Sad Sad Saga of Why to Use “Double-Apping” on Mortgage Applications

A few weeks ago, I had some very nice young clients come to me who had very little money down and wanted to buy their first home in Southern California.  They wanted to buy, but weren’t sure they could afford to buy in our expensive market.

After consulting with them, we figured out that they could indeed afford a small townhome. I found it for them and we opened escrow! Yay!  Everything should be good, right?   At the time, I asked them to please “double-app” the loan, meaning go with two different mortgage brokers to ensure that at least one of them would come through for them.  I really wanted them to have at least one of the loan guys be someone I had worked with before, someone I could count on if things got rough, as they might with a loan where they had so little money down.

I even offered to pay for the second appraisal fee out of my commission so that the cost of running two applications wasn’t a consideration for them, since they were so tight on money — I felt that strongly about it.  But somehow, the other lender, someone they found on the internet, with a few sly remarks here and a few twisted words there, somehow seemed to give them the impression that the reason I was pushing so hard for “my guy” was that somehow I was getting an illegal kickback on the loan or something.  Of course, the only thing I pride myself more on than my service is my ethics, so I was horrified by this insinuation, but nobody came right out and said anything … it was just the ugly elephant under the rug that seemed to be messing up my relationship with my clients.  So I backed off on my begging them to double-app and instead let them put all their eggs in the one basket of this loan guy they found on the internet.

Fast forward three weeks.  We are supposed to close escrow next week and the internet loan guy informs them today that they aren’t going to get the loan that he has been promising them for three weeks is a “done deal” and “a piece of cake”.  He’s got a zillion excuses, a million people to blame, a billion sad stories as to why it’s not his fault.  The recent issues with sub-prime lenders is some of it, but I can’t help but wonder how much of it he could have controlled.  Maybe none, but I just don’t have a history with this guy and I don’t know how much to trust him.  If it was “my guy”, I’d have known every step of the way what was happening and we wouldn’t be surprised now.  None of this gets my clients into their new house, however!!    So now, at the very last minute, we are trying to get “my guy” involved in the deal to see if somehow he can save the day and get these very nice, very sweet people their house.

The last time I personally bought a home to flip, I used two different loan brokers and told them they were in competition with each other.  It helped me to keep the fees down really low and at the last minute get even more shaved off the interest rate on one of them.  I wasn’t dishonest about it, I was very up-front.  It’s just business.  If they don’t want to be competitive, they don’t have to bid.  But by knowing that the “other guy” is out there, it forces each of them to perform to the best of their ability, including being sure that there aren’t any junk fees or extra high interest rates in the package.  It also helps me as your Realtor ensure that we get loan documents in time to ensure a successful close of escrow so that you can move right into your new home on time.

So if I (or if you aren’t in my area, some other great Realtor) tells you to “Double-App” , in the words of the Nike commercial “Just Do It.”  It might be the smartest $400 you ever spent.   And for Seller’s — you may want to insist that the Buyers double app with someone your Realtor trusts just to be sure you have a backup plan!

Updated 4/11/08:  We closed three weeks late on this home due to the poor management of this loan guy.  My clients had to pay extra fees for delaying the escrow, the Sellers almost lost their'”upleg”, and ultimately my Buyers accepted a loan that was far higher interest rate than what they had been promised just so they wouldn’t lose the home completely.  They told me they were sorry that they had chosen this loan guy and that they wished they had listened to me about double-apping.  As soon as a little more time passes, we will try to get them re-fi’ed into a better loan – this time with someone we can trust.

About Lauren Perreault