Cross-qualification

[socal78]

I came across this thread over at Redfin, where a user describes her experience with having to cross-qualify. It got me wondering how commonplace this is.

"So I wanted to put an offer on a property. Seller agent requires that i MUST get a 'cross' approval letter from their lender @ Wells Fargo, before he can submit my offer to bank for consideration. But keep in mind, my own lender has already approved me.

So, i worked with their lender. But it was such a nightmare. I have an 810 credit score, i have more than 20% funds, and my income is more than qualified for the price that i wanted to bid. However, she(their lender) asked for so much details(bank stmts, tax returns, etc.) and picked on little things that i felt she was creating an unfair competition. Not just that, she asked for one piece of info at a time, instead of everything at once, so this entire thing got dragged on for 3 days still without the letter. Then finally she tells me the bank accepted someone else offer. In one of her early email, she stated the following:

"You have a better chance if you are using WF for your financing."

What do you guys think? I am extremely upset b/c the seller agent told my agent that my offer was good. However, b/c her refusal to provide me the letter, i got left out!"

 

[usctrojancpa]

[quote author="SoCal78"]I came across this thread over at Redfin, where a user describes her experience with having to cross-qualify. It got me wondering how commonplace this is.

"So I wanted to put an offer on a property. Seller agent requires that i MUST get a 'cross' approval letter from their lender @ Wells Fargo, before he can submit my offer to bank for consideration. But keep in mind, my own lender has already approved me.

So, i worked with their lender. But it was such a nightmare. I have an 810 credit score, i have more than 20% funds, and my income is more than qualified for the price that i wanted to bid. However, she(their lender) asked for so much details(bank stmts, tax returns, etc.) and picked on little things that i felt she was creating an unfair competition. Not just that, she asked for one piece of info at a time, instead of everything at once, so this entire thing got dragged on for 3 days still without the letter. Then finally she tells me the bank accepted someone else offer. In one of her early email, she stated the following:

"You have a better chance if you are using WF for your financing."

What do you guys think? I am extremely upset b/c the seller agent told my agent that my offer was good. However, b/c her refusal to provide me the letter, i got left out!"

[/quote]
I have come across this several times for my buyers on REO properties. The seller/lender on these REO almost always want a PRE APPROVAL versus a Pre Qualification (the difference is the amount of information a potential buyer provides the bank) from their bank before they will look at any offer. These lenders will typically offer small incentives to go with them like a free appraisal report. That being said, what the lender did in this situation was completely unprofessional and potentially unethical. I would report the incident up the chain at Wells (potentially threaten them with a lawsuit) as well as with the Department of Real Estate and Department of Corporations. I'm sure the last thing that Wells would want at this time (or any other big bank) is bad press like that. The system needs to be purged of people like this.

 

[irvinerealtor]

[quote author="SoCal78"]I came across this thread over at Redfin, where a user describes her experience with having to cross-qualify. It got me wondering how commonplace this is.

"So I wanted to put an offer on a property. Seller agent requires that i MUST get a 'cross' approval letter from their lender @ Wells Fargo, before he can submit my offer to bank for consideration. But keep in mind, my own lender has already approved me.

So, i worked with their lender. But it was such a nightmare. I have an 810 credit score, i have more than 20% funds, and my income is more than qualified for the price that i wanted to bid. However, she(their lender) asked for so much details(bank stmts, tax returns, etc.) and picked on little things that i felt she was creating an unfair competition. Not just that, she asked for one piece of info at a time, instead of everything at once, so this entire thing got dragged on for 3 days still without the letter. Then finally she tells me the bank accepted someone else offer. In one of her early email, she stated the following:

"You have a better chance if you are using WF for your financing."

What do you guys think? I am extremely upset b/c the seller agent told my agent that my offer was good. However, b/c her refusal to provide me the letter, i got left out!"

[/quote]

Bank-owned properties often have this stipulation, to be cross-qualified, in their terms. There is good reason that they make this demand.

The sellers (the banks, in this case) only review complete offers for consideration. They need to distinguish critically which offers are valid and which are potentially unqualified. Their option is to take the word of the buyer's loan agent, with whom they have no experience with and may not have properly done his or her job, or to do the investigation themselves using a known resource.

If the buyer is unwilling or unable to spend the added amount of time to go through the preapproval process, it is telling about their ability and commitment to go all the way through the process to purchase. Remember that the listing agents are "graded" on efficiency, so their incentive is to have the property go into escrow one time and close quickly.

Consider if you were in a position to have to choose between two similar offers: one which says "I've got XX% down, and I'm good for the rest, trust me!" and another that actually shows it. Which would you choose?

The seller can not require you to use a certain lender, but can require you to prove that you are creditworthy through the best means at their disposal.

-IrvineRealtor

 

[socal78]

Wow, two completely different answers. <!-- s --><!-- s --> Thanks, guys.

I don't know -- In the competitive market we're currently in, I think I personally would be willing to jump through the hoops. Dragging out pre-approval one paper at a time on short-notice, may cost you an opportunity on the first place (as in her case) and would be a drag but may give you a leg up on subsequent properties by that bank if you've got all your ducks in a row.

 

[usctrojancpa]

[quote author="SoCal78"]Wow, two completely different answers. <!-- s --><!-- s --> Thanks, guys.

I don't know -- In the competitive market we're currently in, I think I personally would be willing to jump through the hoops. Dragging out pre-approval one paper at a time on short-notice, may cost you an opportunity on the first place (as in her case) and would be a drag but may give you a leg up on subsequent properties by that bank if you've got all your ducks in a row.[/quote]
The other thing to remember is that banks on REO listings have been more happy to accept LOWER all cash offers even versus higher offers of $30k-$50k from very well qualified buyers (i.e. buyers putting 50% down). I know this because I have experienced it first hand with my buyers. With REO listings, the lender/seller set the ground rules and if you want to bid on the home you better play by their rules.

 

[sgip]

Most loan hacks forced to get cross approvals done close about 10% of all deals that come their way. Imagine having to do 90% work for zip-a-dee-doo-dah? It's pretty thankless in that your working with people already hostile to what services you can provide them. Making their job easier can make your offer work.

If you are compelled to cross approve your financing, a good mortgage professional can provide a complete package to the lender on the REO side. That tells the REO manager that your serious and also lets the REO loan hack know they won't have to do all the work for none of the gravy. If you play nicely and comply with the sellers terms your offer will bubble up to the top of the list. That's what I've found.