Is the entire industry plagued by people who think they're entitled to a chunk of every deal without working for it or being responsive to customer needs?
I called a mortgage company that is capable of doing 203k loans. I explained every detail of my mortgage circumstances, which are admittedly complicated. I told them that I had made an offer that was being held up until I had a lender letter in hand and that it was very urgent. He tried to sell me on using his contractors for the rehab phase. He tried to sell me on using his wife as my accountant. I filled out their application and literally sent a dozen emails with over 70 pages attached.
I called the broker about half a dozen times and went to voicemail every time. I went over 24 hours without a single response from them. Yet I'm sure when I get the GFE there will be an origination point, discount points, and I'm certain a yield spread premium in there for them too.
Similarly, my agent told me that there was a competing offer on the property I'm bidding on and that I needed to hurry and get the lender letter over to him. I sent it first thing this morning asking for him to reply to the message to confirm receipt. Two hours have gone by with nothing -- during normal east coast business hours. I called him and went directly to voicemail. I texted him and didn't get a response. And he made me sign an exclusive right to represent in ALL transactions through mid December -- even if he does absolutely no work in bringing the deal, researching the deal, coordinating the deal, or apparently even answering his phone. -- Update. I guess it worked, he finally replied to my email.
I applied for a HELOC with TD Bank. It literally took over 120 days to get through underwriting and go to closing and they literally lost the entire loan package and didn't even notice for 30 of those days.
And then of course, there's the contractors who feel that they can show up whenever they feel like it.
I own a small business providing IT repair and consulting services. I wouldn't dream of treating my customers like this. I answer the phone 80% of the time and send it to voicemail 20% of the time. I give them honest estimates of completion times. I tell them when I have no idea how long it's going to take. And, I do it for a fair price. Why does the real estate industry in general think each segment is entitled to thousands of dollars for really crappy customer service?
I would think if anyone really is so busy that they can't answer their phone at least 50% of the time or reply to an email within an hour that they should hire a knowledgeable, empowered assistant to do their work for them.
So -- am I being unreasonable? What is a reasonable percentage of time to answer your phone vs sending a call to voicemail? How long should I wait for an email reply on something both sides know is urgent?
I work in the mortgage industry, and I don't think you're being unreasonable at all. I try to call back my clients the same day, or at least within 24 hours if I'm really busy.
I would suggest working with somebody else. There's other lenders out there who do 203K loans.
I would suggest another thing as well. If your situation is complicated, you might need to do some extra legwork on your part to make things easier for the lender. I've worked with borrowers in the past with complicated situations and it makes my job really frustrating when the borrower just faxes over a whole jumbled mess of paperwork that's incomplete and doesn't tell the story of what's going on, so I'm left to decipher and figure out everything.
I would suggest finding out what documents the lender is likely going to need from you after explaining your situation to the loan officer, then packaging it all up nice and organized and complete for the lender. You might also want to include a cover letter explaining your situation and what all the documents are, so that it's very easy for the loan officer to package up the file for the underwriter.
Going the extra mile on your part to make things easier for the lender will make it much easier for the lender to get the loan done for you.
@Mark F. Thanks for your comments Mark. I was thinking to myself that I should create a tabbed binder with sections for tax returns, bank statements, and a section for each property but I thought it may be a waste of time because everything is electronic. Maybe I should instead create a flash drive or something with all the documents organized in some sort of folder structure.
I'd love to hear from processors/originators/underwriters on how you'd like to see something like this.
I have a separate bank account for each of my rental properties. Should the bank statements for each property go in the property folder (to verify reserves) or should it be lumped in with all the other bank statements (to verify assets)?
Yes, you'll need to verify at least 6 months reserves (for principal, interest, taxes, and insurance) for each financed residential property. You can do this with one account though (if you have an account with enough cash in it). I would recommend using a retirement account if you can because it doesn't show a whole lot of deposit/withdrawal activity. If you use a regular bank account that has a lot of deposit activity, the underwriter may want you to document where those deposits came from, which can be a huge paperwork headache (ask me how I know LOL). As a loan originator myself, sourcing deposits is definitely one of my biggest headaches at times.
If you use a retirement account for reserves, the underwriter can only use 70% or so of the balance to account for taxes and withdrawal penalties, but if you can go that route, it's far easier. I did that when I refinanced a rental last year and it was much easier than using my business account (which has deposits for rents, which I would have to source) to verify reserves.
As far as organizing it all, you can do flash drive, paper, fax, email, whatever works. If it's a lot of stuff, it might be easiest to put it all in tabbed folders and send via UPS so it lands on the loan officer's desk in a very organized format. You can follow up with a call explaining everything and answering the loan officer's questions as well so that he/she has a good picture of what you're working with.
What you'll likely need is the following:
- Last two years complete tax returns. This includes personal, corporate (for any business you own at least 25% interest), K1s for partnerships, etc. If you have a lot of stuff here, have your accountant send over everything to the loan officer.
- Last two years W2s and last one month's worth of paystubs for each borrower on the loan (where applicable)
- Homeowners insurance declarations pages for each property you own. This is so the insurance premiums can be included in your debt-to-income (DTI) ratio.
- Mortgage statements for each financed property you own. This is so the payments can be correctly calculated for the DTI and matched up to loans on your credit report.
- You may need lease agreements for your properties as well (not always, though)
- Bank statements covering last 60 days to document 6 months reserves for each financed property.
- Contract for property you're purchasing.
- Bank statements showing enough cash to close for new purchase.
Yes, this is a lot of stuff, and the bank could need even more. But if you at least gather up and organize all this ahead of time, it should make your loan officer's life easier. And if it's easier for your loan officer, it will be easier for you too.
Hope this helps!
@Mark F. thanks very much for such specific information.
I was aware of most, but I didn't know that retirement accounts could be used as reserves. That really changes a lot of my scenario right now. Do you know if that's true of FHA underwriting or just conventional?
Sorry to derail the thread from the original topic.
@Eddy Dumire Yes, you should be able to use a retirement account for both FHA and conventional financing. Just keep in mind they'll likely "discount" the balance by 30% or so to account for taxes and withdrawal penalties. For example, if you have a $100K balance, they'll only let you use $70K for qualification purposes.
@Mark F. Thanks so much! Your info about the retirement account really saved me lots of headaches. Most of my personal accounts have been corrupted by quite a few months of moving large sums of money around to buy my last 2 properties. As a result I was scrambling to figure out how I would document adequate closing funds for a new purchase I'm trying to make. I was going to have to ask mom for gift funds until you came through with the retirement account info. Thanks again.
@Eddy Dumire No problem, Eddy, glad I could help!
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