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How Big Box Lenders are Failing Consumers

Are Big Box Lenders are Failing Homebuyers?

Changing the Game?

Big box lenders are those companies that advertise on television and radio with claims about how quick and easy they are going to make the home loan approval process.

The phrases “instant approval” or “no need to talk to a salesperson” or “talk to 3 lenders – let them compete, you will win” are often thrown around as benefits of applying for a home loan with one of these companies.

These same big box lenders are sinking millions of dollars into advertisements trying to convince consumers that qualifying to borrow hundreds of thousands of dollars is as simple as completing a form and connecting your accounts.

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These companies are trying to change the game, but are they are going in the complete opposite direction of what is in the best interest of consumers.

The only game that should be changed is the game of accountability.  Not everyone qualifies for the narrow definition of an eligible loan,  making it through the technology without human intervention.  If you’re part of that 1%, congratulations.

If you’re like the 99% rest of us, your credit profile, or housing history, or income sources can be a bit tricky.  In situations where a big box lender says “no”, there is an experienced home loan professional that can get you qualified for that home.

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Where Have all the Experts Gone?

Let’s face it, nobody wants to talk to a sales person, period, end of story.  However, most people do want to speak to an expert, get help answering questions, and get answers to questions they didn’t know they should be asking.

There is no place for “sales” when making informed decisions about your home financing options, but that’s exactly what big box lenders are doing.

Companies that spend millions of dollars on advertisements do not pay wages that will attract experienced home financing professionals.  What we are left with is a low paying position that is incentivized by volume if they want to earn a living wage.

Because of this website, I find myself in the unique position of being asked questions from people all over the Country, usually after they have been misled, let down, turned down, or lied to by a loan officer that was not experienced enough to be discussing financing decisions with consumers.

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More often than not, the most shocking examples of inexperience come from “customer service” people that are meant to replace experienced and knowledgable professionals that are experts in their field.  The burden of the accuracy of the information lies completely on you, the consumer, to trust and verify that you’re being given good advice.

Experience, the Difference

Some of the strongest evidence that you are dealing with an inexperienced loan officer is if there is a “yes” for every question you ask.  If it sounds too good to be true….well, you know the rest of the story.

This seems to be the standard operating procedure for most of these types of experiences.  The advertisements say that you don’t need an experienced loan officer, and everything is going along well until you press the “submit” button.

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Once you submit your loan inquiry, you now have to follow the exact same underwriting guidelines as every other lender.  This is where the wizard is revealed to be a hoax.

These types of automation based, low wage customer service models are great, until there’s a challenge.  In order to make sure there are fewer problems, these types of lenders specialize in only certain type of borrower.  If you do not meet this lender’s definition of a “good loan”, don’t worry, there are plenty of professionals out there that can do your loan.

A loan denial from this type of lender should be immediately followed up by a second opinion from a more experienced home loan financing specialist.  I am constantly surprised how many of these scenarios that can easily be an approval, but were denied by a lender that simply does not have an appetite for your loan.

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An experienced loan officer that is an expert in their field will stand out from inexperienced lenders like day and night.  The best loan officers are constantly looking up underwriting guidelines, and drawing from past experience to find a solution to your qualifying challenge.

Don’t Take “No” for an Answer

The errors that I see most often are simple, unnecessary mistakes or oversights that will completely change the disposition of your loan approval.  I’ve seen just as many loan denials, that actually qualified, as I have loan approvals that did not qualify.

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Don’t take “no” for an answer.  If a lender tells you that you do not qualify, ask for a specific explanation, and a solution.  An experienced loan officer will be able to tell you what the path to a loan approval looks like.   Most “no” results, should be “not now” results, with a good explanation.

If you’ve found this article, chances are, you are currently in this situation, and you are looking online for answers, because something doesn’t quite feel right about your experience with the last lender.

Getting Your Questions Answered

All lenders are not created equal.  Most of the readers that find this site because they’ve been researching solutions to challenges, and have been told 10 different things by 10 different loan officers.

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 these 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 can also introduce you to a lender friend that I know has experience with your specific situation and can help.

About Your Expert

Scott Schang

As a 19 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

  • Bill Brooks says:

    Although we have to wait til Feb. 2018, to apply for a mortgage.
    We were wondering if we can get an approval letter from a lender
    now . Assuming certain conditions are are complied with . ie down paymt.,
    credit rating, etc. Reason: It’ll be 2 years since foreclosure.

    • Hi Bill,

      It’s possible to get a pre-approval letter that says that you meet the waiting periods, but there may be a couple of issues with that approach.

      First, if it’s a foreclosure, the waiting period may be longer than 2 years unless it was discharged in a bankruptcy, or if you’re applying for a VA guaranteed loan?

      Second, I’m not sure if any seller would be comfortable with an approval letter that has those conditions attached.

      What I’ve done in the past is to simply speak to the seller (as the lender), and explain to them what your situation is. If you credit qualify with no serious challenges, and the waiting period is the only thing preventing you from buying, sometimes an authoritative explanation of reason for the timeline will help.

      The other option you may have is a portfolio loan. The rates and closing costs tend to be higher, but it will get you into the home now. That’s a good “Plan B” if you’re in a pinch and cannot hold out for traditional financing.

      Hope this helps?

  • momof38553 ScottSchang I know of one company that calls everyone a VP.  The fact is, companies give out titles all the time.  Most of the time, it’s to make people sound more important.  A title doesn’t necessarily mean that they are more professional, or experienced.
    Honestly, I use the “gut test”.  Do your homework (like you’ve done) so that you can sniff out BS if it’s being used, then just use your “gut feeling” for what type of person they are.  It’s usually pretty easy to get a read if someone is only concerned about making money, or if they are truly trying to help you.

  • momof38553 says:

    ScottSchang momof38553

    Yes Scott… yes indeed. Do you think there is a difference between dealing with a Jr. mtg broker vs. a VP or senior broker. In my case would dealing with someone more senior be more beneficial???

  • momof38553 Great example!  I feel like I’m walking a very fine line when I say that someone doesn’t do their job properly, and it’s not that they are doing anything purposely malicious.  They are in business to make money just like everyone else, right?
    My problem comes from the fact that they spend all of that money to help a small segment of people, and they try to play it off as being innovative, or game changing – it’s not, it’s called profiling…and only wanting to deal with perfect borrowers with perfect paperwork.  That’s not most of us!

  • momof38553 says:

    Hi Scott- 

    Wow, I have recently had that experience with the big box lender rocket mortgage by quicken loans …….by the way great article. While waiting on a pre-approval from a lender you referred to me to I had seen a commercial on tv that said you could apply online and get approved right away so I applied. Everything was going great, I had come to the end of the questionnaire and they said I needed to call or do live chat so I opted for live chat and they took me through a series of additional questions some where a repeat of what I had already answered then finally they got to what they wanted to know which was where the down payment money was coming from. When I told them from my business they told me that only 3% could come from what was in the business bank account right now. I told them I had zero right now and they said with that they would not be able to approve me for a loan…..sorry. I was so angry because I couldn’t believe that they were so black and white. I felt like I was scammed and because I did not fit into their box I was denied. Either way was just approved by your referral yesterday finally…yea! But also sought out an additional one on my own as well and also got approved the same day on a Sunday to say the least. Amazing!!! Can you imagine if I just went based on rocket mortgage alone, I probably would not be getting a home.

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