Why More People are Not Mortgage Lenders

A quick peek behind the scenes at 75 minutes of the cushy job that is mortgage lending (from Wednesday afternoon):

3:40 – one of our long-time clients’ files is selected by the lender for manual underwriting.  This will delay the anticipated Friday close until at least Wednesday of the following week.

3:42 – I email the client with the news.

3:44 – She responds that she won’t panic until I tell her to.  This is code for “I’m panicking.”  I wish I could tell her there’s no reason to, but her file has iffy-ness in it and was on the line to start with.  The possibility that the deal will not close rises from about 10% to closer to 30%.  We’ve been working on this deal, which involves her parents and another borrower and three pieces of property, since April.  

3:45 – an appraisal comes in for a borrower in Saratoga Springs that needs to get $40,000 cash out of his home.  The appraisal is $17,000 lower than we projected.  We can still do the deal, but we have to cut our pay to less than $1000, or half what we need per file for the business to survive.  We decide to go ahead.

3:52 – a reply comes in to an email sent to the underwriter on another file.  This file is supposed to close tomorrow.  It tells us that because three underwriters are out sick today, the file we need won’t be ready for review until tomorrow morning and no underwriting decision will be made until tomorrow afternoon at the earliest.  This now means that the loan will not close until Monday, and there is a 50% chance that our clients will lose the house they are buying.

3:55 – I call our clients’ Realtor and though he is understanding about it, he makes sure I understand that he’s not sure he can negotiate an extension and that if he can’t, I have just caused my client to forfeit their earnest money.  The impression is conveyed that I might be incompetent.  Heck, at this point I’m starting to wonder that myself.

3:59 – I call the client, but there is nothing I can tell them about whether they’re going to lose the house or not.  The loan will be approved, it just won’t happen until tomorrow.  We are late because 1) the Realtor negotiations took almost a month 2) the appraiser took 3 days longer than projected 3) Ray was out of the office on a medical emergency on Monday and did not get the loan uploaded and 4) the lender’s entire underwriting department is out.  I can’t do anything about any of these except apologize for them.  I have become extremely adept at apologizing for pretty much everything.  And the truth is that I feel awful about it and wish I could do something useful.  But I can’t.

4:10 – another client calls to set up a time to review the final numbers and make sure the loan is going to work.  On the client’s assurances (he’s been a friend for years) that his credit is excellent, we ordered and paid for an appraisal and are ready to submit the file.  Just for luck, I pull the credit while I’m on the phone.  The credit comes back with 13 mortgage lates on it.  His score is 477.  (Aside: credit scores range from 850 to 450-ish, the higher the better.  620 is required for a conforming loan.  680 will qualify for most anything.  580 is the lowest that can qualify for 100%.  520 is the lowest that can qualify for much of anything.  This score is 50 points below the absolute rock bottom for any kind of loan, and I can tell you that getting below 500 takes some serious work.)  The loan is DOA.  We’re out $350, plus the fee for the credit, plus four weeks of negotiation and discussion comprising roughly 15 hours.  We’ll do another 5 hours before we send the client sailing off into the sunset to help him get figured out how to repair his credit into something like a normal range.  He’ll stay as a member of the Group forever, of course, but it will be five years before his credit is back into a useful range for his purposes.  He appears truly mystified about how his credit can be so poor.

4:29 – I call a referral that found us on the Internet.  He has a bankruptcy from 30 months ago and a foreclosure from 23 months ago, and wants 100% financing on a $250k purchase.  He says he has a deal already at 7%, but wants something better.  No, he doesn’t have 7%, and what he wants is probably irrelevant, but I’ll try.

4:47 – another client rings in to ask about her loan.  It is a complicated, multi-part deal involving a federal agency, a state agency, two banks, two inspectors, an appraiser and us.  We got the deal because the previous mortgage broker wanted to charge her 8.5% on a deal that ought to be at 6.5%.  It has already consumed 30 hours of our time and we are not submitted yet.  While I am on the phone with her explaining that I paid her appraiser $450 yesterday, I get an email from the lender – one of two in the state that do this particular loan – stating that as of noon today they will no longer accept any loans of this kind.  They are dropping the program.  I swear to you, I am not making this up.  The loan is not dead, but it is in critical/unstable condition and could go into arrest at any time.  The couple in question has put dozens of hours and untold bucks into this little fixer-upper and have had it under contract for more than two months.  All they want is to close it.  I have no idea whether I’m going to have to tell them tomorrow that they’ll be living with their parents for the foreseeable future.

5:01 – I try to call the backup lender – a lender that has such a bad reputation on this kind of loan that the appraiser refused to do the appraisal if the loan was headed there, which is why we had to pay him up front – and it is past 5pm and they are gone for the day.  It will be 16 hours before our client couple will know if they have any chance at all to get into their house.  They are displeased to hear this information.

5:05 – I call two more prospective clients, each of whom has failed to return my phone calls since last Friday.  Every day that goes by reduces the chances that we will be doing their loan by 25%, according to our numbers.  Neither client answers.  If tomorrow goes by without response, three deals, worth $7000 together, are dead.

Lots of people tell me how they wish they had a job like mine, so they could take the morning off and go fishing with their kids.  Look, I tell them, I’m not special.  Anyone could do what I do.  If the above sounds to you like an afternoon that you’d enjoy, then maybe you ought to consider it.  It is days like today that cause 80% of loan officers to quit the business within 1 year of starting up.  Some of it might have been avoided.  Most of it not.  Some days are like that.  I feel terrible for my clients, and terrible for us, and there’s not one blessed thing I can do to fix it.

But tomorrow is another day.