How many of you at one time or another bought a house or refinanced your mortgage and ran into one problem or another. May it have been the realtor who was not able to give you the correct answer or the loan officer who strung you along and then changed things last minute. I have never said that I am perfect or that I know it all, but it does come down to honesty, integrity, knowledge, and very good service.
What about you first time homebuyers that have never experienced buying a home or refinancing for the first time. I truly believe that there are some key phrases that can sometimes be cause for concerns, known as Red Flags. And just because you have done this before, doesn't mean that it won't happen to you. If you hear some of what is mentioned below more than once, especially in a short time period, this could be your warning.
The General / Basic Red Flags from both the loan officer or the realtor :
As you shopped for a realtor or a loan officer, this person was always getting back to you. Now you have signed a listing agreement, a buyers agreement, or the loan application and they don't get back to you right away. If you are leaving a few messages per day, both e-mail or by cell, and this continues for close to 48 hours, there is no excuse. This is a huge Red Flag if this takes place a few days prior to settlement / closing, especially the day of closing, if they can't be reached at all.
Key words or phrases used often when first speaking to you ; "I promise", "I guarantee", "no problem, I'll fix it", "I am the best", "I am the cheapest", and "I have the lowest fees". I am sure there are more.
Delayed phone calls. I promise to call later or tomorrow. But you don't hear back from them and now you have to track them down. Yes, again, things happen. But if this seems to be a reoccurring issue, then you might have problems.
Deadlines - If there are certain dates on the contract or with the lender, get everything in as soon as possible. If that is ordering inspections in a timely manner or getting documents to the lender, don't wait.
Red Flags from loan officers or lenders :
You are shopping for lenders and the loan officer never offers you a Good Faith Estimate. Rut row.
They don't offer you the rate or the payment? This might sound silly, but I had 3 clients just in one month, that this happened to them. Yes, can I judge and say that they should have asked? But maybe the loan officer talked circles around that client, and then they just forgot. Sometimes just hearing, "you are qualified" or "you are approved", gets you excited, hence why you might forget to ask the important questions.
You find a loan officer because their rates were very good. But since you have so much on your mind, they never go over the rate lock-in features of that program. If they don't cover this prior to application, and especially during application, this could be trouble. Or they get you to sign a rate lock form, but they convince you to float. Question, did that rate even ever exist then?
You might qualify for a FHA or VA loan, but tell you that you don't want those kinds of loans, because conventional is better for you. This has happened to at least 5 people that I know of. The main reason was because the lender wasn't FHA or VA approved.
If your lender/loan officer changes rates or fees during the process or at settlement, don't just give in. Avoid excuses such as; "your credit score dropped", "you have less income", "your credit isn't as good", etc, etc. What I am about to say is the average. These things are usually found out in the first week when processing a loan, not last minute.
Changing stories / shifting blame. This one can be used in conjunction with the other red flags mentioned above.
When comparing good faith estimates, don't just compare the bottom line, "total costs to borrower". Some loan officers low ball certain 3rd party fees to make their good faith look cheaper. Or they escrow less taxes on paper that is mandatory in each state.
You are at closing and the loan officer says, "don't worry about those docs, we can correct that later". NO !!! Once you sign, it's over.
Update (04/03/08) - If you have a credit score of 679 or less and less than 20% down and you know you should be going FHA, but the lender says that going the conventional way is better.... major red flag. It's been proven that going FHA in this scenario is cheaper monthly.
Red Flags from realtors or real estate offices :
When an agent only shows their listings. If you want to see homes and they keep showing those only listed by their company or that they are selling themselves.
One complaint - When a realtor has a full time job that is not real estate related. I heard a story that the buyers had to wait until their realtor got up to show them the house. This was at 1 pm.
Red Flags from consumers :
This is actually to the consumer reading this. Never hesitate to tell your loan officer or realtor everything. Even if they don't ask you and you think it's pertinent to the transaction. Don't take that chance in not telling them. We are all here to help you and not pass judgment. The true professional acts in this manner.
