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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.

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.

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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.

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.

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– 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.

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.

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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.

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%.

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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.

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.

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.

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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.

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– 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

Leave a Question or Comment About this Topic

  • Damont Dudley says:

    A loan officer told me I could not get a copy of my loan application because it was already submitted. I told him my income was wrong ( he boosted) it by 500 a month and told me it not a problem the underwriter will correct it

    • Scott Schang says:

      Hi Damont, that’s unusual that you were told you could not get a copy of your loan application. Loan applications are digital documents that are stored in the loan officer’s LOS (loan origination system). You can have a copy of your application at any time. It’s not a physical document that is handed to an underwriter and you no longer have access to it.

      On top of that, if the loan officer added income to your application, that’s a serious red flag.

      Do me a favor, shoot me an email to scott@findmywayhome.com and let me know what State you’re in. Let me introduce you to someone that I know and trust to help you with your loan. If your credit has been run in the past 30 days, you can have a new lender run it and it does not count as an additional pull.

      Your instincts are right. I would run fast from this loan officer. Something is going on here.

      Hope this helps?

  • Randy says:

    We have a home and we also have what is called a hardship for my mom and dad (manufacture home) on the property that the county lets us do this is so we can take care of them. We are trying to refinance the home and property. We were ready to sign when the underwriter told us to have the manufactured home on the property it has to be setting on the axles and hitch and not on pier blocking . the trailer has been in place for 29 years. We have gave her paperwork from the trailer parks/sales/placement companies that they don’t leave the axles and hitch for the units and the are set up on what they call a permanent installation foundation. Also saying that the unit if it were to be moved it would need new axles and hitch. She told us that this is the guidelines for Fannie Mae . The only guidelines that we can find are for a Manufactured home and property only and in that guideline they say the axles and hitch have to be removed and set on some kind of foundation. ?????. This manufactured home was set up in place by the seller to the warranty guidelines and the county codes.


    • Scott Schang says:

      Hi Randy, this is a very tough one. I recently had a scenario like this in California, and we went to the ends of the earth to figure out how to get it done. After a couple of months and many lenders, the client ended up having to sell the property for cash, and buy a new home.

      The guidelines you found are for financing a manufactured home, which requires that the home is on a permanent foundation and taxable as real property (not DMV). Having one mobile and one stick-built home on a property seems to be one of those twilight zone scenarios that nobody has a good explanation for why we cannot do it, yet nobody will touch it.

      Fannie Mae or FHA will not touch this. At least that was my experience. I’m sorry I don’t have a better answer.

      If it makes sense to do, you may be able to find a portfolio or private lender that will lend on the property, but probably not at an interest rate that you would be excited about.

  • Lesly Vargas says:

    Hello I was recently told by my loan officer, that I am unable to purchase the home I want due to the fact that my fha loan application was submitted 6 days before my 6month employment. He said “that fha guidelines have changed and that I have to wait 120 days in order to get that home because of some government codes. He said something about those codes being tied to my employer. We sent him all the info and they couldn’t tell me to wait the 6 days? I’m a week from closing date and just want to know if that’s true and if there’s a way around it. He said I was unable to resubmit another contract for same home. Please help ): (but I have been accepted for the lon to get any other home.)

    • Scott Schang says:

      Hi Lesly, this is very unusual. I am not aware of any recent FHA changes, and it doesn’t make sense that your employment would be tied to a specific property. Did this same lender approve you for the other home? Is the price the same?

      Now, that said, there could be a challenge with your approval, and the loan officer may just be trying to cover their mistake.

      I really want you to get a second opinion. Can you send me an email to scott@findmywayhome.com and let me know what State you’re buying in? I have very experienced loan officer friends across the Country that I completely trust. Let’s have someone look at this, and we should be able to get to the bottom of this pretty quickly if your current loan officer messed up.

      Hope this helps?

      • Lesly says:

        Thanks so much. To answer the above question, as per the last conversation I had with my loan officer yesterday, we were told that we were approved for the loan; However, we weren’t eligible to purchase the home we wanted. That we can purchase any other home but that one. To me it sounds super sketchy. Can you please contact me as soon as you or your co workers can? I sent an email to the email address provided with my contact information. And again, thank you Scott for your help, I wish we had more helpful people like you in The world.

