Banks, Bankers, Lenders, Mortgage Brokers--What Should you Expect?

Halloween is coming up this weekend and nothing is more scary from where I sit than a bad lender! I write this warning on Austin Real Estate Secrets at least once or twice a year, after some lender has just treated one of my clients about as badly as one could imagine. This time was one of the worst and cost us all many days of delays, change of schedules, scrambling for information that could have been taken months ago (because this was a new home construction build from the ground up) and many unexpected days in the hotel. The process of buying a home is stressful enough, without adding another layer on top from a bad lender to make your blood pressure rise even higher.

Buyers beware. Not all lenders are created equally. While 95% of lenders sound nearly the same when you are getting rates and first interviewing them, believe me when I tell you that they are as different as the people and the costumes that you will see on 6th Street this coming Saturday on Oct. 31st. Some are funny. Some are just plain scary. But finding the really good ones will either require some prior experience or just simply having incredible luck--we are talking lottery luck, baby, not Friday night poker luck. 

When I get a phone call from the lender the evening before closing, it is never good news. It has happened twice this calendar year. This call is never to report that everything is on track and the buyer will be getting keys tomorrow. Sadly, this call happened after the buyer was repeatedly told that everything was good, nothing for the buyer to do, and everything seemed to be going to plan. So, when you find out the day before closing that the appraisal had not come in because it was ordered so late that he had not even been out to the house yet, that the underwriter has not seen the file, that the lender did not have the right contract, and the lender did not know that the buyers would be signing remotely, you have to wonder what the lender and the title company have been talking about for the past 4 months. Or were they talking at all?

So, what can you do to protect yourself? First of all, choose a mortgage banker (Banker, not a mortgage broker) that has been vetted by your Realtor and one that your Realtor has on speed dial. Your Realtor is not recommending this person because they make money from the banker! That would be a RESPA violation and it has nothing to do with why you were given names of bankers. It is because your Realtor wants to save you from unscrupulous, sloppy, and careless behavior that will cost you time, money, and energy on the week before closing as they scramble to try to do the job that you thought they had mastered long before you hired them. But they didn't master this job, did they. Now you get to watch them try to figure it out on your loan and on your time.

So, if you want to be scared--go to 6th Street this Saturday night. If you want to have a great loan experience--ask your Realtor for a list of the best mortgage bankers in your city. Closing a loan on a new home does not have to be a scary experience. 


  1. Thanks to your very helpful post, I now know the difference between a mortgage broker and a mortgage banker! I'd no idea it could be such a minefield out there and naively assumed that all mortgage brokers had to reach a certain level of compliance to ensure all goes well for their clients. It seems I was very wrong!

    Henry Hansen @ Ethica Private Wealth Specialists


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