The Single Most Important Question You Need To Ask Your Loan Officer: Right Now.

Pull up a chair, I need to have a serious conversation with you for a minute. Something happened this week that you may not be aware of yet and although I don’t want to alarm you unnecessarily, I want to help you protect yourself from the fallout of what happened.

What Happened This Week

This week something out-of-the-ordinary happened when the government effectively shut down a large wholesale bank named Taylor, Bean and Whitaker. Yes, it has been all over the news but I worry that many people just assume that it was just another bank failure - heck, they pretty much happen on a weekly basis (always on Friday of course) so what is the big deal, right?

Wrong.

Why Taylor Bean and Whitaker Closing Is Important To You

No matter who you are - or whether you are currently in the process of getting a loan or not, the closing of Taylor Bean and Whitaker will impact the way you shop for a mortgage. One of the reasons it will impact everyone is that Taylor Bean and Whitaker was one of the “last options” for many types of loans. As lenders have tightened up their guidelines, many lenders simply “don’t do” certain types of loans anymore. FHA Jumbos, FHA Manufactured Homes, FHA 203k Streamlines, USDA Loans - these were all loans that TBW did and loan officers all over the country used TBW for years.

The Single Most Important Question You Can Ask Your Loan Officer

With the closing of TBW, many loan officers are now scrambling to get their loan placed somewhere else - and the sad truth of it all is that many people who were just about to close their loan will not be able to close their loan somewhere else because no one else will do the loan that TBW would have done.

So, the single most important question that you can ask your loan officer — please pick up the phone right now and ask it if you haven’t already is:

Do you have a backup lender in place in case the current lender you have my loan with closes their doors?

And don’t settle for any answer other than yes or no.  Don’t let your loan officer go wishy-washy on you. This is an answer that you need to know. You need to know that your loan is in line at XYZ lender and should something happen to XYZ lender, is there a backup plan in place?

And if there isn’t… well - it is time that you demand that your loan officer get one.

Because in today’s mortgage market - as proven again this week by the closing of Taylor Bean and Whitaker - anything can happen.

And by being proactive and making sure you have a backup plan in place should something happen, you can mitigate the risk of a financial crisis of your own.

More Information:

HUD Press Release

Wall Street Journal Article

Taylor Bean Press Release

Dan Green does a great job of putting together a FAQ list for many questions people have about the Taylor Bean and Whitaker event.

August 7, 2009