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Hard Money isn't "EASY" Money For Mortgage Brokers

By Brian Brady

Commercial Real Estate Agent with Matthews Capital Markets NMLS 2415712

July 02, 2007 04:00 PM

Private mortgage loans are not a license to jack up the fees. I often turn away brokered business because of originator greed. Lenders charge points to enhance their yield. A common practice in our industry is for the originating broker to increase his/her brokerage fee to equal or better the lender-charged points. The result is an unrealistic fee financed by the lender and subsequent decline. If brokers are charging a borrower 1-2 points for a subprime loan, and the loan turns into a private mortgage loan, brokers should not automatically raise their fees because the borrower is “stuck”.

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Shane Sarae

Honolulu, HI

Thank you very much for sharing, I definitely agree that gouging in uncalled for on any mortgage loan.

Jul 02, 2007 07:37 PM

Alexander Harb

Knights Investing - Mesquite, TX

Dallas, Texas Real Estate Investing

Sounds like some good business ethics....how many loan companies do you think are doing business this way, Brian?

Jul 02, 2007 11:57 PM

Kate Bourland

Marketing with Kate - Redding, CA

Onlilne Marketing Mobile Marketing

I agree, if more people practiced this policy, the industry would have a much better reputation!

Jul 03, 2007 12:38 AM

Tom Burris

NMLS# 335055 - Baton Rouge, LA

Texas/Louisiana Mortgage Pro - 13 YRS Experience

Sadly, too many originators DO jack up the fees for those that are 'stuck'

It makes the rest of us look bad too.....

Jul 03, 2007 06:43 AM

William J. Archambault, Jr.

The Real Estate Investment Institute - Houston, TX

Bryan,

You've got to get a pulpit to stand behind!

Bill

Jul 03, 2007 05:20 PM

Callie Thompson

Property Xchange Solutions - Frederick, MD

Property Xchange Solutions

Hard Money lenders charge higher fees because of the high risk factor. You need to educate your borrower in gearing towards a low cost, low rate mortgage in the near future after resolving their financial issues. Explain to them this is only a quick fix. There are many reasons why Hard Money loans benefit the client. Just remember to ask yourselves, "Why is my borrower subjected to only this type of loan?" Then you can proceed with assisting your client in their credit or financial situation which will build a healthy trusting life long relationship.

Jul 04, 2007 05:43 AM

Capital Management Mortgage

Capital Management Mortgage - Atlanta, GA

Well said Callie. Gouging is unethical and isn't tolerated under Section 32 lending along with predatory laws restricting fees to 5%.

Having said that, there is also a perception on behalf of poor credit risk borrowers that they are entitled to the same rates as excellent credit risk borrowers.

Jul 04, 2007 05:55 AM

Brian Brady

Matthews Capital Markets - Tampa, FL

858-699-4590

Make no mistake about it, hard money lenders charge points to enhance the yield for the enhanced risk of the low credit borrower. That's not my issue.

My issue is with brokers who gleefully jack up their fee after they have failed to secure the borrower financing they promised BECAUSE it is hard money

Jul 04, 2007 08:32 AM

Dominick Gaccino

Dominick gaccino - Peekskill, NY

i agree

brokers should not raise their fees

isnt that predetory lending at its finest?

Jul 05, 2007 05:18 AM