A Short Mortgage Story

A short mortgage story.

Maybe a lesson or two gleaned, possibly even a useful strategy in dealing with challenging clients.

The set up…

Working with the clients for 2 yrs. 

500+ emails.

Countless texts.

Dozens and dozens of calls… mostly in the evenings and on weekends

OK, Can you guess how the story ends yet?

For your own benefit – google and read up on ‘what is a sunk cost fallacy’

But wait…

At last a live purchase, an accepted offer!

100+ emails just to get the docs updated. 

JPEG’s

Sooo many JPEG’s

Two rentals in the application both with inconsistent payments demonstrated in the down payment docs…

This blows up the file with lender #1

Key Point; Request 90 days bank statements from the account the down payment is flowing through on Day 1.

Also…

Bridge financing required. 

Despite these, and several other challenges the file completes!

It gets done!

Easy street – 2yrs and it’s all cool.

3 days after closing… the lenders branch calls you regarding a client screaming at them. 

Over what?

An LOC balance of $350,000 that must be a mistake.

No mistake, this helped offset the total costs of the Bridge financing.

This saved the clients money.

Clients thought, they are totally lost over the fact they saved thousands using the HELOC rather than the bridge. That fact will never be recovered in this story. 

The clients want to know where this $350K went. 

Enter the statement of adjustments. 

A detailed review.

And the heart of it is….

The lawyers didn’t pay down the clients LOC, they gave them their cash to pay it down themselves… but without directing them to do so.

But let’s back up a sec…

Back on offer day, the clients did their own calculations and asked for a mortgage of $745K.

The Broker suggests $800K.

Personally I’d have suggested more like the full 80% LTV – closer to 1.1M in this case.

It might have eliminated the bridge totally.

And there are some other upsides – but that is another strategy for another story. 

Bottom line is the Lawyer released $311K to the clients. 

And said ‘this is your money’.

The clients didn’t realize where this came from.

To them it fell from the sky.

And they felt like kings – richer than they thought!!!

It was like free money. 

Until they walked into the branch.

Until the Broker review the SOA and connected the dots. 

Luckily this all happened over three days so they didn’t spend their windfall. 

But now they have a balance of $39K. 

The high of having $311K.

To the low of having $39K outstanding. 

Why is $39K outstanding?

Because they failed to account for the $40K in realtor fees. 

The moral of the story?

For the Broker:

  1. Don’t let the clients drive the bus.

Because clients are really bad at math and don’t know it. 

For the client:

2. Listen to you Broker because although they’re also not awesome at math they know it (self aware) and so they ‘err on the side of the client having leftover money. 

Which people still freak out about.

But leftover money is way easier to fix than not enough money.

The key takeaway:

When the clients can only talk to you in the evening or on weekends.

When they power text despite repeated pleas for ‘email or telephone only’

When they refuse to send docs to be pre-reviewed

Cut bait.

I don’t fish, but even I know what that means.

But how?

How?

How do you break with up someone – because well… breaking up is hard to do.

  1. First off don’t – just set your boundaries.
  2. My hours are 7am – 4pm
  3. You can email me anytime, and live files get a priority but my week ends at inbox zero.
  4. You can click the link in the email to schedule a call with me.
  5. I am not available weekends or evenings… unless it is a live purchase file.
  6. Have a solid voicemail.
  7. Have a solid Auto-responder on the weekends.
  8. Explain that all communications must be via email as your team collectively works your inbox together and your underwriter must know all details of the file.
  9. No testing.
  10. The regulator requires that we keep copies of all written correspondence and saving screenshots of texts is not something you are prepared to do.
  11. Are there other text solutions? Sure – but do you want clients texting you? DM’ing you? No. likely not.
  12. Refer to one of your bank channel contacts if the file allows – IE super unique property.
  13.  And know that the more you try to break up with them the more they will resist. Because while you think being the dumpER is hard, nobody likes to be the dumpee.