. 

Capital is plentiful. There is no shortage of lenders out there, all who promise to move heaven and earth to get your loans closed fast and with the maximum leverage because they tell you - they understand, they know how hard it is and are there to help you scale. Sound familiar?

Then you get a term sheet and it looks great. You order an appraisal. You pay for title. You've got a signed contract with COE date that is a week after the lender says you will be funded. Then the nonsense starts. You get conditioned for things you've already sent them. You get questions about things you've already answered. Nobody can give you any updates - usually just friendly words - but sometimes they just ghost you. 

Then they back down the leverage on you. Raise the origination. Change the rate. Tell you it's going to take two more week. OR, and I've seen this way too much, spend 4 weeks to tell you the loan is denied. Yes, money and opportunity are lost. But so is TIME, and what is more important than that. 

So what do you do?

Find a loan officer or a broker you actually like speaking to, one who can prove that they are able to execute, and follow them wherever they go. 

It's generally not so much that a lender is just a mess organizationally, although that is sometimes true. It's that the people you've been working with don't know their own guidelines, don't understand investing, don't understand YOU. They just threw out numbers to get you to commit and deal with the fallout later. It's terrible and it's why nobody generally has a good feeling about lenders in general.

A good broker or loan officer is a limited commodity and they are worth their weight in gold. When you find one. Don't let go. 

 Well said. An experienced LO is always going to catch the BS before it turns into something horrible. Sometimes I find myself coaching newer account executives, because they do not have the experience needed to maneuver and get a deal closed.. Sometimes it really does take a bit of elbow grease from the broker/LO to push forward and find alternatives to clear hairy scenarios.