First Rule of Lending: Never Put the Borrower and Lender Together

by 14 Nov 2012

This is the number one reason why a good broker is essential in the loan process. The first rule of lending is, never put the borrower and the lender together. This was a hard lesson for one of my borrowers to learn. The investor was ready to fund the loan. The borrower was trying to reach me while I was at lunch and I was unavailable. The borrower couldn’t reach me, so he found the investor’s phone number in an email thread from the Title Company. The borrower decided to call the investor himself to ask about a fee on the settlement statement.

An hour later I received a call from the investor/lender. He told me that the borrower had called him directly and the investor seemed very irritated by this. I was shocked and asked him, “How did he get your number?” Of course the investor was also clueless about how the borrower had obtained his contact information. I later discovered that the investor’s phone number was included in an email thread to the Title Company. This email was mistakenly forwarded to the borrower by the Title Company in a much later email.  Another lesson, don’t just click reply all or forward an email without double-checking its contents!

After speaking to the borrower, the investor discovered some information that made him uneasy about making the loan. He discovered that the borrower was going through a brutal divorce. The investor did not want to know this, nor would it have mattered in making the loan. But, purely from an emotional impulse, the investor decided to walk away and not make the loan after speaking to the borrower.

The bottom line, the borrower lost the loan because he decided to take it upon himself and call the investor. This is the reason you must always use a good broker who can present your loan to the right investor and get it closed. As the borrower, never call the lender/investor yourself, as you might reveal some information that should not have been revealed. In this case, this blunder cost the borrower the loan.



Should CFPB have more supervision over credit agencies?