Terrible Service from Mortgage Loan Officers?

43 Replies

Is everyone else finding that loan officers are completely unresponsive and unprofessional? I own 8 SFRs, and am looking to refinance several of them either to pull out some equity or to lower interest rates. These are complicated scenarios, and would take some work on their part, but I'm astounded by the lack of communication from these folks. 

For example,

A Colorado lender who promises to keep getting back to me to start the "three easy steps" to begin our relationship, but who still has failed to do so after 2 months and numerous emails.

The local lender who asked for my documentation, and after receiving it, said he would get back to me in three days. It's been about two weeks, and after various attempts at communicating, zilch.

Another lender who is supposed to get back to me by the end of the day after speaking to their underwriter. That was I think 5 days ago.

So, what gives? Is this normal out there? What's an investor to do?

Steven

Are these residential lenders or commercial lenders?  In my experience, residential mortgage officers range from completely worthless to excellent whereas commercial officers range from not great to excellent.  If you're just trying to talk to some random bank that does FNMA/FMAC residential loans then call around until you find a good one.  The rules are the same for all of them so you shouldn't see any major difference in product, just in service.

@Steven W. find lenders that specialize in investment properties. I know @Micki M.  has at least one of those in her pocket.

I would also say that when I did that a few years ago, there were only 3 or 4 lends who covered the space between 4 and 10 units. Most mortgage brokers don't know how to find those lenders or don't want to take the time.

Hey Steven,

That's awefull!  If you want a good lender I can refer you my guy.  I owe numerous properties and he is always my go to guy for conforming or conventional loans.  Fast reliable and in communication.  You can call me if you want his number.

I would ask around among real estate investors, but is there a local bank where you could meet in person?  If you bring the documentation you supplied to the unresponsive lender, you should be able to get off to a good start.  Another option might be to call some top real estate agents and ask for recommendations.

There are crappy people in every industry.  The good ones are always hard to find.

Don't waste your time trying to work with someone unresponsive.  Move on and find someone that is.

I agree with @Bill S.

 many loan officers don't even know there's overlays of 1-4 properties; and 5-10 properties that lenders employ over typical fannie/freddie conforming guidelines. Stick with mortgage bankers in that arena who specialize in investor properties and can tell you immediately what their policy is after 4 financed properties.

Portfolio lenders are your next bet if you can't qualify for typical bank financing. You'll get the flexibility of unlimited number of financed properties allowed, but you'll give up some on rate and LTV in exchange for that flexibility.

There is a business saying that goes like this:

We offer great service, great price and a great product, the catch is you can only pick two.

With money center banks or lenders who have upline correspondent banks/aggregators the product is the same. The product is the loan policy (i.e. 75% LTV max, DTI ratios, amortization terms, etc). The product is the same because they are selling to the same aggregator.

The price is the loan interest rate and fees.

The service is the responsiveness and the time span of the transaction from cradle to grave.

If the product is the same, then you have one choice left. Price or service. Anyone that thinks you can get both is delusional. My guess is that these providers are selling price not real service, because in the end most people pick price over service even if they won't say that going into a transaction.

@Michael Worley nicely stated. That pretty much sums up my experience from the consumer end.

@Steven W.

 Take the referrals offered here and keep trying until you find someone who works the way you need them too.  In Colorado I know lenders are overwhelmed but there are still rock stars out there working hard for their clients.  Anyone who doesn't get back to me in 24 hours or deliver something when promised gets the boot. I don't have the patience for it, and in our market it can kill a deal.

@Steven W.

@Micki M. is right.  I work in the lending field, offering both types of financing - commercial and residential and I see all the time there are people who are very responsive and take this profession seriously and there are definitely deadbeats, who over promise and under deliver.  I would agree with her that you just need to find somebody who will work with you the way that you need them to.  Obviously this will be an ironing out, but referrals are usually top choice to start with.

Just my .02.  Good luck.

@Steven W. That was our experience as well. After finally pushing to find out why they were not responding, the ones I did eventually speak to basically said they can't do a cash-out refi if you have 5-10 unless it's something you just purchased or it's your primary. A professional would have just told me that response immediately rather than just ignore my request. We did qualify for a HARP and a FHA Streamline on 2 of them, going with the original lender, so those worked well. But trying to do a regular refi didn't work for any of them, not even just to lower the rates, no cash out. I finally did find a local bank willing to help me with a cash-out refi, but the fees and rates were much higher than a conventional product and I don't want a 5- or 10-year balloon. So we just gave up on a refi on that one, maybe do a 1031 exchange on it.

