I talked with a mortgage rep about the market and got some interesting answers…

Closing in a few days and had an open-ended discussion with my mortgage rep.

Background: I work in risk management and am in a course on audit methods right now, so this is of professional as well as personal interest to me.

Also this financial institution largely serves the military & affiliated communities but the mortgage rep also is aware of general national trends. This is one of quite a few such institutions so saying this doesn’t reveal any info about the rep but does qualify the context a bit. Also posting this from an alt I’ve virtually never used so I don’t accidentally later say who I went through.

I am not a real estate agent/accountant/lawyer/crystal ball mind reader. I don’t know what is really happening in the market. This is just an single anecdote where I was allowed to briefly peel the layers back a tiny bit.

Take it with a grain of salt. YMMV. Do not taunt Happy Fun Ball.

Summary of what the rep said during our discussion:

Process controls are quite strict. Many people apply who are weeded out by the audit controls they have in place. Lots of due diligence is being performed. People who submit shoddy applications or insufficient evidence are frequently shut out. In some cases its because they don’t respond in a timely manner, in others they can’t substantiate their claims with evidence. Fraud does occur as it always will but “it has to be really really good because we catch a lot, some of it is creative and we still catch it” – so controls are in place actively monitoring and catching fraud, even though some will inevitably slip through here and there (not a new problem) Most buyers they see by far are residential. Few investors. (keep in mind this institution services a specific type of buyer, which may not represent all buyers) The impression from the rep is that this is a general national trend as well, large investors are often drawn to “hot” markets which can skew perception. Anecdotally this is how it seems from this sub as well, there are comments here yelling about the prices and investors but they seem to cluster around major markets, with others occasionally reporting nothing nearly that crazy in less popular markets Reportedly a ton of people just seem fed up with COVID and all the other stuff that happened lately and just want to move, which has created sudden pressure on the system. People in the city are sick of it and want to move away, and people away from the city are sick of it and want to move to the city, etc. Downsizing and other corporate realignments also puts pressure on people to move. Even in the less popular markets houses are flying within a week or even days or less. I’ve seen this in my own market, after losing multiple bids in my not-popular area with most houses going contingent within 1-3 days, and then getting my current one because I struck within 8 hours of list. (pure luck) Both the rep and my agent believe my current home will go contingent within a week tops, and its not even modern or anything. They both think a first time home buyer looking for a starter home will snatch it. My agent tried to get me to sell my current home to a buyer she had practically before the ink was dry on the contract for the new house.

Apparently a common area of mortgage fraud right now is people who claim to be self-employed due to COVID. Don’t try that, they know all about that fraud method and are absolutely hammering self-employed people right now. The rep actually feels bad for anyone who is legitimately self-employed because they have such a higher bar to overcome since they instituted so many controls to catch the attempted fraud. And they catch “a lot” from what I was told.

I was told that many people just give up partway through the loan process because they have to provide more evidence than they expected.

For me the process was about as simple and painless as a trip to the dentist for a good bit of dental work. But I have an existing home, cash, assets, multiple streams of income, high credit score, etc. I still had to go through all the process steps, but it wasn’t a root canal. For people who are self-employed, or submitting half-ass applications, it sounds like they should expect a root canal.

One thing they did point out was that it can be easy to think processes are lax from the way mortgage companies advertise, but they cautioned that a lot of those lenders seem to be advertising the best possible path while still performing legal/etc due diligence and are using marketing to get people in the door then adding a lot of hidden fees/etc in the fine print. All the lenders have the same basic process controls, it just comes down to how they present things to the customers to try to get them to submit applications.

Overall I came away feeling better about the market. With the understanding this is one person’s view, albeit from the inside. And with the understanding that there are lots of other forces including black swan events that can create problems. I don’t believe anyone should buy into the market without being able to weather a 10-20% drop. I definitely don’t think anyone should do what the sellers of the house I’m buying did – they bought less than a year before they knew they had to leave the state and gambled the house would go up enough to cover their closing costs so they would break even and save a few thousand on rent in the process. That’s a dangerous game, in this case it worked out for them and I’m grateful for the opportunity and wish them the best (they really are a lovely couple) but I would not play that game myself.

