Over and over, I implore my clients to use a lender with a local presence. That doesn’t necessarily mean a local lender, like First National Bank of Jeffersonville, but does mean using a lender with loan officers located in and regularly servicing this county, like Wells Fargo and HSBC. But buyers are often enticed by the seemingly lower rates offered by online lenders like LendingTree (Banks compete, you win) and eLoan. But in the end, you get what you pay for … or don’t get.
Let me give you a case in point. A friend called me today and said they were working to refinance their house with LendingTree. LendingTree said the appraisal came in low, and they couldn’t finance the loan at the great rate that they promised (and my friends paid a hefty application fee to lock in) because the appraisal didn’t support the value, but they could probably finance the loan with PMI (private mortgage insurance), adding 1/2 percent to the cost. I told my friend that I would be happy to take a look at the appraisal report and look for any comps that might support the value. (By the way, the appraisal value that they’re seeking for the loan is very appropriate. This is not a case of pushing value.) LendingTree refused to provide the appraisal, but said they could forward any other comps to the appraiser to "review". But that those comparable sales needed to be within the last 90 days. Wow! A 90 comp requirement is really short, particularly in an area where in the WHOLE COUNTY we only sell about 800 houses a year or 200 houses a quarter! Basically, I think my friends should just throw in the towel with LendingTree, lick their wounds and move on to another lender. By the way, the loan officer handling their loan is in California and doesn’t know Sullivan County from Westchester.
One of the things about working with a lender with a local presence is that they understand that we are a low density rural area with low sales volume. While nationally their companies may impose stringent time and distance standards for comps, they all have developed relationships with their underwriting departments and educated them about the relatively low volume of sales and the need to loosen comp guidelines. Note that this is NOT the same as loosening guidelines for creditworthiness, which should be applied the same across the board. (The ability to repay the loan is the same in Scarsdale as Swan Lake.) Lending officers who are local can work with their underwriting departments to appropriately evaluate appraisals in a low density rural area to help qualified borrowers purchase houses that are appropriately priced.
In these uncertain times of tight credit and nervous mortgage investors, borrowers need an advocate for them who understands the local market, and not just a friendly sales voice at the end of an 800 number who has to use Google maps to find out where we are.