Loan Options Shrink

The whole broker vs direct lender debate is a long and storied one. With the current market, the differences and the pros/cons really are the same.

Pros of using a broker - they can switch from one lender to another to find a better program, a niche in the underwriting guidelines or better interest rates.

Con of using a broker - they don't control the outcome of funding the loan because they aren't the lender. Lenders also consider brokered loans more risky than those originated by their own retail staff so those same niches dry up faster from brokers than for retail loan officers.

Pros of using a direct lender - they know one product line and know how to push for exceptions within that product line. They control the outcome a little more than the broker and so a pre-approval is sometimes more sound....I say sometimes because it still comes down to the quality of the loan officer.

Cons of using a direct lender - they are limited to their own products and rates so they can't offer the customer that great deal at another lender. However, some of them can broker also, so this isn't always the truth

In our rapidly changing environment, I think everything above still remains true. It ALWAYS COMES DOWN TO THE QUALITY OF THE LOAN OFFICER, not the brand or logo on their card. Still, brokers are going to have approvals disappear with guideline changes more rapidly then retail loan officers will. But if the broker has a deal with XYZ lender and that program goes away, the broker can send it to another lender who still offers the product or something similar. If it goes away for the direct retail loan officer of XYZ then the loan is dead and the buyer has to start over with another loan officer.

I think the key to navigating this market right now is finding good mortgage people who have experience and knowledge and develop trust in their abilities. If you are 100% tied into a mortgage lender or broker in your real estate office, now is a good time to make sure you have a backup plan....

Allison, I work for Wachovia mortgage and would love to be able to assist you with your loan.  We are not going anywhere!   Plus we are a direct lender with the option to broker as well so with over 400 products I am sure if it is out there we will find it for you!  Let me know if you need a backup plan :)

Alison (and Ken),

There are several companies out there that are both a direct lender and a mortgage broker, and Benchmark Mortgage is one of them.  Alison, I'm not sure if there's one in your area, but I can assure you that you will not find a more honest, straight-forward, and loyal group of people (and I'm not just saying that because I'm one of them).  =)

FYI: My branch doesn't lend in your state, so please don't take it that I'm trolling for business.  =)

Gareth & Naoma....

If you re-read my comment regarding direct lenders it said, "some of them can broker also" so I was giving room for that possibility.

The key to selling real estate as a buyer's agent in this market is having a closer relationship to the loan officer then you may have wanted in the past. It's important that your customer and you are aware if their loan is one that has risk of not being approved later due to changes in the marketplace.