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Can I be processing two loans at the same time and back out of whatever loan doesn't close first?

Trying to be efficient here. by Billy_Hukka from Beverly Hills, California. Jun 18th 2013 Reply


David Sanders (David_Sanders)
#783 ranked lender in California - 59 contributions

It may cause a red flag to the underwriters. However, most likely not. It may be a waste of money to get 2 appraisals however...If you meet the guidelines then doing 1 loan should be fine with a trusted L.O. Why not do them both? Is it the same property that you are going through 2 different lenders? There must be something more to this situation... Good Luck!

Jun 18th 2013
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Stacey Nielsen (Unitywestlending)
#886 ranked lender in California - 123 contributions

@ Billy_Hukka You may do whatever you wish as long as you know the consequences of each action and understand them both. If it were me I would back out of one now and make a push for the original loan to close.

Jun 18th 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

as the others have mentioned you will need two different appraisals in order to do so and this may not be very effiecient. I know of borrowers that have tried to do this and both Lenders red flagged the loan and neither was approved.

Jun 18th 2013
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Jason Vondrak (jvondrak)
#192 ranked lender in California - 1,739 contributions

You can, however you must pay for two appraisals (just like others have stated) and if the lender has offered to reimburse the appraisal, backing out may cause you to lose the reimbursement. It is also in a way unethical to have two different lenders work on your file when you have the intention of just backing out on one of them. The lender, processors, etc. put a lot of work into the file and some do not get paid unless it closes. Instead, pick a lender that presents the best terms and fastest processing time and stick with them.

Jun 18th 2013
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 8,092 contributions

You could, but why would you??? The terms of both loans will be spelled out in the beginning, so you'll know which one is the better deal, and if your only reason to do this is to see which one closes quicker, then it's probably not the most efficient way to accomplish this. I don't think it's illegal, but it's certainly is unethical. You will have 2 loan officers working diligently, all the necessary work, processing, etc , and they will be spending their money on credit reports, DU/LP findings, as well as getting other professionals involved such as the title companies, which will both be putting together preliminary reports for underwriting purposes.. All this just to see who closes first???? Another problem is that several years ago, when the mortgage/real estate business was flourishing, one rather large area of loan fraud was folks taking 2 mortgages out on the same property at the same time.. what you have spelled out could be interpreted as loan fraud.. since part of the application process asks if you have applied for, or have any other loans or obligations that do not show on the credit report, for you to pursue your unethical rouse, you would have to lie... once the lenders find out, they will both deny your loan.. simply asking your loan officers when the close date will be will give you a more efficient way to determine who will actually close first.. so my advice.. do the right thing and back out of one of those deals today.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 18th 2013
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Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

This may cause a fraud alert. This is a plot that some have used in the past, in order to put two "first" mortgages on the same property, take the extra cash and run, and put the second lender to record at risk.

Jun 18th 2013
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Barb Lanis (BarbLanis)
#71 ranked lender in Illinois - 662 contributions

I don't see that as efficient at all - seems hard to manage. It's time for you to select one lender that you trust and go with it.

Jun 18th 2013
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 8,092 contributions

You could, but why would you??? The terms of both loans will be spelled out in the beginning, so you'll know which one is the better deal, and if your only reason to do this is to see which one closes quicker, then it's probably not the most efficient way to accomplish this. I don't think it's illegal, but it's certainly is unethical. You will have 2 loan officers working diligently, all the necessary work, processing, etc , and they will be spending their money on credit reports, DU/LP findings, as well as getting other professionals involved such as the title companies, which will both be putting together preliminary reports for underwriting purposes.. All this just to see who closes first???? Another problem is that several years ago, when the mortgage/real estate business was flourishing, one rather large area of loan fraud was folks taking 2 mortgages out on the same property at the same time.. what you have spelled out could be interpreted as loan fraud.. since part of the application process asks if you have applied for, or have any other loans or obligations that do not show on the credit report, for you to pursue your unethical rouse, you would have to lie... once the lenders find out, they will both deny your loan.. simply asking your loan officers when the close date will be will give you a more efficient way to determine who will actually close first.. so my advice.. do the right thing and back out of one of those deals today.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 18th 2013
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Peter Botros (PeterBotros)
#72 ranked lender in New York - 895 contributions

Why wouldnt you just compare the loan terms offered from each bank and make your decision rather then waste someones time and your money?

