ooh... tough one

Right now there are a lot of Mortgage Brokers hurting.  One of the reasons is that they believed the philosophy that you only need 20 lenders on your list at any time.  so now their list is depleted and they have to restock due to all the bankrupt lenders!

There is no reason that the loan should have been an issue.  The only problem I'm running into are foreign nationals wanting 80%+ on tricky property types!

Everything else is available

I don't trust banks though... "No Problem" is what I hear from World Savings' clients and then they end up in a program or at a refinance amount they are not happy with.  A lot of the branch based loan officers really don't do mortgages at all.  They do equity lines... there are a few inbound originators that take the information from the branch LO and take over putting the file together.

What ends up happening is they need extra documentation etc and discount the dollar amount.  They also offer "no closing costs" but don't disclose the extra fees involved in such transactions until closing!

Brokers give your clients disclosure and access to a wide array of products from which to choose...

Just like I mentioned to Kevin in his post - you need a backup...

In my post on survival I said we all need to be aligning ourselves with proven partners because those are the people that will carry us through this mess of a market.

Sounds like it is time to network...and funny thing is I know a REALLY good Mortgage Broker!!

I prefer brokers to banks simply because brokers have more opportunities to spread the loan around if it is a tough sell.  If the bank says no, it is back to square one!

Hey Becky,

David hit on some very key points.  95% of the time, I have been able to beat or get done what the bank couldn't, a source of my business are bank turn-downs.  There are cases where an individual may hold a lot of money with the bank or have a unique property that investors/lenders we have access too don't like, yet the bank will do.  Key reminder here though, if a bank turns you down, that's it....you're done.  If one of the broker's lenders turn you down, that doesn't necessarily kill the deal....we do have backup!

And in regards to David's last line, thanks for the props man:-)

Becky - this is a great question, and one I bet alot of agents have but just have never asked.  I'm glad David and Jason responded because it confirmed what I had always assumed the differences to be but never confirmed with anyone. 

Thanks for asking this question!
Ann

Becky,  It is hard to say why the Broker wasn't able to help your friend. There are a lot of different loan programs still out there. I work for a Mortgage Banker. We are able to do most deals that a bank can do. It has to make sense. I would have to know the specifics as to what doc type,ltv,and if they wanted to get money back from the refi. Depending on their scores/credit  and value of the home, generally, we can match or beat our local banks.

If the banks is holding a customers funds and has had a long time relationship with that customer, The banks can give exceptions to it's guidelines where a broker may not. A broker works with many banks. The trick is to know the guidelines for each bank. This way you know how to path your deal.

Broker's have options.  Bankers don't.  So if the bank doesn't have the loan product needed, your client gets told it can't be done.  The broker however has access to the programs of a great number of banks and therefore can shop banks for the best product with the best terms for your client. 

 Getting a loan is like buying a car.  You have multiple dealerships that have the exact same car (all money is the same) but each dealership doesn't charge exactly the same price for the same car.  Prices vary, and so do interest rates among banks.  This is the main advantage of a mortgage broker.

www.IEMortgageBlog.com

I will tell you from my own experience as a mortgage broker that I have lost almost $8000 in uncollected commissions in the past thirty days.  Most of my business is going to the banks.  It used to be the other way around but that is not the case anymore.  I feel that mortgage brokers COULD be phased out eventually and right now that seems to be happening on a daily basis.  I, myself, may have to hurry up and finish my psych degree so I can counsel all of you who loose their jobs.  j/k.  

Charles 

Becky,  the only reason I could see that a broker with a proven track record couldnt find a home for that loan is that the local bank thats doing it is going to hold it in their portfolio.  Small local banks can sometimes decide they want to capture a certain niche market and provide programs that major lenders dont.  Because the loan will not be sold to the secondary market the local bank can set their own guidlines and decide to go "outside the box" and take on more risk if they feel the loan makes sense. Normally programs like this are not around for long.  One other scenario is that the person she spoke with at the bank is not a seasoned mortgage loan officer and may think they will be able to get an approval when in fact the loan may be denied. 

Thanks everyone for all of your responses.  I'm still not sure why the broker couldn't do anything.  I don't know if she has just lost a lot of her list of people she use to use, due to the mess in the mortgage business right now, or what.   

Guess we will just have to wait and see if she closes on the re-fi or not I guess.

If you have a great personal relationship with a bank which lends its own money, it can conceivably cut a better deal than a broker can find on the wholesale market.  If you are an excellent borrower with a vanilla scenario you can sometimes get a better or comparable deal with a bank.  If you golf with the bank president or went to prom with the bank's loan officer, then you might get a better deal at the bank.

Otherwise you are pretty much better off with a broker who can shop the lenders and know the programs.  Even better would be a small lender (disclaimer:  guess what I am!) who can shop lenders and lend.  Very rare is the occasion when the average borrower can find a better deal from a bank.

Becky,

I am very surprised by your comment. Most mortgage brokers have acess to wholesale products that banks offer. There are portfolio product that banks offer but we also have acess to them. Our industry has undergone many product changes in the last few months and product and guidelines are changing frequently keeping us all on our toes. 

Doreen Hargreaves

I strongly believe that we are going back to the "old" way of doing things and that the banks are coming back into play.  Think about it, I just read what the Mortgage Brokers comments were, and I do not disagree with them.  However, they also go through banks, do they not? Fortunately for everyone, if one way doesn't work, there seems to be another.  Correct?  The Mortgage Broker's, I feel, did have more outlets available, but they have now dwindled down, as we all know.  The banks are truly coming back into play and obviously as commented previously, if you have a good banking realtionship, why not see what they can do for you?  I truly feel that Brokers are a great alternative for those who have "challenges" and respect what they do.

