Real-life example: with a bit of intended sarcastic humor.

A snarky response to the answer of no: rude, sarcastic, and mocking in tone or manner.

Parties: A procuring mortgage broker and a lender for a real estate loan request.

During a call about a proposed transaction, the lender made a proactive request to the procuring mortgage broker. They advised the mortgage broker to create a digital file on their computer and assemble and forward all the exhibits. This would allow them to access the material facts about the transaction as the exhibits arrived. The mortgage broker agreed to send the following items.

A summary of the proposed transaction is referred to as an executive summary.

A commercial loan application

Three months' bank statements for the borrower, as well as for the borrower's business enterprise.

The most recent payment statement on the subject collateral property

Proposed borrower statement to allow the lender to order a credit report and background check.

All the above is the minimum to assess the transaction's viability.

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The mortgage broker accepts tremendous fiduciary responsibility. He agrees to act on behalf of the borrower and put his client's interests ahead of his own while maintaining a duty to preserve good faith and trust. At the same time, the mortgage broker is responsible for presenting all material facts known or discovered during his inquiry.

As a key player in the transaction, the mortgage also assumes significant fiduciary responsibilities. This responsibility extends to the borrower and their investors, who will fund the transaction if it meets all the necessary criteria. The lender's unwavering commitment to this responsibility is a testament to their dedication to protecting the investors over generating a fee, a crucial aspect of the mortgage process. The lender's role is not just to provide funds, but also to ensure the viability of the transaction and protect the interests of all parties involved.

Upon receiving the documents from the mortgage broker, they were meticulously entered into the lender's database. The processor then embarked on a comprehensive investigation into additional material issues related to the proposed transaction. This thorough investigation, which included a title search, online inquiries from Zillow, Realtor, and Redfin, a credit report, and a background search from LexisNexis, ensured that all aspects of the transaction were considered with the utmost care and attention.

Title search

Online inquiry from Zillow, Realtor, and Redfin about the property and its value.

Credit report

Background search from LexisNexis

After a meticulous investigation, the lender unearthed crucial facts about the borrower and the transaction.

The borrower inherited the property, which meant that the only economic interest in the property was created by his deceased family, not his own.

The first trust deed is still in the deceased parent's name.

On the application, which was sketchy, the borrower showed no real history of employment other than living off mom and dad.

The borrower's three-month bank statements were close to zero at the end of the month. So, where will he get the money to make the payments?

The borrower's FICOs were 530, 549, and 560, suggesting he did not make timely payments.

There were two judgments for child support totaling $80,000.

The property has a recorded notice of substandard condition against it.

The credit report showed that the borrower lived in the subject property. Still, the application claimed it was a rental to circumvent the consumer purpose versus business purpose provision of the Truth in Lending Act (TILA).

The borrower submitted a one-page statement of purpose for the loan, stating that they desire to start a business, which reflects a future and speculative enterprise.

With the material facts discovered, the lender made the ethical decision to decline the loan. The lender's well-considered decision was communicated to the borrower's mortgage broker through a memo, explaining the reasoning behind it. A transparent decision-making process, which should instill confidence in the lender's actions, is a crucial component of the mortgage process. It ensures that all parties are fully informed and underscores the importance of transparency and ethics in the mortgage process.

Of course, if the borrower defaulted, he would have blamed his broker and the lender, stating that they told him to disguise the loan purpose and that they were at fault, not he. History tells us that a leopard does not change its spots; otherwise, due to the borrower's poor credit history, giving him cash out will not solve the problems in the long run. No institutional lender would be willing to refinance and remove the private money lender. This situation could have led to a significant financial loss for all parties involved. This scenario underscores the importance of ethical conduct in mortgage transactions. The borrower's actions, if not discovered and addressed, could have led to severe financial consequences for all parties involved.

This is where Snarky comes in. The mortgage broker was indignant that the loan was declined; this is a hard money equity loan, and the lender must not know what they are doing. You won't be hearing from me on any future transactions, was the implication. The broker was so desperate to generate a fee that he overlooked accepted customs and practices, as well as federal and state regulations, regarding the distinction between consumer and business purpose lending. The broker's role is crucial in the transaction. Still, it's essential to remember that they are responsible for adhering to regulations and acting in the best interests of all parties.

Here lies the story, repeated daily in a lender's life. The broker forgot that he had not paid an origination fee, and the lender had not either.

The only truth in this story is that the lender unwaveringly upheld his fiduciary responsibility, prioritizing the protection of his investors over making a fee. This unwavering commitment is a testament to the lender's dedication to his fiduciary responsibility and should reassure all parties involved.