We have heard more and more lately about the "setting smile" experience that borrowers have spoken of with real confusion. The "setting smile" is defined by what happens to a mortgage banker / lenders face when they obtain the credit score of a borrower that does not meet their minimum standards. The story is that borrowers are met with smiles and warm embraces when they say that are seeking a mortgage with a local bank, and quickly ushered into a comfortable chair. After some discussion, the credit score is attained and the smile goes away. After the "smile sets" like the sun in the west, the borrower is simply told that they do not have the credit that is needed and shown the door.
After witnessing this, and speaking to countless bankers it is apparent we are failing the borrower here. It is time to lay out the truth.
This is what happened to Suzy in her "setting smile" episode. The banker got her coffee, chatted about her weekend, and home ownership goals. Then, the she (loan officer) pulled only one bureau report, not all three. See, it costs money to pull all three and the bank does not want to spend that money unless they are going to recover it with some good old fashioned immediate gratification. Suzy had a 593 score, and the smile began to set. She was not given access to her credit report to see what could have lowered the score, but rather told she can request one, and get it in a few weeks. Come to find out, Suzy had a 593, 641, and 642 credit score, actually making her eligible for a loan at that very bank, but the banker never knew because she was looking for the easy loan, and frankly decided in a about 5 seconds Suzy was not eligible.
The larger banks have loan officers that are working on very little margin, and would prefer to "grind" through a bunch of easy loans, and go home at 5:00. They simply have no interest or incentive to help people. Many times a person is one or two small tweaks on their report from having the necessary credit scores. The help is there, it just needs to be delivered. The home loan process is not some insurmountable challenge, but rather quite straightforward - when explained.
Recent experience with a home loan application. Is this you?