As a lender, is it ethical to deny someone for a loan and then turn around and share not only that the loan was denied, but the EXACT reason the loan was denied (for example: too many NSFs, large deposit in checking account, hours cut back at work, etc.) with the applicant’s realtor as well as the listing agent who in turn shares it with the sellers?
It’s flat out wrong for a mortgage originator to share someones personal and private information. Sometimes mortgage originators may feel pressured to provide extra details by a real estate agent wanting the nitty gritty and the mortgage originator must decline, or perhaps they’re trying to score some brownie points. Even with “perfect” clients, agents may want to know details that a mortgage originator cannot and should not provide due to strict laws protecting the borrowers privacy. This is a perfect example of why I have an issue with mortgage originators also acting as a home buyers real estate agent.
I encourage borrowers I’m working with to discuss their situation with their agent and vice versa. There is nothing preventing a home buyer and real estate agent from having a conversation and it’s up to the borrower/home buyer to decide how much information they want to share. However, Dear Agents, please keep in mind that the home buyer may be embarrassed about their situation or may not want you to know their privates.
A mortgage originator can share with an agent that the borrower does have verified funds to close and is approved for the mortgage based on their credit, income and employment. These items may be addressed in a preapproval letter.
Real estate gents will often call me to ask about a potential home buyer who has an offer pending. A majority of the time, it’s really a “sniff test” to make sure that I answer my phone, return calls quickly and to verify that the borrower is actually preapproved. They may try to find out if the buyer can qualify for more and I have to decline answering. Many times the buyer may qualify for more BUT the buyer wants to offer or buy less. Without instruction and permission from the borrower/buyer to reveal any of their personal information – mum is the word.