Be loyal and just don't hop to every realtor showing houses. Build a rapport with that person. That's if you feel comfortable with that person.
Overall, don't keep falling for the same excuses over and over. Or, for multiple excuses during the process. Yes, things happen, but 9 out of 10 times, not that many on one transaction. These types of excuses are usually to delay you in finding out the truth, until it's too late. If anything above happens for 2 or more days in a row, don't wait, contact their manager or boss. If you don't feel like you are getting anywhere at anytime, seek a professional in the particular field or possibly seek legal advice. It's one thing to give someone the benefit of the doubt, it's another to be lied to or misled intentionally. Never hesitate to ask questions.
DISCLAIMER to those on Active Rain : I promised that since several offered suggestions in this post, What are your red flags????, that I would allow anyone to copy this for their own marketing purposes. If you want to copy it in a pamphlet, a brochure, to put in your homebuyers folder, or even on your blog site or web site. You have my full permission and don't have to give me any credit for this. Again, it was a collective effort. Maybe if used in a blog or on a web site, you might want to mix this up some. Thanks
49 Comments on Mortgages & Real Estate -- Consumers need to be aware of these Red Flags !!!!!
If anyone as anything else to offer to this, please don't hesitate to write it into the comment. And again, I am giving permission to anyone that wants to use this under their own name. Just change it up some for SEO purposes.
Jeff, this is one of the best articles you have written. It is so informative for consumers as well as those of us who make this industry our livelihood. Thank you!
This is good! I would say people have to exercise patience when getting phone calls returned. For example, this week I have had a 24 hour backlog from Mon-Weds, just catching up on Thurs. I don't think waiting a day for a call to be returned is a sign of bad service. Working with a busy real estate professional can have it's up side and that means finding some great bargains on the market or a product on the mortgage end.
Jeff well done as always. Just want to stress the point that yes things happen BUT not that often. If your Realtor/lender isnt getting back to you the same day via phone,email or text. We might want to look around
Jeff, This is a great post! I like the one when they have to advertise the fact they are HONEST or TRUSTWORTHY...To me you don't advertise that fact. Only your actions will prove how trustworthy you really are.
KRIS...... well, thank you very much. I appreciate that. I think this can not only help the consumer, but we as professionals can use this as a reminder.
RENEE.... thanks for the compliment. Now, I agree some with your statement... exercise patience, but at the same time, not to brush off the time excuses...such as, I am busy.... I'll get back to you in 2 hours and it's a day later. Don't over promise. You are correct in saying that a busy agent can be a sign of a good to great agent. I agree... but many have a method of getting back to their clients. And I even said, 48 hours, start to think about this... that's all. Maybe I will go back and tweak that part.... any help would be appreciative. thanks
JOE..... yes, they do.... and that was my whole point. Don't do exactly what I state, but pay attention and pay attention to the time lines of what takes place... how... and when. Thanks for the compliment.
MATT...... bingo.... let it show through your actions.... sales people sound like sales people. A true professional usually doesn't come across as this. And they are that good, without saying it. What is that phrase? Actions are louder than words? thanks for the polite compliment.
Jeff - with starting our campaign of BEST BUYERS MARKET IN 20 YEARS one of the things I have planned is outlining to people that picking the right mortgage professional for the loan they are doing - when a buyer is going FHA with an approved but less experienced person they could be looking for issues - if you are thinking Oregon Bond and go with someone that has only done one or two you can have problems - these red flags fit into my idea perfectly - I will bookmark for that - if we focus on the people that know their stuff we can make some great deals come together.
Jeff - Bravo my friend! This is vital for information for all consumers. I hope this is read by as many as possible and gets a lot of attention. Must read stuff here.
This is a great post, I took you up on your offer and reposted to my blog. I am amazed at some of the stories I hear from people about how their real estate agent and/or lender behaved. Many buyers just take whatever is handed to them, perhaps because they don't understand all of their rights and their power as consumers. I believe in service and the power of the consumer, and I want my clients to know what they should expect from me. This well written piece might find its way into my buyer's handbook:)
Great post and something we should remember everyday. I'm printing the lender part and will share with my buyers. Just something for them to think about just in case.
