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

Summary:

A snarky response to the answer of no: rudely 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.

• Summary of the proposed transaction
• Loan application
• Three months' bank statements for the borrower and the borrower's business enterprise.
• The most recent payment statement.
• Addendum to allow the lender to order a credit report.

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

Article:

The mortgage broker accepts a 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 lender also shoulders a significant fiduciary responsibility. This responsibility extends to the borrower and his investors, who will fund the transaction if it meets all the necessary criteria. The lender's unwavering commitment to this responsibility, particularly in protecting the investors over making a fee, is a crucial aspect of the mortgage process. It should reassure all parties involved and instill confidence in the lender's actions.

As the documents came in from the mortgage broker, they were entered into the lender's database, and his processor began a meticulous investigation into more material issues related to the proposed transaction. The processor conducted a thorough investigation, retrieving the following to add to the file, ensuring all aspects of the transaction were considered with the utmost care and attention, and providing a sense of security to all involved.

• 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 the only economic interest in the property was created by his deceased family, not his.
• The first trust deed is still in the deceased parent's name.
• On the sketchy application, the borrower showed no real employment history other than living off mom and dad.
• The borrower's three months' 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 said it was a rental to circumvent the Truth in Lending (TILA) consumer purpose vs. business purpose provision.
• The borrower submitted a one-page statement of the purpose of the loan, describing the desire to start a business, which reflects a future and speculative enterprise.

With the material facts discovered, the lender decided to decline the loan. The lender made a well-considered decision, writing a memo explaining its reasoning to the borrower's mortgage broker. The reasoning is self-evident: the borrower lives in the property, it is a disguised business purpose loan, it cannot make payments, and it would be a servicing nightmare. This transparent decision-making process ensures that all parties are fully informed and makes everyone feel knowledgeable about the situation. It is a key part of the mortgage process, instilling confidence in the lender's actions.

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 him. 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 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. The implication was that you wouldn't hear from me about future transactions. The broker was so desperate to make a fee that he overlooked accepted custom and practice and federal and state regulations of consumer purpose vs business purpose lending. The broker's role is crucial in the transaction. It's important to remember that they are responsible for adhering to regulations and acting in all parties' best interests.

Here lies the story, repeated daily in a lender's life. The broker forgot that he did not make an origination fee, and the lender did 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, instilling confidence in the lender's actions.