firstsource

" Mean" questions to ask your Loan Officer

21 posts in this topic

I need to have a copy of my credit report. If I pay you for it, will you send it to me in a *.pdf or fax and mail it to me?

Are you going to send the loan application to a lot of lenders, with my SSN on it? I will not give you permission to do that, just send the credit report with my SSN off and my Loan App. with out my SSN on it to the lenders, I realize that they will have to run the credit for final approval.

The appraisal. I would like you to send me a copy of a letter addressed to the appraiser turning the appraisal over to me. I know otherwise I can not have it or use it if I need to.

I am not going to send an appraisal fee to you before finding a home. I will send the appraiser a check before he goes out to see the home however. Or will pay him when they come out.

What kind of appraisal are you ordering for me? No, I don't want a "short form" or "Twenty Fifty Five", I want a full appraisal or a "Ten Oh Four". I know that that one costs about 100.00 more, but that is what I want. (why? because the values always come in higher-there is more room on the form to help the appraiser "justify" the value of the home. If you ask an appraiser if the value will be the same for a 2055 or a 1004, they will say yes, but NOT)

You are asking for a application fee upfront. Why?

You are asking for a processing fee upfront. Why? What happens if you don't approve my loan.

If this is a prime rate loan:

What lock are you quoting me for this rate? I will expect you to send me a confirmation of the lock when you get it from the lender-today.

NOTE: Loan locks have a time cost to them. So it costs less for a 10 day lock than for a 30 days lock. Loans normally take about 30 days, unless the appraisal/title/documentation is in already. So you would think that a 30 day lock would be ok. WRONG. Spend the extra money and have a 40/45 day lock quoted. Then if it goes one day past the 30 days, you are still covered. I had a loan take about 35 days to fund. It cost me .25% of the loan to pay for the extension. (Funny thing, I called my friend-who dragged his feet getting me the tax info the UW asked for at the last minute-if he would mind paying for the fee, as it was his fault. He said that he wouldn't pay. Geez...)

Thanks for your time. Good luck on getting these loans. Thanks to everyone for asking the questions you ask. Some times I am stumped and have to ask someone, but less and less. So I am learning too.

Charles

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Another important question:

How many points are you getting on the back?

Points on the back are the "refund" or "commission" given to the loan officer/mortgage company for selling you the loan above the going interest rate. Most loan officers conveniently "forget" to tell you this. Another great reason to demand to see the lock sheet.

One more tip: If it is at all possible, see if you can get an advance copy of the HUD-1 (the final accounting of all the fees, deposits, loan, cash back, etc) in the transaction. You will always see the HUD-1 at the closing table, as you will be signing a copy, but having an advance copy allows you the chance to go over it to find "hidden" fees. If your closing is a rush job, it may not happen, as the documents are drawn at the last second, but you may be able to get a preliminary copy.

Kristy, former mortgage professional

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a hud 1..you are required to be given the opportunity to see one 24 house before closing.........which is where you will see the broker rebate..now on the rebate, if the lender has banker status, they can show nothing legally and still be making the loot on it.

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I'm sorry - I can't resist...

Here's another one:

Are you a broker or a direct lender?

Why ask this question?

Because a broker is the one that shops your loan around to various investors for an approval. A direct lender has their own underwriters (and nowadays automated underwriting) so your credit report is pulled one maybe two times. Once when you apply to get the approval and, if you close more than 30 days out from that, again. If you close within 30 days (and yes, it happens) then it does not get pulled again. There's more to this, but that will suffice for now.

Ok, for the borrowers - you want a "par" rate (bottom line - no "backend" money for the company) and you don't want to pay points and you want low fees. So, I'm assuming you'll be looking for mortgage brokers and/or lenders who work for free? :lol:

Regarding the appraisal - in the loan package there is a standard form "How to Get a Copy of Your Appraisal". It gives instructions on how to request a copy. There will be a time limit on there, usually 30 days, for you to request and receive a copy of your appraisal. BTW, the lender does not HAVE to release the appraisal. The subject property is the collateral for the loan. YOU as the borrower need to show what this property that you are borrowing against is worth - that's the purpose of the appraisal, that's why it's required and why you pay for it.

