When you buy real estate, and if you are using a loan, you may be asked to “cross qualify” with the lender who is known by the seller’s agent or seller.
This is a type of vetting process which provides for another lender to check the client’s lender’s work.
Keep following 🙂
Most of the times, the lenders which we deal with, don’t mess around with telephonic approvals.
They ensure actual paperwork is provided to them, credit runs, pay stubs, bank statements, account numbers, tax returns, and more in order to approve someone who wants to finance real estate.
Furthermore, they also need to enter all of this information into a computer system that will spit out an approval – called an Automated Approval. It’s a computer program used by those who provide mortgages and is the “rule of thumb” today.
That is the rule of a good lender.
Most times this process of cross qualification is handled lender to lender. The client is not part of the cross qualification process.
This is the cleanest option. Have the lenders speak lender to lender. Don’t bring in the client because it’s too tempting for the lender who is vetting them to solicit them for business.
That is not good in the referral based world of real estate and home mortgages.
When the package is reviewed between lenders, the one who is the lender for the home buyer and the one who is vetting them on the side of the real estate seller, it’s in their language.
Lender A – the seller’s vetting lender – knows how to read the paperwork, the ratios, Debt to income and the other necessary data
Lender B – the buyer’s lender – provides everything they have to the Seller’s lender.
Desperations ugly head
That’s it. But, when you have a lender call a real estate buyer who is represented by another lender, in order to “get more information”, that’s a lie.
That is a lender who is soliciting another lender’s client, plain and simple.
Here is why. “get more information” is a ruse. The lender who has approved the real estate buyer has more information contained in their file than the client could possibly have. Including credit reports and more detailed financial information.
Be stingy and not so quick to trust
I told my client, as I tell all my clients, if anyone calls you stating they are a party to the transaction, take their name and number, but never give them any information. Let me find out who they are and what they want.
In this case, my client listened and she did an awesome job. The lender on the phone was speechless, especially after he made the comment of “to get more information”, that’s when I blew up 🙂
I stand behind my clients and understand some lenders don’t do their job when it comes to qualification. Some cut corners and some are lazy.
I don’t work with those types of lenders. We only work with the BEST lenders in the Santa Clarita Valley.
As far as the lenders who would use a cross qualification scenario to get another lender’s client to jump ship, there is no room in my world for that!