@Steven W. I had to laugh-out-loud reading your post because my brother and investment partner @Nicholas Jones have had the same experiences, including use of the adjective *terrible*.

A regular occurrence would be us providing some information and asking several questions in an email, to get a response like "Great, thanks. I'll get back to you tomorrow" and then hear nothing but crickets for 8 days meanwhile our hard money loan is going tick, tick, tick, tick.  Eventually I'd drive down to their office myself and show in person daily in order to get some attention.

I also agree with the other commenters on this thread that there are "good" and "bad" people in every field.  Nonetheless it seems the loan officer field is ripe for unresponsiveness because often-times they are absorbed into the most high-pri loan and everything else gets pushed to the side until that one is out of the way.

I was a mortgage broker for a short while.  Many times after spending hours and hours reviewing borrower documents, searching for the best rates and terms, etc, I would find out the borrower was at the same time working with another broker trying to get a better rate.  My allergy to starvation soon kicked-in so in order to eat I had to either a) lie and say I could deliver lower rates and terms than I really could then switch to the true rate and terms at the end after borrower was locked in, or b) only work with borrowers with quick and simple loan scenario's that I felt were only working with me.  I didn't feel comfortable with option a), so if I thought the borrower was working with somebody else, or, it was a complicated file, I would move on to the next file, much like real estate investors do when looking for a deal. It's just too dicey working complicated files.

If you were really working hard to find them the best rates then who cares if they were working with someone else at the same time? That's called shopping around and everyone should do it. If your terms were the best then they would have stuck with you.

Great insight Ron Plata!

As consumers and users of all the new technology, we are used to instant responses and never think about the guy who has the job at the lending institution.  From my own experience, refinancing out of hard money loans is ALOT of pressure and it is easy to get stressed out and take it out on the traditional lender employees that never seem to move fast enough when month after month we are paying that high interest on a property. However, we all know dealing with traditional lenders is extremely slow, but we are forced to put up with it in order to get the great rates.  I have used one mortgage lender to refinance two properties within 3 months and they still asked me for all of the same documentation that I use on the first one and the second took just as long (At least 30 days).  UNBELIEVABLE.  As others have said, you have to find a good mortgage lender and build a relationship with them over time.  Like RE, this is a numbers game and trial and error.  My first lender was great and I built the relationship, but that ended at 4 properties.  The search continues, so you are not alone in finding the perfect lender, if they exist.

I try to put myself in the lenders shoes, and there ultimate goal is to maximize the rate of return on deployed capital.  Thus, traditional lenders are all in right now to loan money they can get back from the secondary market at lower rates (i.e. FNMA, Freddie Mac, etc.).  Unfortunately, banks and you all fall under the same guidelines for these loans.  Portfolio lenders that will loan their own money and keep the loans will require higher rates as they are also in the business to make money.  Thus, the more properties you acquire, the harder it will be to finance them at the lower rates.  If you can still cash flow positive and still make a descent return using a portfolio lender at 6% to 8% leaving 25% capital in, you will most likely find the customer service you are looking for. 

This is the reality and you should factor this in on the buy side of things and with your exit strategy.

I hope this helps with the mindset and understanding in the current market we are in.

It's about COMMITMENT.

A customer has a right to go shop around until the end of the Earth. Having said rate quotes are really WORTHLESS. Until the lender has really underwritten the borrower and the deal the rate will not be cemented in place.

I am not  a lender but I am an investor on the commercial real estate side and a principal broker.

I commit my time and energy to people that are dedicated to me and want the relationship. I invest very little to ZERO time into people just hitting the phones talking to 50 brokers to see what is out there. I learn my clients goals and plans and then we do deal after deal instead of one off type things.

I am talking about individual investors that are high net worth. REIT's, pension funds, insurance companies etc. you understand they have no loyalty but they also have deep pockets and a track record for deals. So in those cases it will be one off but as a broker you know they close.

Someone who tells me they are going all over creation and whoever brings them a deal first blah, blah, blah goes in my trash file. So it could be you just have a difficult loan to do or the amount is small and nobody wants it. These days it's hard to get my commercial lenders excited about a 3 million loan. They have upped minimums to 5 million but still handle them for my clients because of our existing relationship. They know I screen buyers ahead of time and the odds of a deal closing will be high.