  • Teresa says:

    I am supposed to close on my loan (I am the seller) tomorrow at 10:30AM. I just found out that my buyer was never sent her CD 3 days in advance so the loan cannot close. Her loan officer left the country to go on vacation without completing her loan process. Liar loan officer #2 who is covering for vacationing liar #1 then tried to tell us they are running behind because the buyer did not submit requested documents (the buyer’s agent immediately forwarded the email to him in which she had sent the requested documents). Then Liar #2 told another caller they were delayed because the buyer’s mother was supposed to help her with her down payment but she didn’t send the money (ummmm the closing atty already has the wire for the down payment). Then liar #2 told yet another caller the loan had just gone to underwriting & had not even been reviewed by an underwriter yet. All the while these liars have been telling a huge group of people including the closing attorney that we are good to go & would be closing on time in the morning. They told the closing atty we were good to go as late as yesterday.

    Their lies have not only disrupted live, they have now cost people money. The closing atty is out the money he would have made for 2 closings tomorrow. My buyer is crushed as she thought she would own a new home tomorrow. The owners of the house I am buying are taking a huge financial hit because they needed the money on my closing (also scheduled & now canceled for tomorrow) to pay off a big balloon note. I get to call & cancel 8-10 moves & installs I had scheduled for tomorrow.

    Is there no repercussion for the company who employs these liars? How can they tell a closing atty we are good to go 2 days before closing when they know a CD must be sent 3 days before closing so no way the closing could happen as the CD had not even been sent!?! Is there any agency I can report these liars to for their unethical behavior?

    • Scott Schang says:

      Hi Teresa, I’m so sorry to hear about your experience. The national regulatory system for lenders and loan officer is the NMLS. Consumers can research loan officers by their NMLS# (I would be willing to bet that their experience is limited). You can also submit concerns about a lender’s or loan officer’s performance. Here’s the URL – https://www.nmlsconsumeraccess.org/

      Hope this helps?

  • Teri says:

    I was denied a mortgage loan due to foreclose that I was not responsible for. I was on title alone. Went through a divorce and my husband defaulted on his loan. Now my lender is saying that I never told them but I gave them my divorce papers the first day. I lost my escrow funds. Do I have any recourse ?

    • Scott Schang says:

      Hi Teri, I’m so sorry to hear about this experience. Your recourse is probably limited to a plea with the mortgage company manager, and/or the real estate agents involved in the transaction. I do not know the details of your situation so it’s difficult for me to know how it all transpired, but this certainly doesn’t sound like you were purposely trying to mislead anyone. If your lender allowed the real estate agent to remove your financing contingency and they did not have loan approval, that’s a really bad decision on their part. If your real estate agent introduced you to the lender, you may have leverage there too.

      The bottom line is that the lender made the mistake. I would almost be willing to bet that this loan can be done, and that the lender simply doesn’t know how to do it. If you want to file a complaint, you always have social media, or you can go to the licensing authorities for lender.

      I would start by going to https://www.nmlsconsumeraccess.org/ and do some research on the loan officer. Find out how long they have been licensed. You can also submit an official complaint against them.

      Before you even do that though, let’s get you a second opinion. Let me introduce you to someone I know and trust that is familiar with these guidelines. Let’s see if the lender made a mistake. If you can show that the lender turned you down when you could have been approved, that will give you more leverage.

      Shoot me an email to scott@findmwywayhome.com and let me know what State you’re buying in. Let’s get you a second opinion on the loan first, then you should have a more clear path as to what the next step might be.

      Hope this helps?

  • Denisa says:

    I feel like my lender is lying to me. Pre-qual went fine, pre-approval went fine then went to under writing and ran into a residual income issue because DTI was 43% for VA loan. LO Claims he’s been trying to reach sellers agent (for a week now) to negotiate dropping price $2000 and I’m now one day from closing and don’t know what’s going on. Is it normal for LO to lie about if your approved or denied for the loan, or to drag the situation out until closing day? I’m a first time home buyer and they are making this experience extremely depressing and frustrating for me. I refuse to believe it takes a week to negotiate a price and get back to a buyer if it only took 2 days to get back with the original offer the first time. He rarely answers my calls or replies to messages or emails, his wife is my agent and she doesn’t answer or reply either when i have questions for her.

    • Scott Schang says:

      Hi Denisa, I’m so sorry to hear about your situation, and thank you for your Service! Now, 43% is not a hard stop, we recently had one approved up to 75%+ back end DTI because of strong residual income. I would not say this loan officer lied necessarily, but they may not have the experience of someone that specializes in VA loans. It may also be true that you are having a challenge getting an approval based on your residual income. You need someone willing to put in the effort to figure this out. If a $2,000 price change will fix the problem, so will a reduction in the lender and agent commissions. I’ll bet there are some closing costs in there that can be waived to make it work.

