Use a Mortgage Broker Despite the Bad Industry Rap
I hear it every day. "Mortgage brokers are the worst of all the mortgage professionals to deal with." Why is that? Well, in my opinion it is because mortgage brokers are the most independent of all the mortgage companies and have the most flexibility in how we conduct our business and with whom we conduct it.
Mortgage brokers are also the newest player in the game of housing finance and real estate. Mortgage bankers, lenders, Banks, Savings Banks etc. have all been around a long time. They are deeply entrenched in the mortgage and real estate industries. Mortgage brokers have only been on the scene since the 1980s.
Yet, over the years, mortgage brokers have been responsible for close to 65% of all mortgages given to home owners. With that much business going to mortgage brokers, it is no wonder why bankers and other mortgage lenders would want to pick on us. Besides, isn't that what we do as human beings: pick on the new guy?
Only Mortgage Brokers Caused The Mortgage Problems in 2007 - Not!
The slant in the media is that mortgage brokers are responsible for writing no doc loans, stated income loans, and ARM loans for borrowers who had no business getting these loans. And that mortgage brokers made these loans because they were there to give, and were given all for the benefit of the mortgage broker to make money. And to boot, mortgage brokers do not explain these loans to their customers. Does this happen sure. But I say bull to it just being mortgage brokers who do this. Mortgage lenders and banks can write and do write these loans too and they have loan officers that don't do their jobs completely either. And besides like I just explained, mortgage brokers are the easiest fruit to pick on in the mortgage finance world.
I recently was forwarded an article from the Wall Street Journal that showed the large mortgage companies in the US who have closed, gone bankrupt, or sold since January of 2007. The report listed 100 companies. Although I have been paying attention, I was amazed at how many mortgage lenders - not mortgage brokers - were on the list that I have done business with over the years since 1996. To date, as a mortgage broker, I have originated nearly 1000 loans in my career and I have not heard of any of my customers defaulting on their mortgages. And when I take into consideration my company's loans, we have not been notified of any foreclosure or defaulted loans thus far. All of this makes me sit back and think for a moment about all the no doc, stated income, and ARM loans that I have done or seen done by my companies. I ask myself, "am I that good; am I that lucky? I do not think so". This is not my ego talking - well maybe a little - but rather we did not write bad loans - when someone does not fit a loan program or purpose we did not offer it to them or put them in them. Period.
Most Mortgage Brokers Are Ethical and Get Continuing Education
What I do know is that I have attended continuing education training classes taught by the National Association of Mortgage Brokers and the Arizona Association of Mortgage Brokers and have been trained on how to use these specialty loans when they are needed. These loans have a purpose and that purpose is not so that I can make as much money as possible and put people in harm's way. Rather, I have been trained to write these loans when it is appropriate to write these loans and turn them down when they aren't appropriate. For example, it is not appropriate to state income for a W-2 wage earner teacher a salary level that is enough to cover the payment on a house that they want to purchase when I know their salary is really not that high. I can write these loans based on the credit of the consumer, but my training, ethics and integrity say not to.
What is funny, but sad, is that mortgage brokers are the only mortgage professional in the industry that has to disclose everything that we financially earn in a mortgage transaction. All mortgage people make money on the interest rates we charge. Yet, only mortgage brokers have to show this figure to the consumer. Mortgage lenders, mortgage bankers, and banks do not have to disclose this to the consumer. Who looks better? The mortgage banker/lender/banker? We both make the same amount of money by selling the same types of loans, yet mortgage brokers are getting hammered as being the bad guy.
I recently heard some information from the Arizona Department of Financial Institutions that complaints to their office regarding mortgage companies are 2 to 1 in favor of mortgage bankers versus mortgage brokers. There are more mortgage banker complaints than there are mortgage brokers, at least in Arizona. "Huh?", I say, yet mortgage brokers get the bad press. Guess the good ole boy network still works even though the good ole boys are getting shut down. Try using a mortgage broker.
Article by Dale Stouffer. Dale has been a mortgage broker since 1996 and has helped 1000's of people buy and refinance the home of their dreams. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
