Will We Ever Learn?

November 7th, 2011

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It seems we are doomed to repeat our mistakes. Mankind has been jumping over bushels of hundred dollar bills to reach the quarter in the corner, since the dawn of currency. I have a number of new stories every week, of consumers who look so very hard for the best deal, they overlook the fact that they may be dealing with a disreputable provider, or may not get what they expect, or may be getting a promise that won’t be kept, or even worse; may be getting a price quote from someone that has no idea what they are doing. But boy do we consumers love a deal, and boy do we love to believe what we are promised.

I had a client call a few months ago and they wanted to refinance their condo. They started the conversation by grilling me on price, and I responded that I needed to know a lot of things before I could quote a price, like credit score, appraised value, debt ratios, etc. There are numerous variables that go into pricing a loan, but all they wanted to hear is what my most aggressive price was. Somehow I could not get them to slow down and hear my logic. After asking about some of the characteristics of the loan, since it was a condo, I tried to get answers to important questions that all lenders would need the answers to, like:

how many units are owned by investors versus primary residents?
how many unit owners are delinquent on dues?
does one unit owner own more than 10% of the units?
does the condo have 10% of the annual budget set aside in a reserve account?
and more…

He did not want to review these questions, he just wanted “the best price you can quote me.” Then, he wanted to know if rates went down after he locked in a rate, if he could get a better deal! And also wanted to know if we’d pay the appraisal fee! Obviously this was going nowhere, and I ended the conversation, as I could not provide an accurate price quote without ALL the details. And I think if the conversation went much further, he would have been asking me if I would commit to coming to his condo once a week to clean his kitchen, mop the floors, scrub the toilets, and lend him $20. He wanted the moon, and more. This was a very unreasonable individual, I had surmised.

Then, about a month later, I saw in an email my two favorite words”

“Remember me?”

The rest of the email, from the same client I could not get answers from, went like this:

“I wanted to refinance with you a month ago, but you weren’t able to quote me a low rate, and I went elsewhere. Unfortunately, my loan app fell through at the last minute with the lender I went with, because they had problems with the 11.9% of the units in the development still held by the developer. Anyway, would you accept my applications now?”

Yes, it was music to my ears. But, no, it did not make me happy. I was upset that yet another client went racing ahead to what he was sure was the “best deal” without getting all the answers he needed in advance. He jumped over a bushel of $100 bills (in this case savings of $300 a month on his mortgage with me) to get the quarter in the corner (an alleged better deal, that could not even be done, it turns out).

Had he slowed down, and let me ask all the questions I wanted to, there is one possibility, in this scenario, to get a loan through where one unit owner owns more than 10% of the units in the building. But I can’t release that secret here 🙂

In the end, in our desperation to secure the last 1/8% in rate, the last $100 in closing costs reduction, and the last word in getting the best deal; we consumers tend to overlook:

realistic goals
and experience

I wish I could do something besides blog occasionally to remind people that they are only putting themselves in a bad position when they go for the rock bottom deal. Usually, those deals are never delivered anyway. Please be careful, ask a lot of questions, and think about other characteristics of your service providers besides price. You’ll thank me.


Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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