Hi Lise:

     Be careful where you tread. As a Mortgage Banker I would tell you to stay clear of any issues with reference to credit,income etc. As a Lender, I would contact both the Seller's and Buyer's agents and explain the issues. This is my responsibility and never, ever yours. If the lender won't do this, then I would never refer business to them again.

In my 45 years I have never made a promise I can't keep, and believe in keeping everyone in the loop,with good or bad news ASAP.

Hope all works out-Joe

Nope.  None of anyones business as long as you have a financing contingency and the lender will give you the rejection letter.  Why would you want to give anyone someone else's business and why would they want to listen?

Hi Lise Howe - Sounds like an awful lack of communication. First thing I do when I have a borrower that comes to me with a purchase contract is get their permission to speak with both agents. I have never had a client tell me I could not communicate with the other parties in the transaction. It is always best practice to be transparent because even though a buyer may appear to be "perfect" there's always something that can derail a loan from being approved.

As for the issue with the short sale, this should have been addressed on day 1 after pulling credit - could have saved a lot of time and headaches by bouncing the loan to a portfolio lender immediately. Also proves to be great evidence on why getting pre-qualified is a necessary step in purchasing a home!

I'd double check then start working on a termination letter.  

Good morning Lise. I would contact the new loan office, hear it from someone who has reviewed all the information. When I get this kind of call, I let the agent know that they should have the other agent call me so that I can give them assurance that this is a loan that is in fact doable.

Lise - Because the buyer wants to continue to try and purchase the home, I would want to know what went wrong with the first lender.

Here in AZ, it was very common for listing agents to ask buyers to qualify with a lender of their choice over the last couple of years. I am not seeing it as much these days, but it was very common for several years.

I would ask to know why yes, then if the buyer didn't want to say I would my seller client to at least consider back up offers.

They're shopping the loan.  Nothing went wrong other than the buyer wanting to shop the loan.

Extend on the condition that the buyer additionally obtain pre approval from a lender suggested by the seller. Double app. Otherwise, don't extend unless the seller fully agrees.

Seriously, it has been 15 years since I have had a buyer not qualify.  (they went on vacation and spent their house money) I have buyers prequalify with a mortgage pro so I do not spin my wheels.

However if I had a buyer not qualify, I would send LA  the denial letter and call it a day. No details needed.

If I were a sellers agent and really representing the seller...and the buyers agent wanted an extension, I would want to know all the details of why.  That would be the smart thing to do and not bury my head in the sand and waste more time.

Eve

Lise Howe I think the seller is entitled to basically know why without all the details. An extension may be in order.

I would not be so concerned with what happened as I would be with whether or not getting approved with another lender is even a possibility.  I would suggest to my sellers they grant an extension ONLY if the buyers went to one of my preferred lenders to see if they can qualify.  As to the exact reason why, I really don't care to know, I only care if they can qualify or not. 

Good morning Lise. I think the seller should know what happened.

It does happen and often it is not a borrow fault. I did a lot of research of this topic since when the buyer hears: '' you are approved'', they think it is done. Not so fast.There are conditions coming since we now have full doc files.

My last case is extremely ridiculous: everything is great with the borrower, but the community paid for some repairs this year and has no contribution to a reserve fund( even the reserve is substantial by itself), all other lenders I talked to, never heard of such absurd condition for a loan.

I would either be providing the listing agent with a denial letter *if asking for termination or a new pre-approval letter if asking for an extension.  I will tell you that once we had a lender have a loan officer just go awol and leave my buyers hanging.  I eventually got a supervisor in a different state to assist and re-hire a loan officer they had laid off to help complete the file.  That credit union was getting out of the mortgage business.

Being transparent always helps Lise Howe . Sooner the RIGHT reason is disclosed, better it is. If the buyer really is interested in going forward, the buyer's agent must tell the truth.

Otherwise there is no trust relationship and no win-win! And that means - no deal!

This is one of those cases where I might ask the buyer to cross qualify with my preferred lender so the Seller has some peace of mind in knowing that this buyer will be able to close (or not).

Yes, I'd explain it.  If an agent is not open with an explanation, it gives the impression that they're hiding something and that's never good.

The truth is almost never as bad as the stuff created in the imaginations of the seller(s) and listing agent.

I would get permission from my buyer to tell the sellers what happened...makes it easier for the return of the Earnest Money.

I would call to let the agent know, after I sent them the loan contingency and a letter from the lender stating that the buyer lost their loan in writing.

If I am going to be in a position to ask the listing agent for more time, than absolutely I would explain the situation and be proactive about it!

Yes agent should be as honest as possible and assist in finding buyer a new lender . I had this happen to me personally where I went to closing and lender would not fund in Friday and by Monday I had new lender and buyer loan approved and we closed the following week. 

Honesty is the best policy Lise.