Fight Lending Discrimination - Expert Edition Episode 19 (Classic Episode)
Banking distrust dates back to the 1800s. If you feel there is any chance you are facing unfair treatment while applying for loans, particularly mortgages here are your tools to proactively advocate for yourself. We discuss:
Historical Mistrust
Professional discretion that may not lean in your favor
Scrutinizing the Truth in Lending Statement
Always ask “Is This the best you can do”
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TRANSCRIPT:
[00:00:00] Naseema: all right. Nurses on fire. We are back with Leisa Peterson, our certified financial Planner, and today we are going to talk about the historical mistrust of banks, especially in the African American community that dated back, like to the emancipation of black Americans in America. After president Abraham Lincoln signed the freed.
Bank Act in 1865. So basically there was this bank that formed and black people were expected to contribute to this bank, but they weren't allowed to get loans from this bank. And then ultimately the bank was called out on their unfair practices and shut down. Therefore, all the black people who contributed to this bank lost all their money.
And so the story goes on and on and on where there's this historical mistrust. Banks in the black community, and it still persists to today. Like even with the last recession, the housing crisis, we see tons of lawsuits where the NAACP had to file against lenders where people of color were given time and time again, subprime loans versus the conventional loans that they qualify for.
Hands contributing to the housing crisis. And so, These things have not been resolved in our community. I feel like even right now I'm in the process of going through a mortgage and I still feel the impacts of that. I feel like I'm being unfairly treated in my application process. And so I just wanted to dive in with and talk to you about Elisa because you have insider.
Information because you were in mortgage lending for over nine years. And so just to get your perspective on what's going on. And then we wanna empower people so that they have the tools to prevent this going forward. Because it's all about empowerment, right?
[00:01:55] Leisa: Yeah. All about empowerment. And I think that what we were exploring offline and what we both determined would be most helpful for everybody to be thinking about is.
A couple things first that, that I think, like you, you mentioned to me people go into a bank or they go into a mortgage company and they feel like they're going to be heard, they're go, their needs are gonna be, you know, listened to. They're going to be supported and. What I was bringing up is that there is that's true.
I think the general spirit of the companies are trying to do that, but I, what I also know is that there is discernment. And there is the ability for a mortgage banker in many situations, not all, but they have the ability to basically negotiate the deal that they put before you. There is leeway in whether they're going to structure a deal that is very tight for them, and they're not gonna make very much money as the, as the salesperson of that mortgage.
Or there's gonna be the other situation where they make it more rich for the. And we can't ever really know what the ulterior motives are behind, you know, what's going on because the, that information isn't always shared with us. Some of the stuff that they're paid is very like brokers for example, have to have a higher level of transparency about like what they're being paid and how they're being paid by the banks that the lo that the loan gets sold to.
But when you're working directly with a bank like oh, Wells Fargo or a Chase or someone else, a lot of what's happening is kind of behind the scenes where you don't see all the ways that that person is being compensated. And so granted, the rules change. It's been a while since I've done direct production 10 years, but what I do know is, When you show up as a consumer and you are educated, and you are informed, and you know what you need from the perspective of the package, the loan package, and what you're gonna provide.
And you've done your homework on what the current rates are and what the nuances might be, you gain more power in that negotiation, just like in any negotiation. So the more information you have and the more serious you are about the process, and the more educated you are, the better deal you're going to get.
And there's also this whole thing of like, people don't. Feel the the leeway to take advantage of people when they are very professional and informed. Would you agree with that?
[00:04:44] Naseema: Yeah. It's just disheartening because you think that it's just a numbers game. Like they tell you that if you meet X, y, and Z criteria, your credit score is this.
You have this much money saved. You have this much money to put down. Your net worth is this, then this is where you, this is where you should fall, and this should be just cut and dry. And I think most people trust that. Like I've checked off all the boxes, I've done all the things, so you should make sure that I'm getting the best rate.
And it's really disheartening to hear, and this is the very first time I even heard that there is that professional discretion in leeway that can cost you hundreds of thousands of dollars. You know, and like I was telling you before, like I feel like these things compounded with all the other things that we face as a person of color in this country compound to continuously perpetuate the wealth gap that we're seeing.