As a follow up....she did get the loan closed through the Bank and it was closed in less than one week. 

I hope some of the people that are in a financial hardship think to call their bank if a Mortgage Broker tells them no, they can't do anything for them.  I would hate to think they miss out all together of being able to re-fi out of an ARM if they really can through another source, such as their local bank. 

I like many of you thought if a Mortgage Broker couldn't do it, a bank would more than likely say no too.  So, I also learned this isn't always the case.

As more and more banks take on more of the loans and Mortgage Brokers are able to do less and less.....as the last commenter stated, the banks will end up doing the majority.

I think some not-so-seasoned Mortgage Broker's need to be holding on to their britches tightly, as it looks to be like an awfully bumpy ride still ahead.

Becky Troutt.  You should always try more sources if one tells you no.  Remember a broker is only as good as themselves.  Not all people have the same skill level.  Not all people have the same dedication to the profession.  Not all mortgage brokers have relationships with all the same banks (you have to be approved to do business which is a process)  

Becky I agree wholeheartly with Chris Mulder... it all depends on who is working the deal and how experienced they are with their programs. I work for a bank and my husband is a mortgage broker..so all in all I can't say one is better than the other because we  are both very busy.  But there are deals that would be better served with a broker and their are deals that are better served with a bank.  So we are each others best referral source.  I would try to find a solid banker and an experienced broker!  

 Just like not all realtors are created equal!  Glad to hear that she got her loan closed with the bank! :)  

Interesting comments.  Bottom line....they are still going to get financing through the Banks.  Who they use to get there..............that is the questions.  Best Regards to all.  It will be an interesting journey the next couple of years.  We all need to stay informed and work together.

Becky,

Good question. Without knowing all the details, I'd say that mortgage brokers still have more resources than any one bank. They can shop the whole array of choices and find the best fit for their customers whereas banks are limited to their own products.

Becky:

This story makes no sense.  The banks are restricted to GSE guidelines.  The mortgage brokers are not. Mortgage brokers can take a deal through the wholesale department of a large bank and get the loan approved where the retail side of the bank cannot get it approved.  Again, its a totally different set of guidelines.  The boy at the bank is misinformed about mortgage brokers going away.  If they did, the banks wouldn't have anyone to give their turndowns to.

Becky,

What probably happened is what happens ALL THE TIME!!  The bank, with little information, probably looked at her credit and told her that "sure they can do it".  Then when all the details come forth, they won't be able to.

Did she ever get the loan done through her bank?  Because I would bet dollars to donuts that it will fall through.

For your question, NO WAY do I think that mortgage brokers will disappear.  Bill is exactly right, where would all the turn downs go?

Not to "toot my own horn", but I blogged about this exact subject a few days ago. Brokers vs. Banks - Pick me first!

Yes Katie, if you read up to the last comment I left as an update, the loan was closed through the bank in about one week.

I still don't get it!!

Becky:

Many years ago, local banks had the "Gold Ole Boy Network."  This is where the board or committee sat down and discussed loan applicants once per week.  There weren't any real underwriting guidelines.

It went something like:

Banker A: Well Jed Jones wants a loan for the Ramsey's house.

Banker B: "Jed?  Isn't that ole George Jone's grandson?"

Banker A: Yes.

Banker B: George is a great man.  You know he donated the West Wing of the Washington school.

Banker A: Motion to approve the loan for Jed Jones.

Committee: Aye (in unison)

Banker A: George have Betty Sue set up the closing.

Of course, this sort of thing would never happen in Florida. No way.

Here is a thought.

What would you think If I were to tell you.....

"I know of a small shoe store that has 8 styles of shoes and limited sizes and you really should try it out because your big fat feet all covered in bunyans and calluses just might fit in a pair and oh by the way, forget about trying that new large shoe store down the street with thousands of shoes and all sizes because you probably wouldn't find the right fit".

The above is the Mortgage Broker V Banker argument.  For those who are reading this post and need further explanation of the above analogy.......The small shoe store is the bank.  The large shoe store is the mortgage broker.

Bill,

That's a GREAT analogy!!

Becky,

Wow, she did get it done?  I apologize I must have missed that post.  That's great for her, and I stand corrected! 

I wonder what the difference was....

Katie:

Thanks for the compliment on the analogy. You have my permission to use it to educate. 

There are some pieces of the puzzle missing.  We aren't getting the whole story and Becky probably doesn't know either because of privacy issues.

Bill,

That's kind of what I'm thinking.  Something is definitely missing here.

I'm a first time home buyer looking for some advice. I have been approved through Bank of America for a home loan as well as a small local mortgage lending company. My question is if the interest rates are the exact same at this point in time which one would you go with?. The lender is telling me that he can shop my mortgage around to other banks until it is getting close to the closing to try and get me a better rate only it seems that his fees are higher.

I would stick with B of A if they have already approved you and let the other company know that if they can get a better rate that you would be willing to switch.  Bank of America is a solid bank and if rates are equal the only other determining factor is service.  Does this small local lending company have a history of good service?  Do you know them?  Have they ever helped you or anyone you know in the past get a mortgage loan?  How long as the local mortgage company been open in your community? 

Good service is enough to make me want to switch if all other things are equal which according to you they are.  A bank is only as good as the loan officer you are going through so really it depends on who the indivisual is. 

Chris Mulder

www.IEMortgageBlog.com

I see problems for brokers that dont have FHA available.

with recent changes in obtaining Mortgage Insurance on high LTV loans for borrowers with scores below 680,