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Loan Officer Lies

Shocking Lies that Loan Officers Tell

Why Are You Lying?

Statistically speaking, the volume of lies that loan officers tell readers of this site is staggering.

This website primarily exists to help people that have hurdles to overcome, or complicated situations that require a specific area of expertise and understanding of the underwriting guidelines to navigate.

It makes sense that most of the visitors to this site have these nuances that make put them at a higher risk of receiving misinformation about how to resolve their situation.

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If these are the lies that we know about, the odds are that there are many, many more consumers that are being told lies to cover up a loan officer’s lack of experience, or ignorance of underwriting guidelines.

My hope is that what you take away from this is that just because you speak to a “so called” professional, it doesn’t mean that they are an expert, or a good person that is just trying to help.

Below are four examples of recent comments I’ve received on the website that just shocked me.  It’s not that they were lied to that shocks me, it’s the fact that the loan officer tried to pass it off as something that was outside of their control.

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Luckily, these folks found this website, and I was able to clear up the confusion around the lies they were being told about their options.

Guidelines Changed, It’s Not My Fault

This is probably the most common “cover up” that is communicated by loan officers that lie.  Here are a couple of recent examples of how these loan officers try to cover up their lies.

We were pre-qualified for a loan with 10% down.  We made an offer on a house.  After our lender stopped taking our calls for a few days, last week we found out the changed it to 15% down.

– Becky

This particular situation is someone applying for a portfolio loan.  There are not many options currently for portfolio loans.  I can tell almost immediately what kind of loan, or lender a reader is talking to based on what they are being told.

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It is incredibly rare to find a portfolio loan that only requires a 1o% down payment.  In this situation, the reader told me their timeline and credit scores, which I knew immediately would prevent them from qualifying for a portfolio loan with a 10% down payment.

Well, that didn’t stop this loan officer from covering up their mistake by telling these home buyers that the guidelines changed suddenly during the several days that they refused to answer any phone calls or emails.

Here’s another one:

My lender said that currently Student with IBR payments are currently in the “Closed” status.  This keeps changing and is currently on Trumps “to-do” list to switch back to allowing the IBR payment that shows on your credit rather than the 1%. But I see you’re telling people they can do that now.

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Now I’m stuck until Trump gets the Bill to change, AGAIN!

– Susan

This one is goes on the top of my list for the biggest load of bullshit I’ve probably ever heard come from a loan officer.

There is no such thing as a “Closed” status on student loans.  I’m not even sure what that means.  I promise you that the President of the United States does not have a “to-do” list that includes allowing IBR payments to show on your credit rather than use 1%.

I’m struggling right now to not unleash a barrage of expletives that more or less could be deciphered as shock and awe as to how this person is even employed by a lender.

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Here’s the truth.  The student loan guidelines were updated in 2015, and have not changed since then.  There are options for homebuyers that have IBR (income based repayment) payments on their student loans.

Guidelines DO NOT change while you are in the process of getting approved.  Most underwriting guideline changes are announced months before they go into affect.

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Trust Me, I Stayed at a Holiday Inn Last Night

More common are the loan officers that give bad advice based on a complete lack of understanding of what the truth is.  These are perhaps the most dangerous lies of all because they sound so convincing.

The only possible explanation for these types of lies is simply that the lender they work for has instituted overlays to the underwriting guidelines and have chosen to not follow the guidelines of the loan program you are applying for.

I’m not sure why these loan officers are so confident in their answers, but they sound like they know what they are talking about!

Let’s take a look at a couple of examples:

I was told by the lender that i would need to be on a fixed plan to lower my debt, which will guarantee approval. However, I won’t be able to afford the payments on a fixed plan.

– Christie

This one falls into the same “truth” category as the reader that was told that the President has her specific challenge on his “to-do” list.  This is misinformation that could be the result of a conscious decision by the lender, or ignorance by the loan officer.

This one only qualifies as a lie if the loan officer knows better, and is trying to cover up the decision that their employer has made regarding underwriting these scenarios.

