Loan Officer Leaves company the day before closing!
Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes
Loan Officer Leaves company the day before closing!
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y@Kristi K.
This is a reason to NEVER let a buyer occupy the home prior to them owning it. It sounds like it’s turning out ok but this is a huge no no
7e investments53 Reviews
12 Replies
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
@Account Closed:
We had a closing date of Dec 1st 2022. The buyer was "pre-approved" by this lender. They asked for a 3 week extension which was the first red flag. I amended the contract for a Dec 23rd closing. On the evening of the 22nd my buyer gets a call from the loan officer and is told he has left the company but don't worry, it will be ok. On the 23rd I contact corporate headquarters of this lender and they tell me "Loan Officer" no longer works for the company and the loan was denied by this lender. They couldn't give me details since I'm just the seller. That's the last we ever heard from the loan officer that strung us all along for the last several months. The appraisal came in exactly where we needed it to be. The buyer had their downpayment ready, was supposedly pre-approved, I let them move in at Thanksgiving, and at the last minute we get screwed over. Luckily I used cash to remodel this house and get it ready to sell so I'm not under pressure for hard money loans or anything. My personal mortgage company is now involved and they say they can use the same appraisal so life is good.
Lot of lessons learned on this one......... the hard way!
Thanks for letting me vent!
I am not aware that a lender can rescind a loan approval to a buyer solely on the basis of a terminated loan officer. It also sounds like the loan officer you were working with was also acting as an agent or actual employee of the lender.
The lender can't just and without cause, fire the loan officer and arbitrarily deny all the loans he or she was working on just because they fired the loan officer. Such might result in lender possibly being liable to both buyer and seller if they start asking the right questions.
- 3yAshley UndercufflerPro MemberReal Estate Agent · Los Angeles, CA · Member since 2019 · 80 posts · 25 votes
Quote from @Account Closed:
We had a closing date of Dec 1st 2022. The buyer was "pre-approved" by this lender. They asked for a 3 week extension which was the first red flag. I amended the contract for a Dec 23rd closing. On the evening of the 22nd my buyer gets a call from the loan officer and is told he has left the company but don't worry, it will be ok. On the 23rd I contact corporate headquarters of this lender and they tell me "Loan Officer" no longer works for the company and the loan was denied by this lender. They couldn't give me details since I'm just the seller. That's the last we ever heard from the loan officer that strung us all along for the last several months. The appraisal came in exactly where we needed it to be. The buyer had their downpayment ready, was supposedly pre-approved, I let them move in at Thanksgiving, and at the last minute we get screwed over. Luckily I used cash to remodel this house and get it ready to sell so I'm not under pressure for hard money loans or anything. My personal mortgage company is now involved and they say they can use the same appraisal so life is good.
Lot of lessons learned on this one......... the hard way!
Thanks for letting me vent!
Wow, I am so sorry that this happened to you! Really glad that you paid cash for the remodel so you are OK. Not everyone is able to do that but thank you for sharing your experience as a warning for others!
- Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes3y
@Frank Greg 2022 541201 loan officers were let go as we are at will employees. Market conditions laid off more than one million people in mortgage and vendors. My guess loan officer was set loose due to costs.
If seller has the written commitment approval letter from the lender they have to honor it, unless there is fraud. @Account Closed what are the ins and outs of the approval letter? Typical: borrower has to stay on job until closing, no adverse liens pop up, what borrower said in writing is true, the 4506c comes back from IRS a match, appraisal meets or exceeds program, rate lock days match the closing of the 23rd, funds wired from matching accounts...
Typically the lender closes loans in new officer name and prior employee is paid during a 29 day period.
Company sent denial letter to borrower on what date? I would require the letter as the seller and push the agent to disclose why file was turned down. Same issue is going to pop up. I would push the old lender to perform as they are responsible for the actions of their employee. If loan officer did something wrong they are responsible.
Lookup NMLS listing of loan officer and call his cell- what is the truth of what happened? https://www.nmlsconsumeraccess... has Loan Officer home address, cell phone - why you want to work with licensed people.
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
I am not sure what industry layoffs has to do with the conversation or where you get your facts from in terms of layoff figures.
Between Oct 2021-Oct 2022 ( data for the most recent 12 months) official industry layoff figures shows: construction (845,000), retail (838,000), healthcare (742,000), Government (475,000), Finance & Insurance (152,000) etc....
But none of this has anything to do with the fact that if a lender gave buyer an approval then subsequently fires a loan officer in the midst of transaction closing, that is not grounds to send buyer/seller a denial letter a day after closing was supposed to happen.
- Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes3y
Layoffs in mortgage started in May 2022. You said "lender can't just and without cause, fire the loan officer," they can let anyone go.
