KBS Lending

Sometimes the wide array of lending products can be confusing. Each product has different terms, and it is important that borrowers understand the terms of the loan product they choose. Even though these details are covered in conversations with the mortgage broker or lender, they are also provided to you in writing so you can review them and ask questions about anything you do not understand. This is a highly regulated industry, and much of what Nicole has commented on are out of the mortgage broker's control.

Initially, Nicole Renna chose a loan of 75% of the appraised value with a 30 year term. Nicole Renna was encouraged to attend the appraisal to inform the appraiser of all the recent work performed on the property since some of it could not be seen but should be considered when determining the value of the property. This is an important step that results in a more accurate appraisal. Unfortunately, Nicole Renna chose not to attend the appraisal, and it came in lower than expected. We moved to another lender, and Nicole Renna was again instructed to attend the appraisal. Again, Nicole Renna did not meet the appraiser, and the appraisal came in lower than expected. At this point, Nicole Renna chose to change her loan to an 85% loan for 30 years to reduce the cash she needed to bring to closing due to the lower appraisal on her property. In doing so, she selected a loan product that requires mortgage insurance - either included in the monthly payment or in a higher interest rate. The best option for Nicole Renna was to include the mortgage insurance in the interest rate, reflecting the risk to the lender of the higher loan amount.

As a mortgage broker, I have no control over appraisers or their valuation of the property. No mortgage broker does. Government regulations have been put in place to specifically prevent mortgage brokers and lenders from influencing property appraisals to prevent mortgage fraud. It is the borrower's responsibility, in this case Nicole Renna, to meet the appraiser and review the property features, improvements, and any other relevant information that allows the appraiser to provide an accurate appraisal of their specific property.

In addition, mortgage brokers have no control over the basic terms of Fannie Mae guaranteed loans. All loans must meet certain requirements. Mortgage insurance on loans of 85% or greater require mortgage insurance. This was disclosed and discussed with Nicole (add the nature of disclosure here... for example.... "In our initial discussion on the phone when she asked how she could reduce the cash she needed to bring to closing, and in her revised closing documents and term sheet.")

Finally, mortgage brokers do not control interest rates. Interest rates are a reflection of risk. Lenders set interest rates based on the marketplace and the risk they have with each loan product. All mortgage lenders charge a higher interest rate for 85% loans than for 75% loans because the risk is higher with larger loans.

Nicole has accused me of being:
â?¢ Dishonest and that I did not follow proper lending guidelines - This is untrue and a libelous statement. Nicole has all of the paperwork disclosing all material facts of the loan products she selected. This is highly regulated industry and all lending guidelines were followed in this transaction.
â?¢ Rude and Unprofessional - I have the reputation of going above and beyond for borrowers. Unfortunately, Nicole Renna seems to be looking for a way to shift the blame for her decisions. She selected the property, the level of rehab and scope of work. She chose not to meet the appraiser when told to do so in order to get the most accurate appraisal, and she chose to change the loan.

If I could have changed the appraisal, the lender requirements for Private Mortgage Insurance on loans of 85%, or the increased interest rate that is required for this higher loan amount I would have happily done so. Unfortunately, this is all beyond the control of any mortgage broker.