What about the lender that wants to represent the buyer (and gives them an "incentive" to represent them) even though the lender doesn't understand the real estate side of the transaction?
here is one that frys me...The lender puts the buyer into a loan they shouldn't be in, then the lender convinces the buyer that the lender can make their offer for them to get a commission and share it with them...then the lender gets the listing when the buyer defaults on the loan they shouldn't have in the house they shouldn't have bought!
I disagree with your FHA-VA comment. The truth is in the "Good Faith Truth In Lending" forms! If they nock your program just because they don't offer it they are wrong, but if theye are willing to show you the numbers, they are just offering good advice. FHA has it's place.
Jeff, great red flags, yea I have seen more than my share of these. Thanks for putting it out there for EVERYONE to be aware of. Congrat's on the feature, well deserved.
Great post! I'm amazed when I speak to buyers who "have" a Realtor and then I ask some really basic questions and they don't know the answers.
Here in NC we have a written buyer agency agreement in place. I think Realtors feel if they ask a buyer to form an "exclusive" relationship, the buyer will run. I disagree. If a buyer is properly educated, and understands that buyer agency is a protection and commitment from both parties, that is a VALUE. I also tell all my clients...if I do not follow through on my word, please FIRE me. I never want a client locked in to working with me if they are unsatisfied. However, I'm not going to put my time efforts and expertise on the line for them if I don't have a full commitment. I have a track record of excellence and I lay that on the line. It has saved me a lot of time and provided me with loyal committed client relationships.
Heff, Not only was this a wonderful idea for a post but the information it provides is invaluable. We hear about some red flags but certainly don't know them all. And others try to ignore them. Great information to share and a terrific feature that everyone should read.
All important red flags. The one I have run into a lot is the one where the loan officer talks them out of using their VA benefits, by telling them there are better deals. (They are lying) They do not have VA at their company.
Another one that I have seen more and more is competing GFE's that don't have title/escrow fees OR pre-paid items..."Rich, your closing costs are twice as high, why?" My response is, "Because I'm twice as honest." Then I give more detail to explain.
THESA.... I agree with everything that you just stated and then some. It comes down to making people aware of these issues, so when they do shop and or ask questions, they have an idea of some of the BS that's out there.... and can read through the true sales person.
JASON.... thanks for the enthusiastic compliments... and yes, I hope many read this stuff and use it.
TAMARA..... A lot of these stories consumers don't hear of, which is one great thing about blogging. And another is to take snippets of these stories and put them in a post as this one, known as red flags, for everyone to read and share. Thanks for the compliment and I would love to see this in your buyer's handbook. thanks
LANITA..... I totally agree... just something for them to think about. Thanks for the compliment and for stopping by.
MICHAEL..... I have never seen this before... I have heard of a few lenders trying to sell per se and then get a realtor involved.... but yes, this would fry me also. ;o)
JASON..... and another 25 pts for Jason... lol Wait, that wasn't enough letters, was it?
RICHARD..... thanks for the kind words... and no, I don't mind at all. Hence why I included that disclosure down at the bottom. thanks.
WILLIAM..... wooo Nelly.... first off, thanks for that great compliment. In regards to your statement, I think we agree. I hope what I was trying to say was clear. I agree.... if it doesn't make sense and they don't have the program, fine. But if the deal could have been better for them, but the loan officer tells them that it isn't... but the real reason is because they don't have that program... that is WRONG.... right? we agree... I will go back and read what I wrote... maybe add to it. I just didn't want to make this longer.
MISSY..... thanks for the kind words and thoughts. I really think that we need to get this out to the consumer, so they have a better idea and not just a barrel of excuses.... thanks again
THESA..... thanks... the star is not what I am worried about.... they could feature this without a star. It's people just noticing this kind of stuff.... awareness... thanks
Doug, I have the potential to wear the Realtor and lender hat for a buyer if my mortgage partnership is the best deal for them. However, the concept of "doing" every step is a bit much!
