Kris
Santa Ana,#2Consumer Comment
Mon, March 13, 2006
I'm not sure how many brokers you've worked for but this is the way most of them do business, and quite sadly it's the most successful one. People these days are only thinking about rates, this is just one part of the loan. At the end of the day the borrower is not going to worry about their rate being 7% Vs. 6.5%. What people worry about are their monthly payments, and Loan Officers understands this "weakness." If you have a borrower that's been in debt for the past 10 years, and his debt has been increasing or staid the same (which is the case for 95% of the subprime market), the rate will not get them back on their feet again, lower payments might. If a loan officer gives the borrower the rate right off the bat, he will most definitely hang up and go somewhere else, and again, and again....People with bad credit have unrealistic goals of what they can qualify for, thanks to bait and switch techniques used by Ditech, Quick Loan Funding etc. "No Fees!" Of course there's fee's they're just hidden in the back of the loan so you can't see them. Another trick that a lot of L.O's uses is the "rate trick." You say you want 6%, the L.O. says "I got you approved for that, with a $1,200 monthly payment." You think it's great! When you go to signing you find out that the rate is actually 7.5%, you call up your broker and inform him off this. He tells you that he's going to go over to the underwriting dept. to see what he can do. He call you back and says, "guess what, the rate is 7.5% but amazingly I managed to keep the monthly payments at $1,200/month." The borrower signs the deal, not even thinking twice the he was approved for 7.5% all along.