Hi Scott,

I lost my home because of a job loss in 2007. I could not sell the home because if was underwater with the housing crisis. I declared bankruptcy in 2008 and the home was included. We filed all paper work to provide the home was returned to the bank without contest.

The foreclosure did not occur until 2011. Now, 6 years later lenders are telling me that while I meet all criteria for the loan (no credit report issues except the bankruptcy, more income than required, etc) that they cannot write a loan because it has not been 7 years since the foreclosure.

Your site indicates, the 7 years should be waived because the foreclosure was part of the bankruptcy?

– Julia

I have challenges with this one because I know of several major banks that have chosen to not follow Fannie Mae guidelines for mortgages that were included in a bankruptcy.

If the loan officer read the underwriting guidelines, they would know that they are lying to the home buyer.  If they are simply saying what their employer told them to say, then they are guilty of not telling the truth.

Why is it so hard to help folks by telling them that yes, it can be done, but I cannot do it.  I do this all the time.

So that’s the end of my rant.  I don’t make this stuff up, but I have made slight edits to the above comments to keep personal details and identifying information out of the text.

How Do I Get My Questions Answered?

I know, it’s shocking that things like this actually happen to people every day.  Hopefully you’ve found this in time to avoid any major heartache or financial loss due to loan officer lies.

We’ve created this resource to help you sift through the endless opinions and articles that may, or may not directly answer your question correctly.

There are several ways to ask questions, and get expert opinions on this website.

  • Submit a Question:  On the bottom of this page, you’ll see a prompt that allows you to ask questions.  These questions come directly to me, and are answered very quickly.
  • Leave a Comment:  Below every article is the option to leave a comment or question.  We see this comments and questions in real time and the always answered, usually pretty quickly.

In addition to researching your questions and providing you with expert advice, I may be able to introduce you to a lender friend that I know has experience with your specific situation and can help.

Hope this helps?

About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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  • Amber Polley says:

    My loan officer asked me to lie to underwriting for a rural development loan. They asked me to lie and say we conducted the home inspection ourselves knowing that we paid an inspector 500$ to inspect the house in question. We even submitted the inspection to her along with our contractual agreement with the seller, we even asked her if anything on the inspection could prevent us from our rural development loan. She said, no, that everything looked great. Now, about 3.5 weeks later. She is asking us to lie to the underwriters. On top of all of this, our realtor has supported her suggestion. We told her we couldn’t conveniently lose the home inspection in good conscience. So, we had her send it, however. Now we are wondering, did we do the right thing? Why would she even suggest that?

    • Scott Schang says:

      Hi Amber, I’m not exactly sure what the issue could be with this inspection. It couldn’t be the fact that the inspection was done. You are entitled to do your due diligence and you can hire any inspector at any time during the contingency period to determine if want to continue with the purchase. It almost sounds like the $500 is an issue, and how it was paid.

      The right thing to do is always to tell the truth, which you did. Now, that said, underwriting guidelines are not always black and white, and there are often times you just have to do the best you can to provide the underwriter with the information they need to feel comfortable with the risk.

      It sounds to me like your loan officer needs to better communicate specifically what challenges there are, and what their thought process is for solving it. In the whole scheme of things, and not knowing the details or reason for the request, I would not necessarily attribute this to malice. It sounds like for whatever reason, this home inspection became an issue.

      It sounds like they are simply trying to get the loan approved and closed. I simply cannot imagine a situation where a $500 inspection report would be the reason for a loan not getting approved.

      This far into the escrow process makes it difficult to get a second opinion from another lender, but if you believe that you have time, and if you really want this specific home, I can introduce you to someone that I know and trust for a second opinion. Another option might be flipping your loan into an FHA or Conventional, is that even a remote possibility? Would require between 3% and 3.5% down payment.

      Other than that, you didn’t do anything wrong, and the decision is in the underwriter’s hands. I wish there was better communication so you knew what the issues might be, but it sounds like it’s moving forward.

      Hope this helps?

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