Those familiar with this business will probably have heard the phrase ‘rebrokered transaction.’ It refers to a scenario in which a customer is passed from broker to broker in search of a final funding source, often leaving the finance or leasing company oblivious to the true origin of the deal and many of the pertinent details.

The part of my job that I enjoy the most is that I often get to speak with brokers all over the country who have customers in our funding region. Speaking with people with diverse experiences helps give much needed perspective on the differences in how people do business. One of the most common questions we field from our brokers, then, is the age old: “Will you accept a re-brokered transaction?”

The problem, from our side of things, is that rebrokered transactions are often ‘washed,’ where relevant facts are omitted to increase the chances for approval. In a bilateral relationship between a single broker and funding source, Broker Agreements and a standing rapport often prevent this from happening. When a transaction is passed between brokers, on the other hand, a cloak of anonymity helps hide glaring inconsistencies while disguising the culprit responsible for hiding them.

This series of events is usually a recipe for disaster: an applicant that looks good on paper can quickly begin to transform into a very different kind of applicant. It’s not always a matter of fraud, sometimes something as simple as the fact that the applicant is married or the broker is related to the vendor can be hidden. Our credit department relies on completely accurate information to inform the decisions we make. When we issue an approval, we don’t take it lightly.

Recently, one of our sister companies from the midwest told me about a transaction that reminded me why we steer clear of rebrokering. An application on unfamiliar letterhead that had been covered with whiteout (unsuccessfully) came over to their office, along with bank statements and a credit report. The credit report looked good, with both applicants having scores in the high 700’s. The bank statements were outstanding, as well: plenty of cash flow to support the mid-sized transaction they were looking to get funded.

After they had submitted an approval, the owners started thinking about the unfamiliar letterhead (which looked different than what the broker would normally have sent over.) The next morning, one of them called the broker up and inquired about the origin of the transaction. Then, it was discovered that the transaction had already passed through three brokers or more. To clear their conscience, the owners did some more due diligence and found some astounding discoveries.

Not only were there no such credit files on the two applicants when they attempted to pull credit themselves, but the bank listed on the bank statements claimed they had no relationship with them either. When confronted, the broker said he nothing about the misrepresentations, but, by then, there was no way to tell who had forged the documents.

We’re very careful about who we do business with, but there is no way to be sure we’re getting complete and accurate information without knowing where the information is coming from. So when I hear, “Do you all do rebrokered transactions?” I answer succinctly, “Nope.”