This needs to get out there to generate some more conversation on the topic of pre-approvals, or not. I have no issue with bank owner proerties requiring the buyers bo approved by them. Makes sense to me.
So, let's hear from our stellar loan officers...and there are a bunch.
Whaddya think? Pros? Cons? Fact? Fiction?
* * * CALLING ALL LOAN OFFICERS ON ACTIVERAIN * * *
NO PRE-APPROVALS LETTERS???
This post in response to"NO MORE PREAPPROVALS" posted by Marilyn Bondreaux.
WHAT IS THE SKINNY ON THIS MATTER?
WE NEED TO SEPARATE FACT FROM RUMOR. I've seen the posts on ActiveRain and other areas about this but it has always been rumor and limited. However, when an agent gets advice that "because RESPA. . . . . ", goodness, it must have something more than rumor behind it.
INQUIRING MINDS and other REAL ESTATE AGENTS WANT TO KNOW. Since the post didn't disclose the mortgage company involved, I'm left in limbo. What does RESPA say about loan pre-approvals?????
Is this practice limited to particular scenarios, or, limited to thet mortgage company in Marilyn's post?
A PRE-APPROVAL OR AT LEAST A PRE-QUALIFYING LETTER IS ESSENTIAL TO CONTRACT ACCEPTANCE. I don't need a loan office to qualify my buyers for price range. I can do that in my sleep. However, I remember when we once presented offers without lender letters and promised in the contract that the buyer would make loan application in 5 days and have 15-25, etc. days for loan approval.
WORTHLESS LENDER LETTERS?? My experience is that the lender's letter is valuable for credit review and it gives the listing agent and seller some small comfort that the buyer will be able to close.
WHAT'S THE ALTERNATIVE? GET READY FOR THIS! Perhaps agents will have to go back to the procedures we followed 15 years ago and provided sellers with BUYER'S FINANCIAL STATEMENTS. Fine with me. I never stopped using financial statements. They tell me a lot more about a buyer than a lender's letter. However, I do appreciate the credit review which is absolutely critical as loans become more and more difficult and limited.
BANK OWNED PROPERTIES. This would not be a problem for bank owned properties. They would simply require that the buyer making an offer would have to be approved by, who, the bank that owned the property for sale, of course. O.K. I can live with that.
ARE WE GOING TO BE LIMITED TO THE WORKSHEET WHICH IS IN LIEU OF THE OLD GFE???
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
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Jeff, I circled back to Lenn's post to make comments and have reblogged myself, encouraging everyone to post comments on her post. This is a BIG issue. Even more so because the changes were announced in Januaray, 2010 and this is NOT news to those in the know. It is concerning that more people do not understand the significance of the new guidelines.
Jeff here is the responce that I just left on Marilyn's blog.
"Marilyn, who ever gave you that information told you wrong. Pre-Approvals are alive and well and there is no RESPA restriction in issuing them. What RESPA refers to, and Lenders that play games with fees are afraid of is that once a Loan Officer or Broker has taken: the Borrowers Name, Income, Social Security Number, Property Address, Estimate of Value of Property, Loan Amount, that Loan Officer or Broker has to issue a GFE within 3 days of taking that information, because according to RESPA that constitutes an Application. Once they issue the GFE, which they have to within 3 days or be in violation of RESPA, they are locked into the figures on the GFE for 10 days. Many Lenders do not want to be held to that, therefore they will not take all that information so that they do not have to issue the GFE.
So once again the Pre-Approvals are alive and well, but apparently your Loan Officer does not want to be bound to the figures that he initially gives and wants to be able to change them later."
Marilyn,
Following up on your quest for the facts on the status of Pre-Approvals, let me calm your fears on that matter, THEY ARE VERY MUCH ALIVE AND WELL. The information given out saying that they had went the way of the Dinosaur is incorrect. As Jeff wrote in his response the origin of the information may be due to and is most likely due to a misunderstanding of RESPA.
Lenders are held to the figures they provide in their Good Faith Estimate Write ups, since most Pre Approvals capture MOST but not all of the information required to trigger RESPA/GFE disclosure: Property Address, Estimated Value. Names of borrowers, Credit (Social Secuirty Number), Income of borrower and Loan amount (PENCIL) a GFE is not triggered.
Happy selling, and yes pre approvals are quite valuable tools.
Ed
There will always have to be loan commitments unless someone is paying cash. And, that is, in essence, a pre-approval letter. I thought this whole thing was such nonsense, I didn't even bother commenting before. But, it hit AR like a tsunami. Weird how things gather steam here with no credence whatsoever.