I am currently working with a few Ventura County home buyers who have become extremely frustrated with banks (owners of properties) who require that the home buyer gets pre-approved by the bank’s lender. You see, my clients have been working with their own lenders for some time now and have found the process of pre-approval with each bank that is selling a home (bank owned homes/REO) frustrating. In some cases, my clients FICO scores have dropped due to multiple banks looking up my clients’ credits.
As it is, submitting an offer on a bank owned home/REO is very time sensitive and chasing down a local lender recommended by the bank is an undesirable and often unescesary, delay. It is true that home buyers do not have to use the banks’ lenders, however almost all banks that own properties in Ventura County require that potential home buyers go through a pre-qualification or pre-approval process with the bank’s own lenders.
The question all of these clients ask me is, Why do banks have to look up my credit and pre-approve me when I already have my own lender?
This is a very valid question and a valid concern for home buyers who are trying to keep their credit as pristine as possible. After all, my clients have already qualified with their own lender. Don’t lenders trust each other any more? :0)
There are a few reasons banks require home buyers to qualify with the banks’ lenders.
- As the banks lose one client due to foreclosure they try to collect new clients by offering them a loan on the properties these banks now own. Some banks even offer to pay for the home buyers appraisal or other fees if the home buyer uses the bank’s lending services.
- By pre-approving the home buyer the banks hope that the home buyer would use their services in case the home buyer’s lender fails to perform.
- Banks do not like to keep properties in their portfolios. They can not risk keeping these properties longer than necessary. By using their own lenders banks are assured that the home buyers loan will be handled diligently.
No matter what lender you choose for the purchase of your Ventura County home, I recommend that you ask for a copy of your FICO scores. This way when different banks ask to pre-approve you for the purchase of their property you can send them the copy of your credit report (cross out your social security number). If they refuse to take the copy of your credit report, be honest. Inform the bank’s lender that you are concerned about your credit being pulled up too many times and the negative impact all of these credit checks might have on your score.
Remember, all banks and lenders need your permission to run your credit report. So if you are concerned about the number of times your credit has been checked in a month or so, just tell the lender that you have a copy of your credit report and will fax it to them.