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Charl, Kudos lol. I am a Mortgage Broker and the time frame for requesting a copy of the appraisal is 90 days. Yes there is a form in the closing package for this you are correct.

HUD1-A is required to be shown to the borrower within 24 hours correct as well. I have cancelled mu closings if the Underwriters dont get one faxed to me prior to close!

Mortgage Brokers are under the Predetory Lending laws now whereas Mortgage Bankers are not. Mortgage Brokers can also apply for a warehouse line of credit to exclude them from the Part 41 laws as well, tho I know none that have.

2055 and a 1004 are long form and short form correct, but the values are exactly the same or the appraiser would be risking his license to change values on one from the other. Lenders instruct me as to which one they require depending on if the prop is rural or suburban.

FYI the 2055 is nothing more than the fact the consumer has good enough credit for a drive by appraisal. Thus 2055 = Drive by only, which is why theyre cheaper.

Yield spread or points on back of the loan are disclosed on HUD 1A as Yield Spread Premiums 100% of the time for Brokers! Personaly Im so tired of hearing the Broker Bash I'm sick. There are bad yes but most are good and I hate being classified along with the bad all the time.

Watch for application fees and processing fees on your HUD 1-A if the bank charges a processing fee the broker may not charge one period. and vise versa. Used to be they could and were but that thankfully stopped.

Blah theres so much more lol I'll stop here tho ^_^

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I totally agree with what you say about the appraised values being the same, but this is what I was told. With the loan form, there is more room for the appraiser to justify a higher price, than with the short form. As everyone in our industry knows, appraised values are judgment calls from the appraiser. He needs to justify what he says, but no two appraisers will give exactly the same value on a home.

I also dont push an appraiser for value. Every appraisal is subject to a review, so it is simply not worth it.

Thanks for the response. Please come to the forum and answer posts when you get a chance. It helps everyone concerned to hear different thoughts from time to time. Besides most of what I do is sub-prime, so get a bit "rusty" on conventional loans.

Charles

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Ok so I am new here but I am certainly not new to the MOrtgage Business ^_^. I am a Mortgage Broker in PA and NY and in 12 years experience I just wanna weigh in on some of these questions to ask the loan officer lol

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800. ITEMS PAYABLE IN CONNECTION WITH LOAN

801. Loan Origination Fee %  Some lenders charge this, as well as the Brokers points further down $350 00

802. Loan Discount % This is what you pay to the lender for a lower rate than you qualify for $0 00

803. Appraisal Fee to

804. Credit Report to

805. Lender’s Inspection Fee

806. Mortgage Insurance Application Fee to

807. Assumption Fee

808. Mortgage Broker Fee  Front end Broker Fees in Points $2,400 00

809.

810. Yield Spread Premium $1,600.00 (poc)

811.

There are MANY honest Mortgage Brokers out there who utilize the Points and Rate to offer the consumer what the consumer wants, and not just how much profit the Broker can make. For those who want a lower rate, Brokers will negotiate the points paid by the consumer, to establish what the Broker will make on the loan. Those who don’t want the high closing costs, will usually agree to a slightly higher rate, where the lender will then pay the Broker on the back of the loan, rather than the consumer paying all of the points on the front. In any case, the Broker should look out for the consumer’s best interest, that’s what he/she is there for.

Unfortunately there are also many Brokers out there who look at their bottom line, and how much they can make on every loan, regardless of the consumers best interest.

I have given a loan scenario below showing a prime example, of how many Mortgage Brokers make a lot of money in their profession, that more often than not, is held as a closely guarded secret. Please take a look at them, and then go grab your HUD-1A, and compare it to what type of Broker you may have used. You may be surprised at what you find!

For this scenario, let’s say you would like to borrow $80,000.00 for 20 years, to help pay for your Childs college education, or to take cash out of the home for home improvements, to buy a car, or any other reason you may have.

You go to the local Mortgage Broker and apply for a loan with him/her, because they have many lenders available, each lender has many programs for almost any credit situation. That, coupled with the fact that the local Broker may have been in business for years in your community, you begin the process.

Here is what you can expect to follow.

