Wanting the Loan officer to put skin in the game. Is this possible?

Question

So, I'm selling a property and I know this USDA mortgage broker is just telling me (the seller)  whatever i want to hear.    I've heard it before, we all have.....

Is there any way to get this guy to suffer some sort of loss (and Ideally me some sort of gain) if he can't follow through with the timelines he claims he can produce?    My last 3 USDA loans in various areas took 75 days, 105 days and an ALARMING 172 days.     He is claiming 45 days no problem.....same story i heard on the last 3.

Would love to have him put a few thousand dollars in escrow as some type of performance deposit but I fear regulatory issues might not allow that?

Account Closed · Answer

I'm guessing your buyer pool must be limited if you are even considering an offer with USDA financing. And you've done it several times!  That's says to me that government insured loans and buyers with no downs are your source of income/profit on these deals.  So you can deal with the system the way it is or wait for a better offer. You DO have choices.  Getting the loan officer to put skin in the game isn't one of them.  :)

Sean T. · Answer

@Dion DePaoli sorry for not being clear.  I go through USDA as a seller to confirm everything ahead of time, location qualification etc.  Learned this trick from some realtor friends!

Your knowledge is appreciated!

Leon O. · Answer

I am sure the Loan Officer wants to make the deal happen as much as you.  Ultimately, it is up to the under-writers to make the decision to give the loan to the buyer in the end.  The Loan Officer's skin is already in the game, he does not get paid unless the house is sold and I am sure that he has invested much of un-paid time to try to get these loans done for you.  I do get that same sense that most of these guys are "Yes" men though.  I hope this one goes through for you. Good Luck.

Leon

Dion DePaoli · Answer

Kristine Marie Poe the OP is a Seller not a Buyer seeking financing.  It is true, for USDA you will have better luck at an approved Mortgagee's door rather than a broker.  Even then, the file underwriter is not the insurance certificate issuer.  So, innately, there are places in the process which will have timing issues.

Jeff Trevarthen · Answer

I think your agent needs to do a better job of representing you.  There are no freebies in this game and if the buyer can't stick to the contractual obligations, make sure your agent looks out for your best interest.  Whether that means keeping the earnest money deposit or whatever.

Sean T. · Answer

Call the lender direct(I think Chase does USDA still) and see what they are saying.  Or my favorite, threaten to go to a different broker after X days/delays.

I just went through this in MA.  Chase USDA and delay after delay.  Finally went directly to Chase.

Account Closed · Answer

Are there agents that really understand the loan process and are good at getting loans closed? And how do I find them? The agents I've worked with so far seem like they understand the loan and lender situation when we get the offer.  They tell me which lender is easier/better, etc. But then they become gullible and easily bullied when the loan doesn't go as planned, which is always.  They are shocked when I won't extend or cancel.  They think I'm mean.

Your point about getting more knowledge when selling to financed borrowers is a good one.  It is something that directly affects my life.

Dion DePaoli · Answer

Leigh,I can understand your concern and desire.  However, they are unorthodox and really, IMHO, do not move to solve your actual problem.  Attaching RMLO's to RE Agents and Brokers is not a good practice.  Do some agents refer a LO or Lender?  Yes.  However, the Borrower/Buyer is clearly and required by RESPA to be afforded a proper choice of lender.  If you are as active with these types of loans as it seems, I suggest a different strategy.  Sit down with a good RMLO on these deals and learn what it actually means to get these loans processed, approved and funded.  From there you can do what I like to which is use the contract to have the RMLO to send me copies of the conditional commitment.  I can then manage the process from a far.  This would give you a better idea of who is holding up the process.I have done this on every deal that I sold off REO and the Buyer had financing.  Some of those deals did reveal a willing and qualified Borrower and a less than adequate RMLO.  Then I just apply pressure on the agents with my knowledge of the process and lack of results.  Most of the time, if I saw a deal stall because of the RMLO I would have their agent talk to them about submitting with another lender or RMLO.  I have asked for copies of the application for my own review before I even enter contract.  On the flip side, when a Buyer/Borrower stalls, I have ammunition to take a hard stance on contract extensions when they ask.  If we are extending a closing date and the Borrower has failed to turn in proper paperwork, I might just walk or I might condition my extension with more money and a Conditional Commitment from the Lender.  This is a pretty easy task for me personally as I understand loans and the processes very well.  Without that comfort and my own brutal brand of honesty the various players would likely have me believing miss-directions and improper practices.  I suppose the alternative to that idea is have an agent on your side that is familiar with the process of getting and closing with loans.  Not my first choice, but a viable option.  Perhaps a RE agent who really does know not pretends or even an actual RMLO to run pre-qualifications for you which gives them an oppurtunity to write a loan for the borrower.  You can not force the Buyer to use your finance person.  RMLO's would jump at the chance for that type of relationship with you.  Sounds like you need to find one firm or person to deal with that has a national or semi-national foot print to origination.  You get the idea I think.Moral of the story, if you are going to try and manage the situations my recommend is you manage the situation directly not indirectly by using the agent as some form of bowling pin or whipping post.  I just don't think that will get you the desired results.  Every REI that sells to financed borrowers should develop knowledge of loans and the loan process.  That does directly affect your life.

Leigh C · Answer

blah i setup the tags and then they went away...

@Leon O. @K. Marie Poe  @Walt Payne   @Joel Owens   @Wayne Brooks

Leigh C · Answer

Thanks all for the response...

@Wayne Brooks    I need to get tougher skin, i don't want to punish the buyer for hiring a bad lender, i suppose i might want to redirect that to the agent since it's maybe more their fault.     May try a 1000 bonus if it closes within 5 days of the target date, if it doesn't there is a .5% reduction in buyer's agent commission per 2 weeks it is late.      Doesn't stop their desire to keep a bad deal in contract though if it more than likely won't close.  May make them more of a pit bull staying on the lender's heels.     Might make more sense to tie that into your rising price too.     Motivate both parties in hopes one of them actually cares enough to do something.

@Walt Payne    Each region is very different.   That doesn't apply to me sadly as I work multiple areas

@Leon O.    I don't agree.    The current pay structure for lenders are to take anything they think might stick to the wall and kick till either can close or hits a brick wall.    They have EVERY incentive to keep a deal going that might close as the holding cost to them is minimal if anything.   I agree they have a labor cost for each file, but it's not significant to the pay structure.

@K. Marie Poe   I work in several states so yes, at times the local area is driven by USDA sales.   I ended up kicking this offer away as the home didn't really have a long marketing time to worry about a long winded financing deal.   In hindsight, it is a pretty frustrating experience for the buyer/agents and also me.     The deal made sense, if i believed it....which i didn't.        I've closed plenty of USDA deals, and others that die after 60 days.  I wish at times i worked a particular area and could partner with a lender who I could build some type of honest relationship with.   Sadly that doesn't fit my business model.

Wanting the Loan officer to put skin in the game. Is this possible?

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