Know Who You Are Working With
I have long been a proponent of referrals when choosing
whom to do business with. But even with a referral, you owe it to yourself to do
some homework. In terms of a mortgage, you have always had the Better Business
Bureau and local regulators (like state banking departments) that you could
contact. Over the past few years, the internet search engines have become
popular ways of finding information beyond a company s or a loan officer s
website. Two other places I strongly recommend you visit online (one for the
company and one for loan officers) are:
This is the website for HUD s Neighborhood Watch. Neighborhood Watch is
where HUD publishes a lender s loan performance on FHA loans and how it
compares to the national and local averages.
A compare ratio of 100% means average performance. Numbers greater than
100% are below average. And a ratio under 100% is above average. Understand that
the Neighborhood Watch numbers measure the quality performance of FHA loans
only. Further, be aware that HUD recently stated that lenders with compare
ratios over 200% were subject to suspension from being able to participate in
the FHA Program, and lenders between 150-199% were going to be scrutinized very
closely and subject to audit. Be wary of riskier lenders.
When you go to the website, click on the “Early
Warnings” tab and either research an individual lender or look for a list of
lenders in an area, and then just follow the instructions. Remember, many
lenders nationally have similar names, so make sure you have the right
lender.
Here you can search for loan officer and company licensing status. Recognize
that loan officers are individually licensed now. Those who have taken the
required courses, passed the required tests and been approved by their
respective state licensing authority have all that information verified on this
website, along with their employment history. Loan officers who work for
federally chartered institutions (like banks) have not yet been required to take
the classes and pass exams and are listed on the site with their license number
and their employment history.
Make sure you are dealing with a loan officer who is licensed! Ask questions
if they have a lot of job changes.
There has been a cleansing in the mortgage industry over the past few years,
but there are always a few bad apples in any large group. These websites may
help you identify mistakes you can avoid when choosing whom you do business
with.