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If your first question when proposing a deal is how much yield spread you can make or how many points you can charge, you will probably raise red flags with the lender. More important, if a lender sees you charging excessive points, it will become cautious about the deal and about you.
The unresponsive broker
Once brokers get an approval, they often disengage from the loan process. This is not a good business practice. Lenders rely on you to provide information during the underwriting process. If you do not cooperate in this stage, you make their job harder, and you could delay the closing.
Lenders want to work with responsive and hands-on brokers. They will seek out such professionals and avoid those who do not possess these characteristics.
The sleeping lender
How typical is the following scenario? You call the lender, discuss the deal, provide information and then wait by your fax machine for a preapproval that was promised in just a few hours. It never comes. Every time you try to contact the lender, you get no response or a flimsy excuse.
If your lenders promise fast performance, you must hold them to it.
The piecemeal lender
You think the loan is ready to close. The appraisal is done, and all the conditions have been met. Then all of a sudden, the lender starts requesting pieces of information that were never part of the initial conditions.
At first, you start sending that information, thinking it will get the loan closed faster. After a while, however, the requests continue in bits and pieces with no end in sight.
Lenders should be upfront from the start about what they need to get the loan approved. Additional items may sometimes be needed that could not be anticipated at the commencement of the loan. But a lender that continually requests information that was not mentioned in the early stages of the transaction is disorganized or unaware of what is necessary to close the loan.
The chop-shop lender
Have you ever had a lender tell you that even though an appraisal came in at value, the internal-review department knocked it down by 30 percent? Ever have a lender tell you that even though all the loan conditions were met, an interest reserve was necessary because of concerns about the borrowers' lack of history on the property -- even though that history was disclosed upfront? Essentially, the lender is chopping up your loan to fit its comfort level.
A lender has a right to lend its money as it sees fit, but again, it should clarify these stipulations from the onset. A lender that starts implementing new underwriting conditions during the course of the loan or deviating from the appraised value needs justifiable reasons for doing so.
The scared lender
This lender wants to loan the money and even likes the deal, but it focuses on every worst-case scenario possible. Simply put, this lender will always second-guess everything.
Protecting the downside is one thing, but when the lender starts questioning deals that are no-brainers, it may simply be unwilling to take on any risk. Lenders charge interest, points and fees to cover their risk. If that is not enough, you may want to walk away.
The empty-chair lender
Similar to the unresponsive broker, the empty-chair lender does not stay on top of the deal once it is in underwriting. When you call the account executive for updates on your loan, you are told repeatedly that it is in underwriting. These responses indicate, however, that the executive likely does not know what is going on.
Lenders must keep brokers informed about the deal. This can ensure that conditions are responded to efficiently and that the deal will close in a timely manner. Brokers are entitled to good customer service.
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Lenders and brokers want the same thing -- to close good, profitable loans. Avoiding some common bad behaviors can help make this happen and can make for more-solid relationships.
Daniel Stuzin is the president and founder of SF Partners Mortgage, a private-money commercial lender specializing in stated-income/stated-asset loans. The company is a direct portfolio lender funding in Florida, Texas, Illinois, Pennsylvania and Washington state. SF's capital sources are independent of Wall Street, allowing it to actively fund loans in today's uncertain environment. Contact Stuzin at email@example.com.
Visit the company's Web site at www.sfmortgagelenders.com. Regional sales director Symen Morales also contributed to this article.
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