Broker submits your application to 2 or more lenders for the best rate based on your credit and circumstances. Both lenders approve your loan application, pending further documentation you must provide. Lenders fax the PRE-Approval to the Broker, and the Broker calls you with a congratulations, you’ve been approved! In this scenario, were going to assume you have no problem paying the Broker a nominal fee for all the work involved in the processing of the loan, and there is plenty he/she must do.

1.Collect all documents from you that the Lender requested

2.Calculate year to date income to ensure accuracy, obtain W- 2’s from your tax preparer or employer in the event you do not have them readily available.

3.Order the title to the property

4.Order an appraisal to be done on your home

5.call to verify if there are any back taxes due on the property

6.If there are derogatories on credit that must be paid, the Broker will negotiate a settlement on those items, to save the consumer money, and to clean up the credit.

7.Request a Verification of Employment

8.Request a Mortgage Pay off

9.Request a Verification of Mortgage to show your payment history with them

10.If title comes in with judgments, he/she must clean those up.

11.Broker will need to follow up with all of the above until all the requirements are in that lenders requested on the PRE approval.

A Mortgage Brokers job is to make the refinancing or purchase process as painless as possible for the consumer. This is why it is critical that as much of the information required at the time of application is given to him/her so they don’t have to call you on a daily basis for additional items.

Local Broker

1.He/She calls and tells you that you have been approved for $80,000.00 at 7.5% for 20 years.

2.His fees are 3 points on the front, or 3% of $80,000.00 for a total of $2,400.00

3.Let’s assume you are totally satisfied with this because your current interest rate is at 9.5% so the Broker is dropping your rate a whole 2%!

4.With the above scenario, you are going from 9.5% or $745.70 per month, down to 7.5% or $644.47 per month saving you an amount monthly of $101.23! Why wouldn’t you love your Mortgage Broker?

Everything goes as planned and you close on your refinance loan with absolutely no problems what so ever. You refer your friends, colleagues, family members to him/her for business. Everybody is happy all the way around.

PROBLEM!!! PROBLEM!!! PROBLEM!!! PROBLEM!!!

Do you remember back a few weeks ago when you initially completed your mortgage application? Remember, He/She submitted your loan to 2 different lenders for the best deal? Best deal for who? Let’s take a look!

1.2nd Lender qualified you at 6.5%, a whole point lower than what you closed at!

2.Mortgage Broker sold you on 7.5% at 3 points on the front, or 3% for $2,400.00

3.What you missed was that the lender you closed with paid the Broker 2 points or 2% of $80,000.00 for an additional total of $1,600.00! for closing you at a higher rate than what you initially qualified for.

4.Mortgage Broker used the Pre approval that made him $4,000.00 in his pocket

5.Mortgage Broker sold you on a higher rate, higher monthly payment, and a much higher payback of principle and interest, to the tune of $11,525.50!

----------------------------------------------------------------------------------

#1 Loan Amount $80,000.00 at 6.5% for 20 years Payments would be $596.46

#2 Loan Amount $80,000.00 at 7.5% for 20 years Payments would be $644.47

Life of the loan payback of principle and interest option #1 $143,149.66

Life of the loan payback of principle and interest option #2 $154,675.16

You are paying this much more so the Broker makes more! $11,525.50

---------------------------------------------------------------------------------

It doesn’t seem in my opinion, that a consumer paying an extra $11,525.50 over the life of the loan is hardly worth an extra $1,600 in commissions, do you?

The other Mortgage Broker, Gave you the best rate, he/she had taken only front end points, those points paid by you, and guarantees his/her loyal customers through honesty, integrity, and a set or morals that will stand the test of time. For this reason, you and your referrals will always make their way back to this Broker for your financial needs in the future.

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I know this is an old thread, but I thought I would ask anyways: Legend, how do you know if your lender has done this to you? (sold you a higher rate for money back). And i guess this is for everyone: Do all these same guidelines apply for HELOC's also? TIA

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Unfortunately, bankers and lenders are not required to disclose yield spread. Mortgage brokers are required to disclose this however.

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I need to have a copy of my credit report.
Most LO's will gladly send you your CR in any form you choose,

Son of a ___! Last year, when my wife and I were doing a mortgage, the lender refused to give us a copy of our CR, saying that it was against the law. Of course I didn't think of researching it, or asking my uncle-in-law who is a lawyer. Gorram it.

