After about a year of searching, I got an accepted offer for a condo in the Jersey City area. I work for Bank of America which would give me some kickbacks (amounting to about $4000 in this case) if I secure a mortgage through them. However, the feedback I got from my sales agent was along the lines of - They will not be able to secure the loan for a condo in this building. Using a smaller lender... [more]
After about a year of searching, I got an accepted offer for a condo in the Jersey City area. I work for Bank of America which would give me some kickbacks (amounting to about $4000 in this case) if I secure a mortgage through them. However, the feedback I got from my sales agent was along the lines of - They will not be able to secure the loan for a condo in this building. Using a smaller lender that knows the area well will get you the loan and help the deal not fall through.
He reiterated several times that he has no personal incentive to tell me this outside the deal going through.
I do trust my agent, but this seems unusual to me.
Is this a normal thing?
Can my agent or the sellers agent refuse to move forward with the deal if I use my preferred lender?
Should I forgo the property if a major bank cannot secure a loan for me on it?
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Response by streetsmart
over 9 years ago
Posts: 883
Member since: Apr 2009
You should check to see if the building is a Fannie Mae approved building. If not one of the reasons could be that the sponsor or for that matter any single entity owns more than 10% of the number of units in the building. I don't know the loan amount you are looking for, but that matters also.
As far as using a smaller lender who knows the area, this is misguided advise given by someone who is not a licensed mortgage broker or lender.
You can also get a pre approval from Bank of America.
Ellen Silvermam
Licensed Mortgage Bkr. NMLS #60631
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Response by front_porch
over 9 years ago
Posts: 5321
Member since: Mar 2008
With the caveat that I am a broker licensed in New York, and not in New Jersey:
Brokers always like to steer clients to mortgage pros who have responded quickly in the past, but we can't do that to the point that it impacts consumer choice (Google "Regulation Z.") So if your preferred lender will do the deal, then your broker should get out of the way.
So the question then becomes, "how do you know that your preferred lender will do the deal?" That can be tough to figure out, because whoever you are talking to at the lender is probably a salesperson who likes to say yes to everything, and not necessarily the person in underwriting who is actually looking at lending criteria. This can be a problem with any bank; it's possible that your real estate broker has run into this problem with B of A specifically before, and is leery for that reason. I'd ask him/her.
Then, there are two things you would want to press your lender to double-check: the first is sponsor concentration, as Ellen mentioned. You want to find out the percentage of sponsor units in your target building, and whether that percentage is going to be okay with your lender .
Second, you want to check B of A's activity in that particular building. I'd ask your mortgage contact person -- hey, have you guys ever lent on this building? And the converse -- because each lender has rules about its lending exposure to any one development -- have you done so many deals in this building you don't have room to do another?
If you have the lender preapprove the actual building, and not just you, before they write your preapproval, I'd think you'd be okay.
ali r.
{downtown broker}
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Response by streetsmart
over 9 years ago
Posts: 883
Member since: Apr 2009
Getting a pre approval from a lender is never a definite. As far as getting the lender to pre approve the building, this could take some time. You can therefore do your own research which doesn't take very long. First you can google Fannie Mae approved condos, then click New Jersey and see if this building is listed. If it is, then no need to do anything else, if not then proceed to do the following: ask your broker to obtain a generic condominium questionnaire which by the way a lender would need to pre approve the building and see if there are any red flags such as a sponsor or individual entity owning more than 10% of the units; if there are any lawsuits on the building. Then check the financial statement(which the lender would need also,in order to pre approve) to see if there is a line item in the budget allocating 10% of the budget for reserves. If these requirements are met there will be many lenders that will do,the loan.
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Response by dan@digsrealtynyc.com
over 9 years ago
Posts: 114
Member since: May 2012
About 2 years ago, I had a horrible experience with Bank of America representing my client. In this case, my client had long-term banking relationship with BOA and felt compelled to use them, despite the fact that they were no longer a major player in NYC residential loans. My client's mortgage application was handled by a loan officer based outside of the City, who was not particularly responsive or knowledgeable of co-ops. Because of how long they took to process the loan application and produce a commitment, the deal nearly died. When it got to the point of absurdity, I referred my client to an excellent loan officer at Wells Fargo and the deal was handled properly and efficiently and closed within a month. I haven’t referred Bank of America because of that experience, and no client of mine has used them since, but I hear they have been bolstering their residential mortgage lending presence in the NYC metro recently, so perhaps (hopefully) they have addressed the issues with their service.
You should check to see if the building is a Fannie Mae approved building. If not one of the reasons could be that the sponsor or for that matter any single entity owns more than 10% of the number of units in the building. I don't know the loan amount you are looking for, but that matters also.
As far as using a smaller lender who knows the area, this is misguided advise given by someone who is not a licensed mortgage broker or lender.
You can also get a pre approval from Bank of America.
Ellen Silvermam
Licensed Mortgage Bkr. NMLS #60631
With the caveat that I am a broker licensed in New York, and not in New Jersey:
Brokers always like to steer clients to mortgage pros who have responded quickly in the past, but we can't do that to the point that it impacts consumer choice (Google "Regulation Z.") So if your preferred lender will do the deal, then your broker should get out of the way.
So the question then becomes, "how do you know that your preferred lender will do the deal?" That can be tough to figure out, because whoever you are talking to at the lender is probably a salesperson who likes to say yes to everything, and not necessarily the person in underwriting who is actually looking at lending criteria. This can be a problem with any bank; it's possible that your real estate broker has run into this problem with B of A specifically before, and is leery for that reason. I'd ask him/her.
Then, there are two things you would want to press your lender to double-check: the first is sponsor concentration, as Ellen mentioned. You want to find out the percentage of sponsor units in your target building, and whether that percentage is going to be okay with your lender .
Second, you want to check B of A's activity in that particular building. I'd ask your mortgage contact person -- hey, have you guys ever lent on this building? And the converse -- because each lender has rules about its lending exposure to any one development -- have you done so many deals in this building you don't have room to do another?
If you have the lender preapprove the actual building, and not just you, before they write your preapproval, I'd think you'd be okay.
ali r.
{downtown broker}
Getting a pre approval from a lender is never a definite. As far as getting the lender to pre approve the building, this could take some time. You can therefore do your own research which doesn't take very long. First you can google Fannie Mae approved condos, then click New Jersey and see if this building is listed. If it is, then no need to do anything else, if not then proceed to do the following: ask your broker to obtain a generic condominium questionnaire which by the way a lender would need to pre approve the building and see if there are any red flags such as a sponsor or individual entity owning more than 10% of the units; if there are any lawsuits on the building. Then check the financial statement(which the lender would need also,in order to pre approve) to see if there is a line item in the budget allocating 10% of the budget for reserves. If these requirements are met there will be many lenders that will do,the loan.
About 2 years ago, I had a horrible experience with Bank of America representing my client. In this case, my client had long-term banking relationship with BOA and felt compelled to use them, despite the fact that they were no longer a major player in NYC residential loans. My client's mortgage application was handled by a loan officer based outside of the City, who was not particularly responsive or knowledgeable of co-ops. Because of how long they took to process the loan application and produce a commitment, the deal nearly died. When it got to the point of absurdity, I referred my client to an excellent loan officer at Wells Fargo and the deal was handled properly and efficiently and closed within a month. I haven’t referred Bank of America because of that experience, and no client of mine has used them since, but I hear they have been bolstering their residential mortgage lending presence in the NYC metro recently, so perhaps (hopefully) they have addressed the issues with their service.
Dan Gotlieb
Digs Realty Group
www.digsrealtynyc.com