None of this is advice that markets are good and people should buy. I am not qualified to give that advice. Make your own decisions. Submitted only for consideration. Have a nice day.

submitted by /u/No-Tie2251
[link] [comments]

Closing in a few days and had an open-ended discussion with my mortgage rep. Background: I work in risk management and am in a course on audit methods right now, so this is of professional as well as personal interest to me. Also this financial institution largely serves the military & affiliated communities but the mortgage rep also is aware of general national trends. This is one of quite a few such institutions so saying this doesn’t reveal any info about the rep but does qualify the context a bit. Also posting this from an alt I’ve virtually never used so I don’t accidentally later say who I went through. I am not a real estate agent/accountant/lawyer/crystal ball mind reader. I don’t know what is really happening in the market. This is just an single anecdote where I was allowed to briefly peel the layers back a tiny bit. Take it with a grain of salt. YMMV. Do not taunt Happy Fun Ball. Summary of what the rep said during our discussion: Process controls are quite strict. Many people apply who are weeded out by the audit controls they have in place. Lots of due diligence is being performed. People who submit shoddy applications or insufficient evidence are frequently shut out. In some cases its because they don’t respond in a timely manner, in others they can’t substantiate their claims with evidence. Fraud does occur as it always will but “it has to be really really good because we catch a lot, some of it is creative and we still catch it” – so controls are in place actively monitoring and catching fraud, even though some will inevitably slip through here and there (not a new problem) Most buyers they see by far are residential. Few investors. (keep in mind this institution services a specific type of buyer, which may not represent all buyers) The impression from the rep is that this is a general national trend as well, large investors are often drawn to “hot” markets which can skew perception. Anecdotally this is how it seems from this sub as well, there are comments here yelling about the prices and investors but they seem to cluster around major markets, with others occasionally reporting nothing nearly that crazy in less popular markets Reportedly a ton of people just seem fed up with COVID and all the other stuff that happened lately and just want to move, which has created sudden pressure on the system. People in the city are sick of it and want to move away, and people away from the city are sick of it and want to move to the city, etc. Downsizing and other corporate realignments also puts pressure on people to move. Even in the less popular markets houses are flying within a week or even days or less. I’ve seen this in my own market, after losing multiple bids in my not-popular area with most houses going contingent within 1-3 days, and then getting my current one because I struck within 8 hours of list. (pure luck) Both the rep and my agent believe my current home will go contingent within a week tops, and its not even modern or anything. They both think a first time home buyer looking for a starter home will snatch it. My agent tried to get me to sell my current home to a buyer she had practically before the ink was dry on the contract for the new house. Apparently a common area of mortgage fraud right now is people who claim to be self-employed due to COVID. Don’t try that, they know all about that fraud method and are absolutely hammering self-employed people right now. The rep actually feels bad for anyone who is legitimately self-employed because they have such a higher bar to overcome since they instituted so many controls to catch the attempted fraud. And they catch “a lot” from what I was told. I was told that many people just give up partway through the loan process because they have to provide more evidence than they expected. For me the process was about as simple and painless as a trip to the dentist for a good bit of dental work. But I have an existing home, cash, assets, multiple streams of income, high credit score, etc. I still had to go through all the process steps, but it wasn’t a root canal. For people who are self-employed, or submitting half-ass applications, it sounds like they should expect a root canal. One thing they did point out was that it can be easy to think processes are lax from the way mortgage companies advertise, but they cautioned that a lot of those lenders seem to be advertising the best possible path while still performing legal/etc due diligence and are using marketing to get people in the door then adding a lot of hidden fees/etc in the fine print. All the lenders have the same basic process controls, it just comes down to how they present things to the customers to try to get them to submit applications. Overall I came away feeling better about the market. With the understanding this is one person’s view, albeit from the inside. And with the understanding that there are lots of other forces including black swan events that can create problems. I don’t believe anyone should buy into the market without being able to weather a 10-20% drop. I definitely don’t think anyone should do what the sellers of the house I’m buying did – they bought less than a year before they knew they had to leave the state and gambled the house would go up enough to cover their closing costs so they would break even and save a few thousand on rent in the process. That’s a dangerous game, in this case it worked out for them and I’m grateful for the opportunity and wish them the best (they really are a lovely couple) but I would not play that game myself. None of this is advice that markets are good and people should buy. I am not qualified to give that advice. Make your own decisions. Submitted only for consideration. Have a nice day. submitted by /u/No-Tie2251 [link] [comments]

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