The Golden Rule of Lending...Tell the Truth!

The Golden Rule of Lending may differ a little from what your mother told you when you were young. When it comes to Mortgages and Real Estate Transactions, the Golden Rule is to always Tell the Truth. An ethical and honest Mortgage Lender will know that this is not always an easy thing to do and that telling the truth certainly applies to both the client and the Mortgage Professional.

Completing the mortgage process can often times be intimidating and confusing. Those who have been through it can attest to the fact that in most mortgage loan scenarios the nitty gritty of your income, assets, employment, credit and debt comes out in full colors. These are obviously personal and private pieces of information that some borrowers might not want to share with their Mortgage Lender or Real Estate Agent. Unfortunately, for the mortgage process to be successfully completed, all of this information is going to have to be addressed and reviewed. If there is some erroneous or negative information discovered, that was not originally disclosed, the information could prohibit the transaction from being successfully completed. An example of such information would be an outstanding tax lien, an unpaid collection account or a monthly child alimony payment. It is understandable why someone may not want to disclose this personal information, but it will be discovered.

The key is when these pieces of information are discovered. If they are disclosed early in the process, a Mortgage Lender can take the necessary steps to try and circumvent the problem. Depending on the nature and magnitude of the problem, a lender may or may not be able find an acceptable solution. If the information or problem is discovered too late in the process, it may be cause for the transaction being delayed, if not nullified, which could cause the loss of earnest money and possible law suits in a worst case scenario. However uncomfortable it may be, it is best for the client to be honest and open upfront before any major problems occur.

On the flip side, it is equally important for a Mortgage Lender to be honest and tell the truth. Those that are involved with the Mortgage Business for a living can attest to the fact that Mortgages can sometimes be quite complicated. There are guidelines and parameters to which every loan application and client must adhere. Debt and income must be calculated properly to ensure that the ratios are acceptable, assets must be accurately verified and calculated, credit reports must be reviewed and amended if applicable, etc. In a competitive market, where rates and fees are often the sole determining factor of who gets the business, it is not uncommon for Mortgage Lender to expand the truth and quote rates that may not be obtainable.  They may also give clients a false sense of security in what they may be able to accomplish in a certain time frame. Just as a client’s failure to tell the complete truth could result in negative consequences, a Mortgage Lender’s failure to quote accurate rates, timelines and feasibilities can have the same dire consequences. An honest Mortgage Professional will take the proper time to analyze a client’s situation and scenario before quoting rates and timelines or addressing hurdles that may be encountered. As with the client, it is of the utmost importance for the Mortgage Lender to tell the truth up front as to what is obtainable for a particular loan scenario.

William DesPortes
DesPortes, Selig & Associates
Professional Mortgage Services
Managing Member
970-949-0653
wdesportes@qwest.net

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