Steven you are just going to have to keep calling around until someone wants the business. Most people avoid confrontation and hope you just go away and seem nice like they want your business.

It's best to be polite and just say when you call " I do not have time to work on this and here is why ". They try to give them somewhere else to go to see if their needs can be met. I have no qualms telling someone that is looking for a vacant 50 unit apartment building at 10k a door that I no longer do those deals and my minimum for time invested is in the millions in purchase price. People tend to respect you when you are direct and too the point. Poor communication is one of the problems in this business. 

@Joel Owens

Glad to hear some people take this approach. People who avoid confrontation when simple honesty can save loads of time/money slows every industry - and consequently - the world down. What's frustrating is how many people are like this!!

Originally posted by @Max Tanenbaum :

If you were really working hard to find them the best rates then who cares if they were working with someone else at the same time? That's called shopping around and everyone should do it. If your terms were the best then they would have stuck with you.

 Maybe you can, but I couldn't afford to spend oodles of time on a file only to have the borrower go somewhere else.  Shop around to your hearts delight, the rate and terms are the same regardless of where you go.  You are a perfect candidate for what I call the biggest liar wins mortgage brokerage business.  I've seen it happen, borrower shops around, finds the lowest rate, borrower submits all paperwork, waits weeks if not months then is told interest rates went up and the rate will be higher than originally quoted, you're burnt out and running out of money, so you suck it up close the loan AT THE RATE IT WOULD HAVE BEEN HAD THE BROKER NOT LIED IN THE BEGINNING.  You can always go to a commercial, portfolio or hard money lender and get the rate quoted but it's going to be much higher as soon as you step out of the Fannie/Freddie domain.

No offence Max, I feel the same way as you when I'm on the borrowing end of things, even if I know the reality of the business.

@Steven W.

Most loan officers don't have the support, knowledge or experience to read different schedules of income etc. I just had to turn down a loan from a fellow BP member recently because of DTI issues and declining income issues. I stayed in touch no longer than 72 hours. But it doesn't take knowledge, support or experience to just get back to someone. I hate that this happened to you Sir.

Thanks to everyone who commented here for such fantastic replies. I did hear back from one lender, so I'll see what happens. I have no problem with being turned down--I understand that's part of the business. I'd just prefer to have people get back to me and say they can't help me at this time. 

The last thing I'd want to do is waste people's time. The only reason that I have contacted three lenders is from the lack of communication. I have no interest in shopping around from now until the end of time. I am happy to pay a premium for better service--up until now, I used one lender almost exclusively until she could no longer help, and I would highly recommend for conventional loans, if anyone is looking (send me a message and I'll forward along her contact info).

@Ron P. I'm looking into finding a portfolio lender as we speak!

Best to all,

Steven

Steven,

I wish I had seen your post earlier. I've been in the lending game since 2003 and simply cannot fathom bad customer service. As a mortgage banker, good communication is probably the most vital part of my job. It's all been said here (and quite well, I might add). Even if I have no news for my client I will still touch base with him/her every couple of days to say so.

My broker lends in California and owns rental properties himself (we both do). PM me if you have investment property questions or just need advice. We are all here to help.

I'd like to chime in here.  Most loan officers like the "low hanging fruit".  That is to say deals that aren't too complex in nature.  Back before the Dodd-Frank Act, I think you would have found more folks willing to get your deals done because they'd would be able to price the loan appropriately and be able to gain an appropriate income for working on the more complex deal.  With the strict "lender compensation" requirements, it may depend on the size (amount) of your loans.  In other words, if you have small loan amounts and lender compensation is capped, what's in it for the loan officer? 

Personally, I can see value in doing the smaller loans and doing a good job for you, because I understand this is a relationship business.  Doing the deal for you know could lead to referrals and more deals down the road. It's been my experience that 95% of loan officers don't have a clue that this is how you build your business and production.  They're in it for immediate compensation when the goal should be long term relationships which would in turn provide an annuity of income. 

Thanks @John Ching I appreciate the help. I'll touch bases if things don't work out.

@Shaun Weekes contacted me after seeing my plight, and he's been incredibly responsive. I don't know if we can make this work out, given all of the complications of my portfolio, but I've been very impressed with his timeliness. Heck, if a loan doesn't happen, I feel that I should cut him a check just to pay him for his service!

Just goes to show you that there are some professional folks out there.

Steven

@Steven W.

Thank you for the kind words and I'll email soon as I will have an update shortly.  Take care and have a great day. 

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