And so it's really frustrating.
[00:05:45] Leisa: The other pieces is, is when you're buying a home, In comparison to refinancing a home, mm-hmm. You have more leverage to negotiate when you're buying a house because the ways that the mortgages are bundled together for a purchase loan are different than a refinance loan.
So if you really want to negotiate, you're gonna have an easier time getting a better deal on a purchase loan than a home refinance. So that's also important to. But, but here's the deal. Lenders really like purchase loans, okay? So even if we just planted a seed for everybody, that when you go in to negotiate, and we're bringing this whole word into the equation, but when you, I want you to think about this.
When you go into negotiate that purchase loan and what they're gonna lock that rate in for you. You want to, no matter what they offer you, you wanna ask them, is that the best that you can do?
[00:06:50] Naseema: So what, at what point does this come into play? Because you know, this is a long process. You're given these numbers throughout the process.
Like for me, for example, I'm buying a new home, so it's under construction. So you know, there's a little bit of lag time between when the house is gonna close, therefore they have a little bit of time to lock in the rate. Therefore, the rates can go up and down. Yes. At what time do you come to them and say, listen, I know this is the rate that you offered me.
Is this the best option? Is this the best you can do? Yeah.
[00:07:19] Leisa: So just like you said, Before you go to lock in the raid, that would be when you wanna have that conversation again. But my guess is, is when you first started shopping them and you decided if they were the ones you were gonna go with, you could also ask that question at that time.
And get a sense of like, what am I dealing with? I'm working with me. Oh, let me go, let me go back and check. Let me see if there's anything better I can do. And then you'll know if, if they do, say they come back and they give you like, let's say an even an eighth of a rate better, right? Or something better.
You'll know that even if you're not locking in at it during that conversation, when you go back again, you're gonna wanna have that exact same conversation again cuz they will have forgotten and you won't, you're gonna. Again, is this the best you can do? Now there's the rate itself, but the trick is, and this is where we can't do the math in a podcast, but I can at least bring people's attention to it.
For some reason, lenders really, really like to have you pay points to buy down the rate, but a lot of times those don't make sense and they know it because people have a tendency of selling their house of like, Before the 30 years is out, and so you're buying down a rate, but if there is any chance you're not gonna be in that house for that full 30 years, then you need to evaluate the value of what it they're offering you for the paydown in comparison to what it's gonna cost you.
I do not like fees and I do not like buying down rates. It takes a lot for me to do that because we have a tendency of moving every. You know, four to six years if, if not shorter. And so the math never works for that short of a timeframe. So, but they keep doing it. They keep trying, they keep offering and they're like, oh, this is great.
And they make it sound so good. But if you just paused and you did the math, again, we could probably give them some mortgage calculators or some links and things. But the deal is, is most of the time it won't make sense. Let's say you have to. $4,000 to pay it down and you start doing the math and it's gonna take you 10 years to get that money back.
It's not a good way to go. You see this,
[00:09:37] Naseema: Lisa? It's so sad because like this is the first time I've ever heard anybody say that and I've always been, I've always been of the train of thought like, oh, if you can buy down the rate, that's even better. Cause that's gonna save you more money.
But that's how it's sold. Like that's how it's marketed to you. Oh my God, this is such a great convers conversation because I'm just like, oh my god. Mind blown, like on how many ways people can kind of get over on you, whether it's intentionally or whether it's with your best interest at heart. It's just all the more reason why you have to empower yourself financially and know, and not just trust that other people are gonna do the right thing for you.
Because that's what we wanna do. We wanna just automatically assume that everybody has our best interest in heart. But as we've shown time and time again, that's not the case. Oh.
[00:10:28] Leisa: Because there's the rate and there's the buy down. So that's one part of the discussion. Mm-hmm. The minute. Side that you're leaning towards working with somebody, even if you're not ready to lock in the rate you wanna get it in writing and get that truth and lending statement as soon as possible because it's gonna show you the rate that they're offering any kind of buy down.