I also don't control the loan quotes or pricing for a buyer. I'm hands off with that and my loan coordinator with 10 years as a LO handles that for me. If she shops and finds them the best deal against other mortgage companies, I feel it's a plus for my buyer. Disclosure and choice is KEY to that working.
HAHA...I just thought about the fact that my hubby flips houses! I don't have him help any of my clients though. It's a bit too close for comfort! :)
These are all wonderful points. I especially agree with the FHA and VA comment regarding being approved or not. It is unconscionable, IMHO, to "sell" a loan to a borrower if their is a better all around option available. That is what happened to a lot of these homeowners facing foreclosure. They were sold a subprime piece of crap when they might have qualified for FHA, VA, or conventional with more favorable terms. I have heard the old line that you present options and that is commendable but oftentimes the borrower doesn't understand and makes either an uninformed or misinformed decision. As loan officers, we must recognize that we do have the power to sway borrowers in a particular direction. I would advise that you do what is in your borrower's best interest as a reputation is acquired through hard and ethical work and easily lost to neglect and dishonesty!
LISA H. ...... thanks on all accounts of your comment. It started to become a tad longer, but I wanted to give a clear understanding and just not key words that might not be fully understood. thanks
ERICA..... thank you very much for the compliment. I agree, same thing when a borrower asks me a few questions and then I give them several answers and they go...oh, really? And I am like, the other loan officer didn't explain this to you? It's basic and should be explained... same thing that you are experiencing. It basically comes down to, the less the client knows, the better the loan officer, that can get away with things. Just my honest opinion.
CAROLE.... I even found it as a great reminder for myself, as I wrote it..... it keeps me on my toes when talking to a potential client. Thanks for the polite compliments.
DOUG.... lol... funny. Some will argue with me on this.... I don't care how good that I am, you can't possible give your client the best service on it all.... meaning, the mortgage business changes every quarter... you can't keep up with those new programs and regs.... and so many other things and then flip over and write a contract and keep everything else in line.
I will say this.... the only way that you could do this is if you did 1 or 2 deals a month and that's ALL....I still don't care what others that do this, what they will say. In my book, you just can't service your client 110% if you did it all. That's why as a loan officer, I have a processor. I know some loan officers process so they can save that processors fee... no way.... how do you go back our and originate new business then?
RANDY....... I know you have run into this often, because you and I have talked about it. And I will admit, I don't know VA loans well, but I know I could do a good job, because if I am not sure of something, I ask. And I had a client that I actually was taking VA and she had two other lenders tell her conventional was better, with 10% down. I said, no way, from my knowledge and experience... but I said, let me run figures... sure enough, my payment was $74 less. Number don't lie, if you work them out. I found out that both lenders were not VA approved.
JASON...... and they are out there and the client thinks that they will be serviced the both, when it's actually the total opposite, in my opinion.
DANNY...... yes, I think that is one of the bigger red flags.... thanks for the compliment.
RICH S. ...... I think I pretty much mentioned this one in there... not in 110% detail, but close enough. I just wanted to get my point across, so I think we are on the same page. Overall, I totally agree.. I lost a refinance one time to someone that escrowed 3 months taxes, when I escrowed 4 months... and in the state of NJ, it sometimes can be 5 months.... I hate when lenders chop the title fees also... and then say, well, it's not my fault, because it was a 3rd party fee which I am not responsible for.... I just give estimates on those. lol
I love this list Jeff. If I do use it I will make sure you get credit. I use, " Anything I learn about you is confidential. I'm here to help not pass judgement.", is something I use very early in establishing a relationship with a client. Thanks.
Hi Jeff --I was just out visiting your blog and WOW I'm impressed. Not only do you have a wealth of information, you share it, and you do so like someone who really cares about his readers. Again, thank you and God bless you!
ERICA..... you said.... "I have the potential to wear the Realtor and lender hat for a buyer if my mortgage partnership is the best deal for them. However, the concept of "doing" every step is a bit much!"
