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why would a loan officer get slightly abrased over people wanting small home loans?

I went to Bank of America last year and got a approval or estimate on a home loan for $47,500.
The sale fell through and I looked for another house and it was being sold for under $40,000. I remember hearing the loan officer say “the size of the loan is not worth the time”.
So, I went back and looked on the previous loan details and I did not see commission but I saw “lender fee”. I asked if this was a commission or a certain % of the loan amount or a set amount. I was told it is a set lender fee. If the fee is “set” why would loan officers at huge banks not want to write smaller loans like $38,000? If the fee is set why does it matter?
In the big picture of things, the billions of dollars of home loans given out by Bank of America, why are my small loan request given lower priority, it seems?
I have a good credit score and other assets and risk on me is 0.
It sounded like loan officer was making more $ loaning me $50K than if loan was $35K. As far as inferior homes, they have 2 B appraised. The reason the house I look for is under $50K is because that is my budget and some of these are foreclosures and are worth alot more than the cost. If the loan officer makes the same amount of money (commission) on a $50L loan as a $35K loan then the loan officer should not care. I wanted to assure the officer that their help was greatly appreciated and I am open minded to a “gift” to justify a 35K loan versus a $50K since it seems he gets impatient with smaller loans.
I’ve got an agreement with my real estate buying agent. I said, don’t worry about the commission. We’ll go with 3% of $45K even if you find me a $30K home. I’ll go with a minimum commission 4 help on these lower cost houses. I’d do same with bank officer, minimum commission, if they work on commission. Do they?


  1. Ryan M says:

    Small loans = horrible investments + higher risk for the banks. Since the underlying property is so cheap, it is probably not that great of a house. It is either in a dirt poor neighborhood or needs a ton of work….adding to the risk that if they have to foreclose, then they might not be able to recoup their money. In addition, people who buy house for that low, generally live right on the poverty line and again are a huge risk. The risk just does not outweigh the benefits of giving out these small loans since interest income will be minimal, for those kinds of properties, to those kinds of borrowers. That is three strikes right there against a small loan.

  2. Doctor Deth says:

    the bank doesn’t make enough money from loan fees to pay all the related labor costs, broker commission, etc – the loan app fee is NOT the same for a $40,000 loan as it is fro a 250,000 loan – if it was – you’d be paying several $1000 just for the mortgage app fee, never mind all the other closing costs

    that being said, I got 2 home loans in 2008 for under 20,000 – one was a 15 yr “Home equity to purchase” loan, which has a variable rate, but hasn’t changed yet in 2 yrs and the other was a 30 yr mortgage for about $18,000 – both were on investment properties and in perfectly livable condition – they are just located in a depresses coal region – I have a retired guy renting one house and I have $100+/mo positive cash flow and my ex and kids live in the other house

    – I needed 20% down on each property, but that was only a few $1000 each – also got a Land Loan (vacant land) in 2007 for 16,000 – 10 yrs – I think variable rate again, but rate hasn’t changed yet – it’s like 8% and I pay extra on it – hope to have it paid off in 6-7 yrs total

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