And it also has to show you any fees they're gonna charge, because fees are another place where there's huge discretion in what they charge. Yes, they say that there isn't, but I have witness. Time and time again where the fees have gone away because I've called them out on things and said, you know, I'm not gonna pay that fee.
Or, why is this being charged? Or Who gets this? Who's being paid this money? Like, are you being paid this money or somebody else? Like, I question every single line item on the fees. They have a history of charging things and. They, they could actually consume and, and eat and not have to charge you. Processing fees.
Underwriting fees, like appraisal fee, you know, typically that's gonna be pretty standard,
[00:11:36] Naseema: no, they charge me like a $600 fee to run my credit. $600. What? Yes.
[00:11:42] Leisa: Okay. Yeah, that's totally unacceptable. Totally unacceptable. That's like a $45 fee at most. Yeah. So we, so then you look at that list of those, those fees and, and then let's say you go back to lock in, you wanna get that truth and lending statement again because like you said, even in the course of doing your deal.
Some fees have changed, some add-ons have changed. You wanna be able to compare side by side, so you want a truth and lending in the beginning and you want a truth and lending. Lock it in so that you can make sure if anything's changed and, and then you can question them for the differences. Like, why did this fee change?
Why did this fee change? And this was one thing when I was a mortgage banker, truth in lending was the biggest and most important thing to me. And I would literally walk people through every single fee and tell them what it was for and why I needed to charge it. And if there was a way that I could get out of charging it, I didn't charge it.
Or if I could pay it, I could pay it with my commission, like, It's amazing what can happen when you just bring people into the fact that you are gonna question every single line item and not just assume that it's an automatic, cuz maybe it isn't.
[00:12:55] Naseema: I love this, I love this and I love that we're giving people the tools.
To be able to speak their language. Like I love you. Have a piece of paper in front of you that you can go line by line through and question them and hold them accountable for it. So it's just not a victim's game here. Like now we have the tools moving forward so that we know what to do to protect ourselves and protect our money because we know what disadvantages we're coming to the table with.
And so, Oh, this is a great conversation, Lisa, even though it's got me fired up. Cause I'm not to flip a table on somebody, but this is great cause I'm sure, and I know for a fact that I'm not the only person going through this and sometimes you just don't know what you don't know. And it's so easy to wanna trust other people that you might have a feeling in your heart that something is wrong or that you're not getting like the best deal, but you still proceed to move forward because you think maybe.
The best that you can get. And I'm here to tell you that it's not, if you're not negotiating, if you're not coming to the table questioning every single thing you're paying for, chances are you're getting the short end of the stick.
[00:14:06] Leisa: Yeah, it's interesting cuz I think both you and I are trying to make sure that people are empowered, and this is part of like the communities that we build, is giving people a place to go.
When you're in those moments of like, we, we saw this note, like, I don't know how to prove if I'm actually being discriminated against. So I think this is one of the. That's why we, we do wanna have people hanging out with us and asking questions, you know, and knowing that faith got safe places to ask these questions cuz this is not easy stuff and we are turning the tide in big
[00:14:39] Naseema: ways.
Yep, yep. And I'm so glad that you can be here with me and turning the tides. Like even, I mean, like every time I talk to you, Lisa, I find out. Something new and something great about your, your past and your experience, that really has been an added value to me and my community. So I appreciate each and every moment that you've been here with us, because I mean, you are a gem.
You are priceless. Thank you so much, Lisa.
[00:15:07] Leisa: Thank you. I love these conversations. You remind me of things I'm like, We gotta share this stuff, like, thank you. I need you to like be asking me these awesome questions you're reinvigorating me for, for the fact that there is big opportunities here.
[00:15:24] Naseema: But I love the way that you don't hold back in that.
You could have just easily been like, no, these things don't happen, or just not disclose. Like these things that are kind of like insider secrets but your heart is in the right place and I see that and I feel it. And I thank you again.
[00:15:40] Leisa: Thank you.
Hey there I’m Naseema
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