The Mortgage Trap: Why Fake Pre-Approvals Are Killing Home Deals
Friday, February 07, 2025
🏡 THE MORTGAGE TRAP:
The Pre-Approval Scam No One Talks About
🤡 The Setup: A ‘Guaranteed’ Pre-Approval That Wasn’t
A few weeks ago, I got a call from an old client. Let’s call them Mike & Sarah. They were excited—just sold their home in Tennessee, moved to sunny Florida, and were ready to buy their dream home.
Their first mistake? Assuming all pre-approvals are created equal.
Their second mistake? Trusting a lender the way a toddler trusts a magician—too easily, and with zero skepticism.
See, their realtor hooked them up with a local lender who worked for one of those big-name banks with the fancy commercials—you know, the ones that act like they care about customers but actually just collect fees like a squirrel hoarding acorns before winter.
The loan officer made it stupidly easy:
🔹 Quick phone call
🔹 Online application
🔹 Ding! Pre-approval letter lands in their inbox in under 5 minutes
No pay stubs reviewed. No bank statements checked. No actual verification. Just a PDF and a prayer.
Sounds great, right? Yeah, until it wasn’t.
🚨 The Problem: The Deal Falls Apart Like a House of Cards
Mike & Sarah found the one.
They put in an offer.
Realtor high-fives were exchanged.
Inspection was paid for.
Everything was perfect…
Until the lender actually started doing their job.
🚫 Loan denied.
Why?
Mike had just started a commission-based job and hadn’t been there for two years—something that’s a basic underwriting requirement. The lender, who had been coasting like a high school senior after college acceptance letters came in, suddenly realized:
💀 Oh crap, we can’t actually approve this loan.
And just like that—POOF! Their dream home disappeared faster than a crypto bro’s portfolio in 2022.
What did they lose?
💸 $2,500+ in inspection & appraisal fees
⏳ Weeks of wasted time
🏡 The house they were picturing their kids growing up in
And here’s the kicker: this happens all the time.
👉 Over 30% of mortgage applications get flagged with issues after pre-approval. (Urban Institute)
👉 40% of deals that fall apart are due to financing issues. (National Association of Realtors)
👉 And too many lenders treat pre-approvals like Tinder dates—quick, thoughtless, and mostly a waste of time.
⚠️ The Industry’s Dirty Secret: The ‘Fast’ Pre-Approval Scam
Lenders love speed. Why? Because speed = more clients = more commissions.
The faster they hand out pre-approvals, the more deals they get in the pipeline. But here’s the problem:
🚨 A pre-approval without proper verification is a participation trophy—it means nothing.
Most buyers assume that once they have that golden ticket, their loan is set.
NOPE. It’s about as reliable as a “lifetime warranty” on Wish.com.
💡 How Not to Get Screwed: The 3 Questions You Must Ask
Before you trust any pre-approval, ask your lender these three questions:
❌ Did you actually verify my income, or did you just take my word for it?
❌ Did you review my assets and debt-to-income ratio, or just assume I’m rich?
❌ Has this been run through actual underwriting, or did you just fire off an automated letter?
If they hesitate or say anything vague like “Oh, we’ll verify that later”… 🚩🚩🚩
That’s your cue to walk away.
📌 The Takeaway: Don’t Gamble Your Future on a Lazy Lender
Mike & Sarah learned the hard way that not all pre-approvals are real.
So here’s what you should do:
🔹 If a lender isn’t asking for real documents upfront—RUN.
🔹 If a pre-approval comes too easily, it’s probably garbage.
🔹 If you want to avoid financial heartbreak, work with someone who actually does the work first.
🚀 Your Next Move (Unless You Like Losing Money)
If you’re buying a home, let’s make sure your loan is actually solid.
If you’re a realtor, let’s make sure your deals don’t implode.
Because your dream home isn’t worth gambling on a PDF some lazy loan officer fired off between coffee breaks.
- Keith G.
