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Healthy Competition

Working with a Mortgage Broker has it's advantages. I have a customer who came to me for a mortgage. He was concerned that the interest rate was higher than he expected. I find that most customers remember interest rates when they were at their low point. Now they are over a percent higher. Right away they want to shop around for a better rate. I may be giving my age away here but I remember taking my 14% mortgage and refinancing it for 9.75% and I was happy!

My customer came back to me to see how I compared to another lender. I gave him my Good Faith Estimate to look over. This always makes me nervous because I have seen other lenders estimates and they always seem to conveniently leave out some fees. My customer called me back and said the other guy had a little higher interest rate, but his fees were $4,000. less! How could this be! I am VERY accurate when making out a Good Faith Estimate.

After questioning him on the "other guys" fees, I learned that the difference was in the tax escrows. I had shown him escrowing about $4,000. for his taxes,as did the "other guy", but he had an agregate adjustment of $4,000.! Now I don't know how he came up with that, but my customer thought he was saving money going to the "other guy".

Well my customer questioned him on it and he couldn't give him a straight answer. Needless to say, my customer came back to me because I was honest with him. Sometimes it's hard to keep your customers happy, but it pays to be honest!

Posted by Michael Delp on 07/25/2007 08:45 AM

Comments (10)

honesty, mortgages, estimate

10 Comments on Healthy Competition

JUL

2007

Michael, this is one of the things that drives me crazy about mortgage brokers. I can have the same client go to three or four brokers and get four different good faith estimates...with some hefty differences. I usually have to sit down with my client at that point and help them try to figure out why this happens. I always move towards the honest and straight forward approach. Anything else leads to mistrust and problems later.

Andrew - this is why you DON'T have them sit down with 3 or 4... 3 out of 4 mortgage brokers you know will give someone bad numbers in the first place... get a trusted partner and when you present the options to your clients... "Here is a list... I will tell you though that I do most of my business wiht X and he's never offered a bad rate or junk fees"... that should end that

Michael - there is no such thing as healthy competition when you're up against someone who can't write a simple GFE. I'm helping a rookie mortgage broker with a client she really wants to grab. Upon hearing the rates, I told her to forget it... he was playing her. Sure enough he had been lured in by someone who would not put up - the good faith was from a direct lender and showed evidence with the TIL of hidden fees. Sure, she could not compete with the rate... but if the rate is that low, the direct lender is going to stick it to you somewhere!

Andrew- It seems that all Mortgage Brokers have different fees, it's when they get the ones that don't change wrong that drive me crazy. You are right, honesty is best. Honesty may lose you the deal, but the customer will find out at the table just how right you were.

David- I like your approach. Give the customer 3 or 4 choices and tell them "I would recommend this person. A referral goes a long way where trust is an issue.

Sometimes all the client hears is the rate and how much they are to bring in to close, then they get a big suprise at the end and have to scrambloe for money. I present my GFE and TIL at the same time and if someone wants to shop me I tell them to ask for both forms and compare them

Joe-I too give the GFE and the TIL for my customer. I used to cringe at giving them the TIL because most people couldn't understand it. Now i explain it to them and let them compare loans. They can see how I differ from "the other guy". ( Assuming 'the other guy" knows how to calculate it properly)

AUG

2007

It is ALWAYS ALWAYS ALWAYS better to take the high road. It's hard when you see others shooing customers in who are being slightly misled. But so much better for you when you have the reputation of being honest.