MortgagesUndressed

Intro by Larry Cragun, Article by Teresa Boardman

I have taken some pretty hard stands these near 11 months agains banks. All of my comments have favored mortgage brokers.

In a conversation with Teresa Boardman about lenders I found a surprising difference of opinion.

I wanted what she said available here for you the consumer. Teresa relucantly provided this article. Thanks Teresa, and you aint no weenie. Lar

Mortgage Brokers Vs. Banks for home loans.

This post is my opinion based on my experiences as A Realtor/Broker in St. Paul, MN. This is not intended as an indictment of all mortgage brokers. There are wonderful mortgage bookers all over the country that I have the utmost respect for. Both the mortgage industry and the real estate industry are highly regulated on the state level, my experiences and those of my clients may not have meaning in other markets. Most of my experiences with the mortgage industry have been positive.

There are three lenders that I recommend when buyers ask for advice. These three lenders get rave reviews from my clients, have the utmost integrity and are wonderful to work with. Helpful, honest outside the box thinkers, who care about our clients and who always do the right thing. Two are loan officers with banks and one is a mortgage broker.

That said, in general I prefer to work with banks rather than mortgage brokers. The money for home loans comes from banks, even if the loan is handled by a brokerage. I believe that the banks I deal with have the best rates and they have more access to first time home buyer programs. My business has an affordable housing component in it as a business goal, these lenders are also involved in affordable housing initiatives.

I have not had any problems when dealing with USBank or Wells Fargo but I have had problems when dealing with some of the local mortgage brokers.

It is easy and inexpensive to get a license and go into business as a mortgage broker. We have too many of them and it is almost impossible to research them.

Here are some of the problems my clients and I have had when dealing with mortgages brokers:

1. Not being able to find them. When dealing with a bank we can find someone to help us if the loan officer is not available. As a listing agent I get a pre-approval letter from the buyers agent for an offer on one of my listings and it can take a business day before I can talk to anyone who can tell me if the letter and or the company are legitimate. As a buyers agent I want to know that my buyers are getting the best rates and are not borrowing more money than they can make payments on. How much money someone borrows is none of my business but if I can educate a borrower before it is too late they just might be spared some of the misery caused by a loan that is too risky or expensive.

2. The money not arriving in time for the closing. In Minnesota we close at the table, to accomplish that the money must be wired to the title companies trust account so that it can be disbursed at the closing.

3. Surprises at the closing, in one case $3000.00 dollars in fees that were never mentioned on the good faith estimate but showed up on the settlement statement. The surprise came on my 26th wedding anniversary so instead of enjoying time with my spouse I spent the evening on the phone with an upset buyer and confused closer. After hours of negotiations I was able to get the lender to remove or reduce most of the charges.

4. Higher loan costs, the interest rate may look lower. An examination of good faith estimates and settlement statements often reveals that the total cost to the borrower is not lower. Do mortgage brokers have the the same access to loan programs as the banks own lenders? I have been told that they do not.

5. Lack of access to some of the local city and county first time home buyer programs.

6. Failure to attend the closing. A closing mostly involves signing loan documents, the loan officer or someone from the bank always shows up. I have never had a mortgage broker show up at a closing.

7. Banks appear to supervise their loan offices and have some quality control built into the hiring process. A full time loan officer with a bank has more credibility than a part-time mortgage broker who also owns and operates the local pizzeria.

I am not an expert on mortgages, I sell real estate. Each December I take a class that gives me an overview and update of various loan products and how they work, a legal update and an overview of local mortgage trends. I rely on people I know and trust in the mortgage industry to answer my questions and those of my clients.

The homes we purchase, and loan products we choose have an impact on our long term financial health. Each time one of my buyers gives a mortgage I am struck by the enormity of it all.

The one mortgage broker that I refer business to has 12 years experience in the industry. Also a person with a lot of integrity, he has more experience working with investors, than either of the loan officers. I believe that the investors I work with will come out ahead when they use his services.

The owners of Keller Williams Integrity Realty also have ownership interests in a mortgage company. In general I avoid recommending any company that is financially tied to the brokerage I am affiliated with, an almost unheard of stance in our industry. Many have tried to change my mind about “affiliated” services but no one has made any progress.

Teresa Boardman