Could you go into more detail of this? You semi lost me. Do you sell real estate or do you originate loans? You stated mortgage partnership. Are you part of a mortgage company? You talked about the fact that you work with a loan officer that does most things for you. Why even tell the client anything about mortgages if you have someone that does this for you? I am just curious, because I have my .02 about this.. thanks..
RICH D. ..... I agree with everything that you mentioned. One thing that I wanted to add. I have had disagreements with loan officers even a year ago, that were so hung up on 100% financing, that it was better than FHA... and I disagreed, because pricing was always a tad higher. And you could get creative to get that person the 3% needed for an FHA loan and still have their total payment lower than even on a conventional deal. There wasn't a huge difference, but enough to make a difference. Now...???? There is a huge difference. FHA mortgages vs Conventional mortgages - A True Comparison Thanks for your feedback.
BRONSON..... I think educating them is huge... just being upfront with them. I use to hang with many loan officers during happy hour, that would tell me that they would raise the rate or fees on a client the day before or the day of closing. This is the part that gives us lenders a bad name. And at the same time, took money out of my mouth, because I couldn't be competitive against a liar. But now, I arm the consumer with facts, educating them just as this post, and I am now picking up some more clients. thanks for the compliment.
ROBERT.... wow, bingo.... " It's all character and attitude. " And yes, many have neither. But many are great at just selling to the public, even when it's deception. thanks for your input.
CHRISTY..... thank you very much for those kind words. It was hard in keeping this short, but also to get the point across.
MICHAEL S. ..... my pleasure and thanks for stopping by and for the compliment.
WAYNE..... thanks... I actually liked it when I finished also...even though I did rush through some of this. But as I stated, I had help from some AR members, if you go back and read my previous post, when I was asking for help. And these are some of the same red flags that I list from time to time in my posts, when I write them. Overall, thanks for the kind and thoughtful comments.
Jeff, I think this is the best post you've ever written. Halfway through I was already thinking that I should create a page on my web site and link to this. Then I got to your footer. Thank you! You rock! =D
ROBERTA...... thank you very much. And yes, I agree, even those of us in the business, as reminders...
LISA H. ...... hhhhmmm... well thank you. I won't argue with a compliment. ;o) And there you go, you can have this post for the great price of "free".... ;o) Thanks for the kind words.
Jeff.... Thanks for the reminders for those of us in the business and for a short real estate class to the consumers out there who deserve honest professional representation.
Jeff.... Thanks for the reminders for those of us in the business and for a short real estate class to the consumers out there who deserve honest professional representation.
Jeff - Nicely done on this summary post of red flag items. This is invaluable information for consumers, and a well-deserved featured post! Talk to you soon, my friend.
Jeff, I always tell my clients that if the loan officer wont give you a Good Faith Estimate on a hypothetical situation at a certain sales price, then find a new loan officer. Thanks for reinforcing this.
JASON C. ..... thanks for the kind words. Yes, I think many consumers need to read this and understand what is out there. thanks
MIKE..... better late than never, right? Thanks for the mention.
GREG.... yes, it was good to meet you also. Just to think that was almost a year ago.
KAREN... I agree, this is good for not only the consumer, but all of those in the mortgage and real estate industry. thanks
TOM B. ..... yes, it is semi funny..... and I seem to be getting more clients now, telling me... well, the other loan officer didn't ask that question... or bring that up... If it's needed to complete the deal, that it's a guideline, who cares what the other lender said... RED FLAG....
BRIEN.......great point... I agree 110%..... but so many loan officers just are sales people. And the average consumer just doesn't think about this. I have had several clients, when I mention this, tell me that the loan officer must be busy. I say... if they qualified you, they already have the figures... there is no reason for anything over a day... RED FLAG...
Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages Cherry Hill, NJ More about me…
Infinity Home Mortgage Company, Inc
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I just want to educate people about mortgages and the process.
In regards to lending, I am very creative, intuitive, honest, and one who communicates information, may it be good or bad. I am a loan officer that looks out for your best interest.
Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages 
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If anyone as anything else to offer to this, please don't hesitate to write it into the comment. And again, I am giving permission to anyone that wants to use this under their own name. Just change it up some for SEO purposes.