Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
This week I spoke with two potential clients who were both looking to buy homes. Although each circumstance was significantly different, both were previous homeowners who purchased their current residences between 8-10 years ago. When I went through some of the documentation needed and qualification criteria required, each responded in the same way. They were shocked at the process and with all that getting a mortgage in today’s marketplace entails. There’s no question that the mortgage process can be an overwhelming and rigid task for many. Over the past few months, organizations such as BankRate.com, Free-and-Clear.com and NerdWallet.com, amongst several others, came out with independent surveys about the mortgage industry, which revealed some very fascinating discoveries from previous mortgage customers.
For starters, one survey revealed that one out of every six applicants said their loan had been rejected. Fifty-two percent of those who were turned away said they had been told their “debt-to-income ratios” didn’t meet current loan standards. Most were not explained what that even meant, nor how those ratios were calculated or derived. Almost forty percent had been told their credit reports (or scores) weren’t good enough for the loan program they requested. Again, most were not given any indication of what the credit items were that resulted in these decisions.
I can speak from personal experience in this regard because a current client of mine recently applied with one of the major commercial banks for a home equity line of credit, and his loan was denied. His calls and emails to his loan officer went unanswered. About two weeks later, he got a one page form letter in the mail saying his application was denied for “unacceptable credit,” and that he should contact the credit agencies to request a copy of his credit. Not surprisingly, the bank officer wouldn’t speak to him any further. I was able to help him restructure the loan terms and amounts he was looking for based on his current credit and income situation, and hope to have him approved soon enough.
There’s more. Almost sixty percent of the respondents in another survey found excessive paperwork to be the most overwhelming aspect. Many noted that the sheer amount of paperwork creates significant difficulties and challenges, making the process confusing and overwhelming. The second most troubling issues for consumers were the strict qualification and requirements for loan approvals – without the upfront guidance and expectations. Unfortunately, the myriad of consumer frustrations went on.
On the heel of reading all these abysmal survey results, I was pleased when I received this letter from a client:
It doesn’t make sense that we met you in person for the first time at the closing. We don’t feel like we just went through a business transaction with you. What we feel we should be saying to our friends is something like this: “My uncle owns a bank, so he hooked us up with an incredible rate. Yeah, it didn’t matter that the closing date kept changing. Yeah, he was totally cool with the fact that we closed three weeks later than scheduled. But you’re not our uncle… and we only met yesterday, and the work you did for us was really incredible. There were a lot of crazy things that happened while trying to get to the closing date. You didn’t have to do any of the things that you did for us – and we wouldn’t have been upset with you. We would have understood that it’s not in your control, and sometimes things just don’t work out perfectly. Well, you made sure things worked out perfectly for us at your own expense. On top of putting our own interest (pun intended) above your own, you bought us a totally unnecessary, but much appreciated gift. It feels like it’s a gift on top of a gift! We’re so thrilled to be homeowners. More importantly, we’re thrilled to be homeowners of a house we could afford – and we have you to thank for making that price possible. Thanks for everything! Hopefully, the clients of Approved Funding help bring some favorable feedback to these surveys!
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