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Real Estate Agents-Pre-qual the right way!
An Accountable Pre-Approval Alternative By Stephen Argen, REALTOR®(Mount Pocono, PA) BBNJ.ORG - Real estate agents and their home sellers are constantly asking for a pre-qualification letter from their customers. They rightfully want this, in advance, to be submitted with the purchase offer. The majority of agents, completely outsource and reach out to a mortgage loan originator for this document of which they submit alongside the purchase offer. A buyer’s agent can be involved and can be pro-active in documenting the pre-approval. It may be remiss to take a "blind eye" approach. The Pre-Approval Problem Unfortunately most mortgage originators, at this critical time, prepare a pre-approval without basic source documents to rely upon. In fact, most lenders big and small, National or local—pacify these request "at the drop of a dime". These "pre-approvals", "pre-quals" or "bank letters"—walk, talk and taste like an actual underwritten loan commitment, while in fact, they are merely all too often generated without regard or verification of the borrower’s credit, assets, employment etc. Some are freely handed out by the loan originator hoping the documentation will later fall into place after the purchase offer is executed. All too often the lender’s pre-approval letter is not worth the paper it is written on! Home financing is a common denominator and a critical contingency in today’s residential real estate transactions. Typically the purchase offer is "supported" with this bank pre-approval letter. Nonetheless, the pre-approval is not supported with any empirical data.ALTERNATIVE SOLUTION Imagine an alternative scenario that Workforce Mortgage Association encourages all agents and lenders to implement on a National level. Workforce Mortgage Association’s member Real Estate Agents and loan originators supply a loan status report (LSR) instead of the pre-qualification letter. Workforce Mortgage Certified ® (WMC) Real Estate vendors agree to use a Loan Status Report which informs the parties involved of the steps the borrower has taken to successfully obtain the mortgage."Since we replaced the Pre-Approval letter with the LSR form the buyer’s pre-approval status is now credible.", Said William Hagan,WMC President, of Simplicity Home Lending Corp. "The listing agent can immediately sense that the buyer’s agent and lender are jointly taking responsibility for the mortgage contingency and the expected steps have been initiated by a serious buyer" , Hagan added. The Real Estate agent initiates the LSR form and has the buyer acknowledge significant steps they have taken to be pre-qualified. Next the buyer’s lender date and sign each time a recognized step to approve a mortgage loan was accomplished. For example, the date on whether or not an application has been submitted, supporting documents provided and trimerged credit report obtained are disclosed. The Workforce Mortgage Association Loan Status Report also contains a cash to close worksheet clearly displaying the borrower’s net cash needed to close. It includes any rebates, seller credits and / or assist. Also, the LSR displays for the borrower the proposed total principal, interest, taxes and insurance (PITI) payment. This is important information for the borrower because both are NOT shown on the new HUD revised 2010 Good Faith Estimate.Arizona REALTORS® and lenders have made progress to rid themselves of the inherit problems of the old pre-approval method. The Arizona Association of REALTORS® conducted focus group meetings with REALTORS®, mortgage brokers and bankers. They replaced the pre-approval letter and designed a uniform Loan Status Report. Their LSR form is mandated and must be used by all Arizona REALTORS®. Hopefully, other states, nationwide, will follow suit!Isn’t it about time the real estate agent take charge and document basic data pertinent to a mortgage loan instead of accepting a pre-approval at face value? A Workforce Mortgage Certified ® (WMC) real estate agent is made privy to the facts on mortgage documentation because without the mortgage funding most home buyers would not be able to close. Thus, the funded mortgage is the real estate agent’s commission and reputation!The pre-approval is demystified when a buyer’s agent initiates the use of the LSR. According to the Pennsylvania Real Estate Commission’s Act, it is in the real estate salesperson’s definition of law and scope of work to negotiate a loan on real estate.* Which means the agent should be knowledgeable about mortgage financing opportunities and should be able to aid and interpret their buyer’s mortgage documentation. In fact, a professional Real Estate agent representing a buyer may want to verify mortgage application data collected and compare the information with the loan status report. Perhaps a conditional loan commitment can be obtained sooner than later with all third party advocates being accountable for the mortgage contingency component of the principals.* "Salesperson." Any person employed by a licensed real estate broker to perform comparative market analyses or to list for sale, sell or offer for sale, to buy or offer to buy or to negotiate the purchase or sale or exchange of real estate or to negotiate a loan on real estate or to lease or rent or offer to lease, rent or place for rent any real estate or collect or offer or attempt to collect rent for the use of real estate for or in behalf of such real estate broker. No person employed by a broker to perform duties other than those activities as defined herein under "broker" shall be required to be licensed as a salesperson. (Def. amended Nov. 25, 1998, P.L.908, No.112)About Stephen Argen Stephen Argen is 25 year diversified Real Estate Professional. He is a PA licensed Real Estate Broker, Real Estate Instructor, Certified Broker/Appraiser and Mortgage Planner / NMLS licensed loan originator. In addition to providing his clientele with "barrierlessness" to demystify the roles of all real estate vendors, Mr. Argen is an expert on assisting business groups to create, facilitate and maintain a customized Workforce Housing Initiative. He is the author of E-MAP ® (Employer Mortgage Advantage Plan) and founder of Workforce Mortgage Association (WMA). WMA is a specialty trade association where Workforce Housing Certified® and Workforce Mortgage Certified ® real estate professionals bring education and "insider access" to Select Employer Groups’ (SEG) entire employee population. Stephen Argen sits on the real estate advisory board for The Better Business News Journal and currently contributes Direct To Consumer Education (DTCE) to the Public as a BBNJ Select Real Estate Expert with the Better Business News Journal (BBNJ) on www.4u2c.tv . He is an Adjunct Real Estate Professor with Northampton Community College in Bethlehem, PA . Mr. Argen invites everyone to learn and share educational real estate and Workforce Housing news with him on www.FindaRealEstateExpert.com , www.WorkforceRebates.com and www.WorkforceMortgageCertified.com . Workforce Mortgage Association new member or certification inquiries are always invited. Please RSVP Workforce Mortgage Association, Route 196, PO Box 835, Mount Pocono, PA or call 570-872-4035. |
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Added by: Workforce Date: 8th Mar 10 Views: 1156 Comments: 0 Favorited: 0 Channel: BBNJ Better Business News Journal |
