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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

  • Mary says:

    My loan officer said at the beginning that I would have 10,000 on closing costs I signed and know he changes his estimate to only $7,228 on closing costs which increase my cash to close.

    • Scott Schang says:

      Hi Mary, if your closing costs were reduced from 10,000 to $7,228 that would mean that you would have less cash to close, not more.

      Do you mean that you were going to get a credit of $10,000 to cover closing costs and now the credit is only $7,228?

      If you feel like your loan officer is not being honest with you or not communicating well with you, I’m happy to introduce you to someone I know and trust for a second opinion.

      You can email me at scott@findmywayhome.com and let me know what State you’re in, and I will make the connection.

      Hope this helps?

  • Teresa says:

    My loan officer is telling me to sign a closing disclosure that is incorrect. That the final one will be fixed. He didn’t hear my questions or concerns he just says sign it

    • Scott Schang says:

      Hi Teresa, depending on your communication and the competence of your loan officer, that might not be a “red flag”. The acknowledgement of the CD is required to start the clock ticking before you can get your loan documents.

      Can you send me an email to scott@findmywayhome.com? I have some questions and want to make sure you’re making informed decisions.

      If this is a refinance, I would recommend a second opinion (I can introduce you to someone I know and trust).

      If it’s a purchase, that might change things a little.

      At the end of the day, if they do not correct the numbers, you can refuse to sign your loan documents. You are under no obligation to take a loan that you do not want.

      Hope this helps?

  • . says:

    If i recieve an fha number does that mean i am approved with conditions ?

    • Scott Schang says:

      This is a really good question. Being assigned an FHA number does not in any way guarantee that you will qualify for an FHA loan.

      If you would like to give me more details about why you might be concerned, I understand it might be private so you can email me directly at scott@findmywayhome.com

      I’m happy to help you explore this further and make sure you don’t get caught with any surprises.

      Hope this helps?

  • Terry Bertoson says:

    We asked our mortgage lender if we could lower our mortgage payments with a re-fi and if so what would the cost be and how long it would take to recoup those costs. The representative they connected us with told us our cost would be $2,217, we’d be reducing our mortgage payment by $160/mo. and it would be a 14 month payback.
    However, when we got the closing sheet details the cost was $5,322. When we asked the rep about this he said we need to deduct the $1,952 set up for 4 months of Insurance and taxes they require. But that still means our cost would be $3,370.
    Our insurance and taxes add up to $4,731/year or $394.25/month. Our monthly payment
    brake down would be $266.95 to principal, $588.00 to interest and $394.25 to escrow.
    We asked the rep why we needed to borrow the money for the future escrow charges when we’d be paying them the $394.25/mo and wouldn’t that mean we were being double charged?
    We are waiting for a reply on how he came up with the $2,217 cost and the pre-paid escrow charges but so far nothing back.
    Seems to us this has to be a Fair Lending Issue or outright fraud.
    Your take?

    • Scott Schang says:

      Hi Terry, this isn’t fraud, but your loan officer sounds like they don’t have much experience helping people refinance.

      In some cases, if your current lender is also the servicer of your loan (the company that sends out the mortgage statement), it’s not uncommon to be able to move your existing escrow account to the new loan so you don’t have to pay those 4 months up-front.

      If your lender cannot transfer the escrow account then it is always the case that if your taxes and insurance are being paid through the loan that you must make sure there is enough in there to make your payment when it’s due. That’s why they need to collect 4 months upfront. This is completely normal and not fraud at all.

      There are a couple of options here that might help. 1st, you can bring in the money to close so you’re not financing it. Once your new loan closes, you will be refunded the balance of your escrow account that you have with the current loan. So you’re paying it, but you’re basically getting most of that back in a few weeks.

      Another option is to increase the interest rate enough to create a lender credit to cover those costs. While your payments will be a little higher than they are now, you’re not adding to your loan balance.