Jun 18th 2013
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Adrielle Edwards (AdrielleEdwards)
#879 ranked lender in California - 96 contributions

If you are looking for efficiency, this is not the route to take. You should shop in the beginning and get two or more GFEs (good faith estimates) and see which lender will offer you the best deal and go with that lender. It could result in a red flag but will definitely end up costing you more money in the long run due to needing two appraisals instead of just one.

Jun 18th 2013
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Bert Carpenter (BertCarpenter)
#39 ranked lender in Arizona - 1,815 contributions

Bad option. This could easily blow up in your face because failure to notify each lender that you are working with someone else is considered an act of bad faith. Some might even call it fraud if you don't tell them up-front. In the boiler plate you sign, you agree to disclose all material facts. Another application for another loan is considered material. I have seen underwriters decline a borrower for dual applying. And trust me, they WILL find out. Do your comparison shopping. Pick one and then stick with it. When you shop, make sure you also factor in the reputation of the lender and Mortgage Professional for ease of closing and accuracy in hitting the COE target as well as total pricing. I've had customers try and weasel me down for a $200 difference in total closing costs and go with the cheaper guy, only to be killed at closing because the cheap guy can't perform. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Certified by the National Association of Mortgage Professionals and Licensed in California and Arizona ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jun 18th 2013
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Peter Botros (PeterBotros)
#72 ranked lender in New York - 895 contributions

Why wouldnt you just compare the loan terms offered from each bank and make your decision rather then waste someones time and your money?

Jun 18th 2013
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James Mazzola (Mazzola)
#110 ranked lender in New Jersey - 313 contributions

yes

Jun 18th 2013
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Elden Lewis (elewis_409_299)
#41 ranked lender in Indiana - 223 contributions

I agree with William. The only advantage i could see if you do this is if you are locked with one and floating with the other allowing you to choose the other if rates go down. Highly unethical and boarding fraud.

Jun 18th 2013
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Bert Carpenter (BertCarpenter)
#39 ranked lender in Arizona - 1,815 contributions

Bad option. This could easily blow up in your face because failure to notify each lender that you are working with someone else is considered an act of bad faith. Some might even call it fraud if you don't tell them up-front. In the boiler plate you sign, you agree to disclose all material facts. Another application for another loan is considered material. I have seen underwriters decline a borrower for dual applying. And trust me, they WILL find out. Do your comparison shopping. Pick one and then stick with it. When you shop, make sure you also factor in the reputation of the lender and Mortgage Professional for ease of closing and accuracy in hitting the COE target as well as total pricing. I've had customers try and weasel me down for a $200 difference in total closing costs and go with the cheaper guy, only to be killed at closing because the cheap guy can't perform. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Certified by the National Association of Mortgage Professionals and Licensed in California and Arizona ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Jun 18th 2013
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Robert Hanson (rhanson)
#3 ranked lender in Maryland - 646 contributions

You would not have to pay for 2 appraisals if you are doimg an FHA loan--- you would just have the appraisal done through one lender and transfer it to the other if that's who you end up going with. As long as you are upfront with what you are doing, I don't blame you one bit! Lowest rates. Best Service. 20 years experience in the industry. I am always happy to assist so if you need more information, a pre-qualification, or a competing rate quote you can go to my web page and use my live support button to discuss anything at all with me in an easier format. Web Address is: http://www.loansfromrob.com/quote/ Email is rhanson@gladewaternational.com and direct phone is 240-752-7549. Good Luck -- Rob Hanson

Dec 11th 2013
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Lorne Harvey (lorneharvey)
#81 ranked lender in Washington - 420 contributions

This is not a good option, especially if both lenders lock in your interest rate.I recommend choosing one that you feel will do the best job and cancel out the other one. You will have to explain the credit inquiries, and this would surface.

Sep 28th 2016
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