You put out fires — so should your lender

Key Takeaways

• In a difficult transaction, the right lending partner will look for solutions to get your client’s financing back on track.
• A great lender will offer to pay for closing extensions, reduce his lender fee, or even release the entire file to a competing lender.
• An effective lending partner will never hide behind the excuses listed below.

Just as your ability to “put out fires” impacts the number of closings you’ll have this year, the same thing goes for the lender you’re working with. Difficult transactions always seem to flare up.

The wrong lending partner will say: “We’ve exhausted all possible solutions. I’m sorry, but we can no longer provide financing to your client.”

The right lending partner will say: “…but I have an idea how to solve this for you (or I know someone who can).” The right lender will look for solutions outside the box that get your client’s financing back inside the box.

Fires flare up, and clever lenders are good at solving them.

Does your lender hold himself and his company accountable when there’s a problem, or does he blame everybody else? Does he offer to make a situation right? When there’s a problem, does he offer to pay for closing extensions, reduce his lender fee, or even release the entire file and appraisal to a competing lender who can finish the file?

You’ll get resistance from lenders who don’t think the delay is their fault. Here are some examples:

“The buyer took forever to get me X, Y, and Z documents, so the loan isn’t ready on time. It’s the buyer’s fault.” I say BS to that. The lender could have informed the agent weeks before that he was having difficulty acquiring information from the buyer, so the agent could have helped communicate the urgency to the buyer. The agent would have known beforehand that there was a looming problem and could have started asking for extensions early on. Asking for extensions right before closing is likely to add costs and stress to all parties involved and possibly blow up the whole transaction.

“The loan docs are still in underwriting. They were supposed to be out yesterday; there is nothing I can do.” Delayed docs create a domino effect of issues. A lender uses this excuse if she feels the delay is not her fault — but it is her fault. She knew the deadline, and if she didn’t hit it, she needs to own up to it.She could have gotten the papers to the underwriter sooner, especially if there was a backlog — but what’s done is done. At this point, she can get a company executive involved to speed up the process. She can help soften the burden of the delay by paying the seller a daily fee until the problem is resolved.

Will the buyer or seller be temporarily homeless, need a hotel, or be delayed from closing on another property now? Will either party be charged extra fees and expenses because of the delay? The lender needs to step up and cover those expenses if she’s the one who caused the problem.

“The buyers didn’t disclose that they had a short sale three years ago, so now we can’t do the loan.” This is a BS answer, because it means the lender was lazy when he took the initial application. He should have asked for complete information and worked ahead of time to really vet the buyer and discover up front if there was anything the underwriter or the lending institution was going to find.

The lender would have seen on the client’s credit report if there was a foreclosure or bankruptcy — if he’d checked. He could have told the buyers right away that they were going to have problems getting a loan, and saved everyone the time, expense, and paperwork involved in viewing multiple properties and making an offer.