      Lastly, I think you need to get a second opinion. It really seems like you’re working with a call center, customer service type of person that really doesn’t know the first thing about loans. $2,217 in loan charges sounds high to me. We are a mortgage broker and we don’t charge any lender fees. There is your cost of the appraisal and credit report, but we don’t charge any origination, processing or underwriting fees.

      If you would like a second opinion, shoot me an email to scott@findmywayhome.com and let me know what State you live in. I can introduce you to someone that I know and trust that can review what you’re being quoted now, and see if there is anything you can do to put yourself in an even better situation.

      Hope this helps?

  • Andie says:

    I am in the process of buying my first home. I was pre-approved and found a home. We made an offer and it was accepted. My loan officer called yesterday and informed me that because of COVID19, the requirements have changed and we can’t close until I have actually received my first pay check from the new job in the location of where I am moving. I am a contracted employee moving to the area for this new position, have been in the education profession for 26 years, and never had a break in job history. This pushes the closing date 30 days past my move and is not attractive to the seller. She indicated they can’t repackage and sell the loan without this because Freddie Mac requires this. I was also required to be at the home inspection with only a 48 notice and having to drive 5 hours to do so. Are they playing games with me? I appreciate any insight. Thank you

    • Scott Schang says:

      Hi Andie, I don’t think that your lender is playing games with you, but I do think that their options may be limited due to COVID-19. Employment is a very sensitive subject right now and the guidelines have definitely been tightened in regards to requiring a verbal verification of employment before the loan can be funded.

      You also mention Freddie Mac, did your loan officer attempt to run it through Fannie Mae DU?

      It’s true that things are much different right now, but it doesn’t mean that you should take this as the answer. I recommend a second opinion. If your current lender wants to delay your closing 30 days past your move date, you have nothing to lose by trying to find a lender to do it sooner. Your “plan b” is delay closing.

      If you would like, I can introduce you to someone I know and trust for a second opinion. Shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in. I will make an email introduction.

      Hope this helps?

      P.S. to look up the Fannie Mae guidelines about this topic, go to the Fannie Mae selling guide – https://selling-guide.fanniemae.com/ and type into the search bar: Can a loan close prior to the borrower starting a new job? The first option that comes up in for Employment contracts.

  • Tiffany says:

    My lender went and put the appraisal into the closing cost without my consent the closing cost were being paid by the seller but now that it fell through she is trying to get my bank information for me to pay for the appraisal she said and I quote “ she put it in the closing cost on good faith and did us a favor by not paying upfront at no time did we say we wouldn’t pay the appraisal that she was suppose to collect from us before the appFaisal happened again now that we are not buying the home she wants us to pay for the appraisal because now the seller doesn’t have to pay the closing cost she stated she didn’t need our consent to put it into closing cost but that can’t be true can it?

    • Scott Schang says:

      Hi Tiffany, I received your email as well and I will reply there also. This lender is not necessarily doing anything wrong, but their communication is absolutely appalling. Lenders can roll the appraisal in the closing costs, and it was probably disclosed that way when they sent you the initial Loan Estimate. This is actually pretty standard practice.

      There are always 3 options – 1. The borrower pays upfront (this is what we do in our business) 2. The lender pays the appraisal fee and collects it from the borrower at close, or 3. The lender pays the appraisal and does not collect from the borrower.

      Number 3 sounds like it’s the best option, but the interest rates are almost always increased to cover this cost.

      I don’t know if the loan officer can “make” you pay the appraisal fee, and I would definitely NOT work with this lender if you get back into the market at a later date.

      I hope this helps?

  • Ignacio Cordova says:

    I gave my all the information financial information to the loan officer wanted including my proof of income letter from Social Security that was for 1400 when I got my final closing statement my loan applications to 2000 something so that’s how he got the loan because I can’t afford it at 1400 and the payment was 924 that 63% of DTI when it should only be 43% that’s what and how he did it and when I looked at the loan application in the final closing papers he had put down $2,000 income instead of 1400 and I had reported him to the cfpb but he lied about the report there so they close the account

    • Scott Schang says:

      Ignacio, thank you for sharing your story, I’m so sorry you had to go through this experience.

