The bond market has been all over the place, and we have seen rapid movement in both directions in the past few weeks. We also have many originators that are struggling to produce loans and they are promising (and hoping) rates and fees that currently don’t exist to attract business. While this is nothing new for the industry, those that are desperate are taking this to a whole new level and don’t really care who they hurt in the process. It’s a shame, but people will be hurt and to be honest, little to nothing will be done about it other than maybe a tirade on social media about a loan officer that promised one thing and couldn’t deliver.
The issue is real and sometimes, it may cost people more than just money. It may cost them their chance at home ownership, possibly forever! Think about it, a borderline customer that is all in to make a certain payment and cover certain expenses in buying a particular house, trust someone who offers them the “best rate and lowest fees in town”. They sign a contract, spend a bunch of money on inspections and appraisals to make their dream come true, only to be denied the loan they need because they don’t qualify for the mortgage they need. But they were pre-approved by this lender, there was an LE defining terms that were far from what the original “pre-approval letter” stated and they couldn’t afford the fees or they payment, because the rate they were “sold” was not only not available, but it wasn’t likely available at the time the pre-approval was issued, but it was done to secure the client and have them believe they had “the best deal”.
We have all seen this happen. We know people who do this. What makes it worse is now not only did they overpromise something, but the markets also went the other way so far that the deal is no longer remotely possible! In some cases, these people might NEVER recover. Between the lost money, the lost home, rising prices, and being shattered by the experience; these people may NEVER have another opportunity to buy a home. So please, when you are having conversations with buyers about what may be possible, PLEASE set the proper expectations! Share with them real options and market conditions and remind them that VALUE is far different from PRICE; and the “BEST PRICE” means nothing if it’s not in writing with expiration dates and signatures! A great originator is the last line of defense a consumer has against those that would expose them to losing it all!
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