Running Out of Cash, Fast! The Affordability Crisis

It’s Not Me. It’s You.

By: Shmuel Shayowitz

An elderly man came to a health clinic and requested hearing aids for his wife. “From what distance does she hear well, and from what distance is it hard for her to hear?” the technician asked. The old man didn’t know. So the technician instructed him, “Go home and test her hearing and report back to us.” He gets home and, from a distance, asks his wife, “What did you make for dinner?” There was no reply.

He walked a few feet closer and asked again, “What did you make for dinner?” Once again, there was no reply. This is more serious than I thought, the old man thinks. She really doesn’t hear. He approached another five feet closer: “What did you make for dinner?” Again, no reply. By the fifth time, he had already entered the kitchen and shouted, “What did you make for dinner?” She screams, “I told you four times already – soup with noodles. Why don’t you hear me?”

Over the past few months, I have been in touch with someone who was looking to buy a home and had been in contact with me for the initial pre-approval and consultation. We became friendly and had many lengthy conversations about everything from the home-buying process, the considerations, and the steps he would need to follow once they found something. When reviewing his paperwork, we determined he could not qualify independently for the type of purchase price he was considering. We discussed alternatives, including a co-signer, which he knew his father would be willing to do.

They soon found a house that they loved, and we sprung into action to update our information and sign off on the pre-approval. There were many other offers, and I did everything I could to guide them and advocate for them with the seller’s team to help their offer ‘stand out’ as most favorable. Thankfully, their bid was accepted, and they were moving forward.

About two days later, my client called to say they truly appreciated all that I had done, but his father wanted to go with “his guy” for the actual mortgage. In fact, he said, as a “past client,” he was getting a “below market rate,” which seemed a little suspect to me. We had some back-and-forth discussions, but ultimately, it was his father’s call, and I wished them well. It was not 24 hours later when I got my first text from the son, “Is this normal? The other mortgage guy said…” I called him, helped him understand the issue, and suggested how he navigated accordingly. A few days later, there was a “quick text” asking why they were charging so much for an appraisal.

There were two emails about credit explanations that I helped him respond to, and I hoped that he was near the finish line. The following week, he asked if he could speak with me about an appraisal issue. Unfortunately, the appraisal came in low, and now they were required to pay mortgage insurance or make up the difference. The appraiser under-appraised the property by less than 1%, something I haven’t seen in ages. The appraisal issue wasn’t the only mishap. The other underwriter was giving them a tough time about the father’s self-employment income and couldn’t fully understand his compensation structure.

I provided them with my notes and insights on how we qualified him, and they were satisfied. He was genuinely grateful and offered to pay me as a consultant, which I appreciated but declined. At that point, I took a particular interest in his situation because I was so curious how they could offer him such a favorable rate, despite qualifying him under the same program as the one I suggested. I asked to see their paperwork and discovered they were being charged over $9000 for that “lower rate.” In this environment, I would advise any home buyer not to “buy down” the rate because there will be refinancing opportunities in the future, and it’s a waste of money now to pay for such a short-term benefit.

The calls and texts continued to increase, and I was more than happy and willing to guide him to ensure his loan was approved on time. He kept asking me if what they were telling him was normal. Each time my answer was, “It’s not you. It’s them.” The incompetence he was experiencing was frightening. Unfortunately, not everyone has an advocate that can help them navigate a frustrating experience elsewhere. We often accept things at face value, not recognizing that there is neglect on the other end. Never be afraid to ask questions and insist on explanations – or call me for free advice. I am more than happy to help anyone who feels stuck elsewhere.

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].