HOWEVER Lender is responsible to legally hold to the commitment letter.We don't know if loan officer committed something bad such as faked the letter, still the lender is responsible. We also don't know when the denial letter was sent to the buyer. These facts are vital to the seller. If the buyer can still close- push for that immediately. If lender erred, ask for $$ to pay for the delays in a downward falling knife market.
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
The statement made was clear... there is obviously an "and" after what you quoted...
We can't make assumptions about what the officers contract was with his or her employer. Nor can we just assume that the loan officer here engaged in some fraudulent act.
Any employer can fire any employee but that does not mean the employer can be so careless or reckless as to not attend to whatever the terminated employee was working on... which in the case happens to be something as important as a closing.
Seller did say they got a call the day before closing about the loan officer leaving and was told there wasn't an issue but then a notice of the denial on the day of closing when they contacted the officer's employer. Then employer refused to provide seller (who is an injured party) with any further details.
The seller can make this an issue if they choose to.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Kristi K.
This is a reason to NEVER let a buyer occupy the home prior to them owning it. It sounds like it’s turning out ok but this is a huge no no
7e investments53 Reviews - 3yPaul DefnginPro MemberLender · Rockville, MD · Member since 2008 · 498 posts · 199 votes
Quote from @Account Closed:
We had a closing date of Dec 1st 2022. The buyer was "pre-approved" by this lender. They asked for a 3 week extension which was the first red flag. I amended the contract for a Dec 23rd closing. On the evening of the 22nd my buyer gets a call from the loan officer and is told he has left the company but don't worry, it will be ok. On the 23rd I contact corporate headquarters of this lender and they tell me "Loan Officer" no longer works for the company and the loan was denied by this lender. They couldn't give me details since I'm just the seller. That's the last we ever heard from the loan officer that strung us all along for the last several months. The appraisal came in exactly where we needed it to be. The buyer had their downpayment ready, was supposedly pre-approved, I let them move in at Thanksgiving, and at the last minute we get screwed over. Luckily I used cash to remodel this house and get it ready to sell so I'm not under pressure for hard money loans or anything. My personal mortgage company is now involved and they say they can use the same appraisal so life is good.
Lot of lessons learned on this one......... the hard way!
Thanks for letting me vent!
Goodness gracious. I’m sorry that you and the buyers had to go through this.
- Member since 2022 · 4 posts · 0 votes3y
Quote from @Caroline Gerardo:
@Frank Greg 2022 541201 loan officers were let go as we are at will employees. Market conditions laid off more than one million people in mortgage and vendors. My guess loan officer was set loose due to costs.
If seller has the written commitment approval letter from the lender they have to honor it, unless there is fraud. @Account Closed what are the ins and outs of the approval letter? Typical: borrower has to stay on job until closing, no adverse liens pop up, what borrower said in writing is true, the 4506c comes back from IRS a match, appraisal meets or exceeds program, rate lock days match the closing of the 23rd, funds wired from matching accounts...
Typically the lender closes loans in new officer name and prior employee is paid during a 29 day period.
Company sent denial letter to borrower on what date? I would require the letter as the seller and push the agent to disclose why file was turned down. Same issue is going to pop up. I would push the old lender to perform as they are responsible for the actions of their employee. If loan officer did something wrong they are responsible.
Lookup NMLS listing of loan officer and call his cell- what is the truth of what happened? https://www.nmlsconsumeraccess... has Loan Officer home address, cell phone - why you want to work with licensed people.
The number on the nmls website 99.9% of the time will be his company office # and address unless he's a broker working out of his house which doesn't seem to be the case.
Only thing that can be done is have the realtors communicate to find out what happened. More than likely the buyers agent wants to get the deal the done and won't be fully truthful. Your realtor can require proof but most of the time the letter is generic.
more than likely the borrower was not approved for one reason or another and only had a pre-approval not final approval.
inwould move on to the next biyer
- Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes3y
Thanks everyone. I'll update as I find out more. I appreciate all the comments/suggestions.
- Lender · rate.bid · Member since 2022 · 324 posts · 62 votes3y
@Account Closed:
Thanks everyone. I'll update as I find out more. I appreciate all the comments/suggestions.
FYI, In your sales contract with the buyer, it should have stated how to handle a buyer default that results in a failure to close.
Some contracts might state that seller is only entitled to escrow funds (if any) as the sole remedy and without such a limit, you obviously would have other options.
You certainly want to press for the facts as there are too many "could be's". The fault here could be with the buyer/buyers agent, the lender and or the lender's agent.
- Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes3y
We closed on the property today! The problem was the mortgage broker that my buyers were working with turned out to be a bad egg. He was fired from the company he was representing a couple of days before the closing date in December. I got the mortgage company I usually work with to take over and 7 weeks later, success!
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