Lend me your ear

And I’ll talk about mortgages.

by George Stephens   Not everyone can pay cash for a home. In fact, our recent survey of Texas buyers shows only 7% do. For many of the rest of homebuyers who rely on mortgages, things have been a bit dicey of late. I know that’s the case because no matter where I go in Texas, REALTORS® tell me about their clients’ troubles with mortgage brokers and bankers.

What kinds of stories have I heard? Loans that don’t fund in time, rate locks expiring despite the applicant meeting all obligations, locked rates that actually weren’t, hidden fees popping up just before closing–even lenders interfering with contracts by changing the terms. Obviously, there are plenty of lenders who are maintaining the highest standards and meeting their customers’ needs. But there seems to be a higher number of problems lately–perhaps due to the crush of mortgage business generated by people buying homes and refinancing mortgages at such great rates. If there’s any doubt of this problem, I even heard that the chairman of the Mortgage Bankers Association of America wrote a letter to members urging them to address loan processing delays before the industry suffers a consumer backlash or increased regulation.

One significant problem concerns mortgage brokers who don’t use the mandatory letters for conditional qualification and conditional approval. These letters could help consumers hold brokers to their word. Applicants, though, don’t know about the letters, so they don’t know to insist their mortgage broker provide them. As REALTORS®, we can help our clients by educating them on this.

Though mortgage brokers are required to use these letters, mortgage bankers are not. Not yet, anyway. Hopefully, that will change soon. One provision of the legislation TAR recently sponsored to regulate mortgage bankers gives the Texas Savings and Loan commissioner authority to require mortgage bankers to use the letters. TAR will be encouraging just that. We also are appointing a mortgage lending task force to study and make recommendations regarding any continuing problems in the industry. We will work with mortgage-broker and mortgage-banker associations to find solutions, so that homebuyers–and sellers, too–won’t experience unpleasant surprises regarding their loans.

In the meantime, you can find the mortgage broker letters in the Forms section of TexasRealtors.com. The letters are a step in the right direction ... when they are used.

Photo by Jerry Jones/JonesImages.com.

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