Real Estate Broker Shane Todd likes to tell the story of the first time he worked with Leslie Girard and Evergreen Home Loans on a home purchasing deal.
Todd, a Vancouver Coldwell Banker Bain agent, had a set of buyers who insisted they wanted to purchase their home through an online lender rather than a local one. So the buyers got a quick and poorly vetted approval letter, went through the entire home shopping process, and then found out three days before close that the supposedly low rate the online lender had offered came with an astronomical set of fees they couldn’t afford.
“At that point they finally agreed to meet with Leslie at Evergreen,” Todd said. “She met with them, gave them first position priority, and we actually managed to close that loan within those three days of going into her office. I had never had an experience like that. It saved the deal.”
Girard is the producing branch manager and loan officer at the Vancouver location of Evergreen Home Loans on Park Plaza Drive. She’s been in the mortgage lending business for about 20 years, including 11 years at Evergreen, and she’s been on the front lines spearheading the bank’s Security Plus Seller Guarantee and strong up-front vetting process for home loans.
The Security Plus Seller Guarantee, which pays out money to the sellers if the buyer’s financing fails at closing, has been around during Girard’s entire tenure at the company. But about four years ago, Girard and Evergreen decided to hire more staff to bulk up on the pre-approval process and make an “approval express lane,” as Girard calls it.
And a few months ago, the company decided to up its game even further, raising its seller guarantee from $1,000 to $2,500, which has really turned into a win-win for everyone involved, Todd said.
“If you want the competitive edge, you really need to spend the most time on your finances – and that you’re getting the right loan offer for your needs,” Todd said. “Otherwise you’re just winging it.”
Evergreen is based in Seattle and operates in Oregon, Washington, California, Idaho, Arizona and Nevada. It’s also licensed in Alaska, but has no branches there yet.
“We’re growing in all those states,” Girard said. “We’re West Coast, and we’re staying here. We don’t really want to expand to full national.”
Evergreen’s pre-approval process isn’t particularly strange for buyers, but it does take more time before they can hit the road and go house shopping. The security of knowing how much money you have and what you can really afford, though, is a huge benefit, Girard and Todd said.
“We still have the same conversations with buyers,” Girard said. “But we do more up front. We gather all the information, asset documentation. We verify employment and run tax transcripts with the IRS before issuing an approval letter.”
Approval letters from other institutions are often only very weakly vetted at the start of the lending process, which can lead to significant problems and surprises down the line, Todd and Girard said. But buyers can’t shop for homes without one.
Buyers used to get away with a lot more before the home lending market crashed in 2008. The crash got rid of some of the worst lending practices, but for some reason the weak pre-approval process remains at most companies, Girard said.
“Before 2008 or 2009, there were so many products,” Girard said. “You could get away with just using your stated income and nothing else for approval. Those days are gone. You have to prove your income now.”
Most mortgage lenders still only do a quick credit check and then get the approval letter out fast so the buyer can start shopping, but that can lead to problems like the one Todd faced when he first worked with Girard.
“Those big lenders, it’s kind of garbage in, garbage out,” Girard said. “There’s more to this than a quick conversation and an automated system.”
The problem with the quick pre-approval method used by big lenders usually occurs at closing time – when the real underwriter gets a look at the approval. Underwriters often remove variables like overtime income, part-time income or other revenue that borrowers can’t always prove are consistent, Girard said.
“Self-employed folks, a lot of them make good money, but what they show on their taxes is very different,” Girard said. “They often write a lot of things off for taxes, but you also have to prove what you make. So if you have $20,000 as your bottom line, it won’t show for much when you’re looking to buy a house.”
Some people also sock money away at home instead of putting it in the bank, which is also a bad idea if you’re looking to buy a house.
“More and more people anymore have money under the bed or at home somewhere,” Girard said. “We can’t use that. It has to be sourced in an account. And you don’t want all that to come up when you’ve found your house.”
It costs Evergreen extra to have staff to do the up-front approvals, but it’s worth it because of the reputation the company has gained from the practice, she added.
“We have to hire loan processors specifically for this, because it’s important to us,” Girard said. “There’s a lot of detail. And if people don’t make it through the process, that’s good too. It means we didn’t put a buyer on the market who couldn’t afford to buy.”
Buyers also face financial consequences if a deal falls through because of bad vetting. They can lose thousands of dollars in fees, money that’s often critical for their next home-buying attempt, she said.
“We really, when we push our letter out, we want people to know it means something,” Girard said. “The challenge on our part is when I meet with a buyer and they’re anxious to buy a house. I have to tell them ‘slow down, we need to do this first.’”
Once they have Evergreen’s pre-approval letter and the seller guarantee, though, buyers find they have a real advantage in the market.
“We’ve had buyers in areas we do this that will actually get lower offers from sellers [rather] than competing offers because they want the seller guarantees,” Girard said. “Realtors also really like the guarantee because it cuts down on problems at closing.”
That’s certainly been true in his experiences with Evergreen, Todd said.
“Hundreds of buyers later, and we’ve never had one fail or come in late through Evergreen,” Todd said. “Not a single one.”
Right now, the local market is saturated, with very limited options for buyers. So the process of buying a home is highly competitive, and Evergreen’s policies have helped his clients win bids, Todd said.
Sellers fear loans failing in escrow because it can be extremely expensive – forcing them to pay additional mortgage payments, taxes and securities. So the guarantee is an extra draw for them that can put Evergreen borrowers on stronger footing than competing offers.
“Getting an offer that has the assurance it’s going to close allows the homeowner to make their own plans, knowing if it falls through it will save them a lot of money,” Todd said.
Some other regional lenders have copied Evergreen’s early vetting process, but none of them do the $2,500 guarantee.
“We have some competitors that have copied us, but in their small print, it says if the buyer does certain things, they won’t cover it.” Girard said. “They have so many loopholes, they don’t have to pay. We back that buyer. And we do pay.”
The company hasn’t had to pay out the guarantee much, because the vetting process is so good. But they have paid it out on occasion, she said.
In one incident, a buyer was fully approved after securing some gifted funds from parents for a down payment. The buyer got into the contract and then the parents decided they didn’t like the property and pulled out. The problem wasn’t the buyers or sellers fault, so Evergreen paid the seller.
“It has no value if we never pay it,” Girard said. “So we don’t mind paying it.”
