I wrote about the loss of another Lender the other day. This happened to be a good lender. Yes, there are good lenders and bad lenders out there. I talk to many mortgage professionals on a regular basis. It's interesting as I talk to them I have noticed a paradigm shift of sorts.
What makes a Good Lender?
My original article lamented the loss of what I perceived as a good lender. But what makes a good Lender? To me the qualifications are clear.
- Good Programs - I want a large variety of programs to choose from. Did you know that with something as simple as a 30 yr. fixed loan, a good lender may have 10 different loan programs? Each on has it's own guidelines and rules as to what it will do and what it won't do.
- Good Communication - I want to have the ability to discuss a scenario with a Account Executive. I want to discuss the conditions with the Underwriter. I want to know what stage the loan is in at all times.
- Good Track Record - Just like the girl in high school with the bad reputation, Lenders also can earn a bad rep. I'm not inclined to do business with a Lender that consistently knocks down an appraisal figure or adds last minute conditions. If I am submitting a clean file I want as few last minute surprises as possible.
Remember this is what I personally have deemed makes up Good Lender. I also appreciate many other factors. I like a good website. I like good technology.
The Public View
If you ask the public what makes a good lender they'll have a different view.
- "They don't make those bad loans. You know, those Interest Only, Stated Income, Payment Options kind."
- "They are strong and have plenty of money behind them."
- "Their phone people are so nice..."
That's the overall public opinion today. While it may be heavily influenced by the media it is what it is. I argue that both the public and the media don't have a clear picture. Their view is skewed and incorrect.
Case in point. Not to pick on one lender but let's just look at WAMU. In the court of public opinion WAMU is a good guy. They have funny commercials. They have nice looking banks. Ask the next person you see on the street about WAMU and they'll give you a thumbs up.
The bulk of WAMU's business has been in Option ARMs. Historically that would be around 80%. Of those loans more than half were also stated income loans. I haven't seen that on my nightly news have you?
Interestingly, Wachovia which bought World Savings earlier just had a commercial on my TV pushing a 30 yr. fixed with "flexibility". Does the Public realize this too is an Option Arm? Not at all. My point is that the public is misinformed. They don't have the complete story.
Shift Happens
Two years ago, if you asked a mortgage originator what made a "good lender" they would reply with a list that might look like this:
- Programs - "They have a stated 2/28 that'll go to 100% with no reserves, no sources, no seasoning and I got 2 points on the backside."
- Conditions - "I told them I couldn't get the verification of deposit so they waived it."
- Speed - "The underwriter pushed it to Docs prior to clearing all the conditions. We closed in a week."
Today, in what I think is a deliberate attempt (conscience or not) to distant themselves from what the public and media are saying is a bad lender many loan originators are singing a different tune. I've heard them touting the same diatribe as the news reports.
"Good riddance! They were a lousy lender. All they did was Stated Income and Option Arms!"
Many of these are the same people that were aggressively selling the very same loans. I can't blame them. It's marketing, it's salesmanship, it's wanting to look the best in the public eye. Right or wrong, I find it interesting.
So... What song are you singing today?
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