      I would typically offer an introduction to an experienced specialist, but you’re so close to close, let’s figure this one out.

      Give them time. Ask your loan officer if you can talk to the person making the decision. Your question is easy. We are a Veteran family, what can we do to figure this out?

      Don’t feel guilty for asking questions. You have a lot on the line and you’re right to be concerned.

      If you need anything at all, you can email me directly at scott@findmywayhome.com

      Hope this helps?

  • Blackorchid772 says:

    If there is requested required documentation that I can’t provide. How are they able to approve the loan? The builder wants to keep my EMD.

    • Scott Schang says:

      This is a difficult question to answer without additional information. If the lender told you that you qualify, but did not really have you approved, then you may just be out of luck. There is little recourse available to consumers that are told they qualify when in fact they do not. If your real estate agent recommended this lender, or if it’s the builder’s lender, you can argue that you never qualified in the first place, and they need to give you your EMD back.

      I see this often if you have a past bankruptcy, and a home was included, or if you have student loans. I guess this is all to say that your options are very often limited to the experience of the loan officer or underwriter you’re working with. Many “big name” lenders hire inexperienced people as loan officers and depend on technology to move the process along. That only works until you reach a point where an experienced professional is required.

      Please contact me directly at scott@findmywayhome.com and provide me with exactly they are asking for that you cannot provide. It is not uncommon for lenders to simply not know how underwrite certain scenarios, which may be able to be cured. No may not mean no. It might just be that they don’t know what they are doing.

      Hope this helps?

  • Codi says:

    Hi Scott,

    My boyfriend and I are first time homebuyers. We are currently buying new construction, building has started. We went with the affiliated lender of the builder because of incentives. They are covering around $9,000 in closing costs. We were prequalified and so building began. We just had a problem with our loan – I am self employed and the past two years of taxes have shown negatives by way of write offs and depreciation. The first year they said no problem, but the second taxes were no good because no income (I didn’t touch the money in the company account because I wanted to see the write off amounts and such) – though I made 25-27,000 with bank statements to prove. My business made money, 100% fact. The branch manager of the lender is now handling our loan after this issue and told us an option to save the situation. My bfs debt to income must be lowered and he can qualify on his own. We are able to do what he suggested and greatly decrease his debt to make this work. The manager however is supposed to plug in the new numbers and give us a new loan amount but he hasn’t called us back yet going on the third day in a row with a weekend included. Our house is set to finish at the end of June/ July. Everyone says we are being taken advantage of and I’m not sure if we should try switching at this point and tack on that extra amount since we would lose the incentives. At the start of this, our credit scores were very high hence prequalified on the lenders part. They’ve only decreased because of the hard inquiry. Still very good numbers though.

    • Scott Schang says:

      Hi Cody, you definitely need a second opinion. It is kind of common knowledge in the mortgage industry that the “in house” lender at new construction to have much higher interest rates and costs than other lenders. It’s not right, but it happens. That lender is not doing anything special, ALL lenders can pay your closing costs if you take a higher interest rate.

      I would look at a couple of different options. First and foremost, if the lender’s interest rate is too high, that is causing you to not qualify, and therefore requiring that you pay down more of your husband’s debt. Also, if you paid the $9,000 in closing costs (which sounds kind of high to me) instead of paying down/off debt, you may be able to lower the rate enough to qualify.

      Either way, you need a second opinion. If you would like, I can introduce you to someone that I know and trust to give you some insight on your options.

      Shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in, and I’ll make an introduction.

      Definitely don’t panic. I think you have many more options than what you’re being “told”.

      Hope this helps?

  • Monica says:

    Hi scott, we are in the process of buying a house..we paid for an appraisail, after a week we were asked to pay for a second appraisal, (which by the way was 160$ more than the original)BUT this time it couldn’t be under our name.. the agent had to pay for it out of her personal account and we have to reimburse her.. I been asked the loan officer and her response was that that’s how they needed it. Sounds super sketchy

    • Scott Schang says:

      Yeah, this sounds very sketchy. If they are trying to be creative, they should at least let you know what they are doing. If you would like, shoot me an email to scott@findmywayhome.com and let me know what State you’re in. I can introduce you to someone I know and trust for a second opinion?

      Hope this helps?

  • 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?