      If your Social Security is not taxed (it usually isn’t), the underwriter will actually use 125% of your benefit for qualifying purposes. I’m not sure if that happened here, 125% of $1,400 woul only be $1,750.

      Great job reviewing your loan documents. It’s important to trust, but verify when you’re working with a loan officer that you do not personally know.

  • Anonymous says:

    Hello –

    I was just wondering, can a loan officer lie about my credit score? I recently bought a car with a TransUnion score of 740 – as reflected on all my credit card free score estimates, now the loan officer is saying that the loan is qualified off the score 672. Why is this? Or is he just lying?

    Lastly, how do you negotiate the interest rate without shopping the loan and getting even more inquiries on your credit?


    • Scott Schang says:

      This is a really good question, and one of the many confusing things about credit scores. There are 3 credit reporting bureaus, Transunion, Equifax, and Experian. Each one of these bureaus calculates your credit score differently. What gets even more confusing is that they all have different “models” that they use to calculate your score.

      This is a long way of saying that Auto dealers use a completely different credit model than lenders use. Lenders use what’s called a tri-merge report. This just means that they use a pretty conservative model to run all 3 bureaus, then throw away the high and low credit score. You mortgage loan, interest rate, and closing costs are based on the middle of the 3 scores.

      Auto dealers and online credit score companies like Credit Karma use a model called Vantage. This score is almost always higher than what a mortgage lender would use.

      Your last question is a really good one too! There are a couple of things that most consumers are not really told about shopping for mortgages. First of all, consider the source. If you apply for a mortgage from an online advertisement, or a TV commercial or radio ad, chances are that company is spending a LOT of money to get that advertisement in front of you. That usually results in a higher interest rate to cover those costs.

      Next thing to consider is the company you work with. Direct lenders have a lot of overhead, buildings, employees, attorneys, this drives up the cost to process a loan.

      Finally, a mortgage broker is an independent mortgage professional, usually a small business or entrepreneur with low overhead and years of experience earning their business mostly through referrals and repeat clients.

      The mortgage broker model is almost always a lower rate, and more importantly a better, more personalized experience.

      Full disclosure here, I have been in the business for over 20 years and have been both a direct lender and a mortgage broker. I am a mortgage broker now, for quite some time, and I am biased in my opinion. Mostly because I chose this route because I am always trying to do what’s best for my customers.

      The other side to this is in regards to having your credit pulled. You are allowed to have multiple mortgage companies pull your credit within a 30 day period, and it only counts as one inquiry to the credit companies. This is the same for Auto dealers. The credit model assumes that you will shop for the best rates and terms when shopping for an automobile or a home mortgage, and therefore accounts for that.

      I hope this helps? If you would like an introduction to a mortgage broker that I know and trust, shoot me an email to scott@findmywayhome.com and I’m happy to connect you! Please include what State you’re in if you email me 🙂

  • Acacia says:

    Does the loan you qualify determine the amount of bedrooms you want?I had an loan.officer ask how many bedrooms I wanted I said 3 or 4 they said I would need someone else on my loan because I only qualify for 1 hundred 85 thousand

    • Scott Schang says:

      Hi Acacia, the loan you qualify absolutely does not have anything to do with the number of bedrooms. I just think that the loan officer did not do a good job of communicating to you that homes with 3 or 4 bedrooms may be more expensive than what you are qualified for.

      If you are not comfortable with how the loan officer explained this, I would absolutely recommend you get a second opinion. If you cannot trust the loan officer to be able to explain this to you, it’s likely that you will have other miscommunications further into the process.

      If you would like, you can send me an email to scott@findmywayhome.com and let me know what state you’re buying in. I can introduce you to someone that I know and trust to give you a second opinion.

      I hope this helps?