Oh, and we were never sent a copy of the survey, which we had to pay for as there wasn't one in the county records. Guess I need to call them...

Damien

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Great article. One point about rate locks...

I once dealt with a guy who was dragging his feet a bit on getting to the closing table--he wanted his rate lock to expire, because rates were falling and he'd already excersised his one-time "float down" option. If this is you, be careful--most rate lock agreements state that if a lock expires, the borrower will still get the locked rate if it is higher than the current rate. This guy didn't bother to read the agreement.

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I once read that it's a good test to ask your loan officer, "What's your par rate?"

This is lending jargon for "What's your rate with no points?"

If he doesn't know what you're talking about, he isn't that experienced.

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Good post - hats off to legend......:-)

...I once read that it's a good test to ask your loan officer, "What's your par rate?"....

I get that asked alot, I respond "What rate can I qualify you for?????

Bottom line it is your loan officer that is going to get you the best deal. A borrower has to be comfortable with the person thing are dealing with.....:-)

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Ok, for the borrowers - you want a "par" rate (bottom line - no "backend" money for the company) and you don't want to pay points and you want low fees. So, I'm assuming you'll be looking for mortgage brokers and/or lenders who work for free? :lol:

Regarding the appraisal - in the loan package there is a standard form "How to Get a Copy of Your Appraisal". It gives instructions on how to request a copy. There will be a time limit on there, usually 30 days, for you to request and receive a copy of your appraisal. BTW, the lender does not HAVE to release the appraisal. The subject property is the collateral for the loan. YOU as the borrower need to show what this property that you are borrowing against is worth - that's the purpose of the appraisal, that's why it's required and why you pay for it.

Ummm...lenders earn plenty of money on the interest rate. Interest rates always include markups for risks that the lender is taking. So, if you're getting a loan from the direct lender, there's really no reason for them to add any points, application fees, origination costs, credit report fees, and the appraisal.

With regard to the appraisal--Since the bank is the one hiring the appraiser, the appraiser works for the bank and is preparing the appraisal on behalf of the bank. Therefore, the bank should pay for the appraisal--in a perfect world.

If the borrower is paying for the appraisal, then the borrower should be entitled to select any qualfied appraiser.

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If this is a prime rate loan:

What lock are you quoting me for this rate? I will expect you to send me a confirmation of the lock when you get it from the lender-today.

NOTE: Loan locks have a time cost to them. So it costs less for a 10 day lock than for a 30 days lock. Loans normally take about 30 days, unless the appraisal/title/documentation is in already. So you would think that a 30 day lock would be ok. WRONG. Spend the extra money and have a 40/45 day lock quoted. Then if it goes one day past the 30 days, you are still covered.

Charles

AWESOME! This is something I never knew... VERY good point. What is the normal avg cost for a 45 day lock on your given interest rate? What if the interest rates dip below that given locked rate during that time-span? (Just to make sure I understand, once you are fully approved and given the loan at a certain rate, you can shop for a home up to that amount and can lock in the rate quoted for 45 days while you shop for a home?)

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AWESOME! This is something I never knew... VERY good point. What is the normal avg cost for a 45 day lock on your given interest rate? What if the interest rates dip below that given locked rate during that time-span? (Just to make sure I understand, once you are fully approved and given the loan at a certain rate, you can shop for a home up to that amount and can lock in the rate quoted for 45 days while you shop for a home?)

No. You can not lock in your rate without a contract on the property.

You can get a pre-approval without a contract - but the contract is required to lock in your rate.

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Although you have penned down the number of questions that should be asked to the loan officer, but it is practically not possible to remember each and everything while you are actually facing a loan officer. Hopefully, all these instructions will prove useful at the time of need.

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These are easy questions for any experienced LO to answer. Only the newbie might get discombobulated. But if presented in this manner, the client would probably be someone I would not want to do business with.

On the credit report issue, most lenders have a policy that prevents them from releasing the credit report to the borrower. It has nothing to do with whether the borrower pays a fee or not. It's based on the lender's contract with the credit reporting company. LOs that do release it often have been poorly trained and don't know better. The same concept applies in other situations where the creditor pulls your report. If you apply for credit at Macys, you cannot get a copy of your report from Macys. They will direct you to the credit bureau.

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