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Brokers vs. Banks - Pick me first!

Lately, I am hearing more and more from realtors and others that they are urging borrowers to go to their local banks for financing. They are telling them to stay away from larger banks and mortgage brokers due to unstable market conditions ( ie: subprime mess, lenders closing )

Now I may be biased, being that I work for a mortgage broker, but I am here today to tell you why you should be ENCOURAGING your borrowers to seek out mortgage brokers:

•1. We work on commission. We are committed to getting your loan done because if it doesn't close, we don't get paid. We are hungry!

•2. We have a wide range of banks to choose from (If you go to a local bank, your options are severely limited) If your loan falls out at one lender, we can easily move it to another...try that at your local bank when you are 5 days away from close of escrow.

•3. We care about you! You aren't just another face that walks in the door. We are dealing with a much smaller number of people on a daily basis. I will remember what your dog's name is ;)

•4. You can reach me today, tomorrow or next week. And it will be me every time. You won't be shuffled from one person to another.

•5. We have a broader range of knowledge (in my opinion). With all the new programs and the ever-changing guidelines, we have to educate ourselves constantly.

•6. Contrary to popular belief, most of us are extremely conscientious. We work on referrals and want to do our best for you in order to grow our business.

The bottom line is, now more than ever is the time to turn to mortgage brokers.

Katie Marchione

Community First Financial

480-305-8900

Posted by Katie Marchione ~ Community First Financial on 10/11/2007 05:57 PM

Comments (35)

mortgage brokers, referrals, realtors, banks, loans, community first financial, katie marchione, mortgage, programs, guidelines, agents, subprime

35 Comments on Brokers vs. Banks - Pick me first!

OCT

2007

hey Katie,

That was an excellent post and I agree 1000000%. What are those realtors thinking. Any and every bank is limited in the programs they have to offer and if the client goes bank hopping, each bank will want o pull their credit and fill out an application ..... Go to a reliable broker and only One Application and One credit pull regardless of how many BANKS we shop the loan with.....Plus we will save the client numerous of hours and gas driving around town talking to all the banks. The benefits of using a broker are HUGE !!!!!

Sean Allen
The Mortgage Professionals

Thanks Sean,

Those are excellent points! I didn't even think of the time and gas that is wasted...

Another way to say #4 is "We don't work banker's hours".

Great post, Katie.

Katie, Great post! So many Realtors or people that just have'nt seen the ball since kickoff don't get it! If we run DU it is the same as a direct lender but we get the added benefit on shopping several lenders at one time. Plus if Fannie does'nt approve it we have other ways to go.

Good info, I think that the problem is most of the industry does not work as hard as you. I see both sides as a real estate broker and mortgage broker. The 20% of us who work hard and smart are slowed down by the 80% who do not!

Amen Katie. Do the job right and you get to feel good about yourself and tell the world why they should feel good about you too!

OCT

2007

It's about time somebody put that in writing. I work for a direct lender that also correspondently lends and brokers as well, so we have all bases covered. Try going to a bank for a challenging, non-vanilla loan. GREAT post.

Katie great post. I've worked for 2 major banks and now I am a broker and I agree with you. Those who say that LO's at banks have more control over the process are wrong. Normally banks like to keep the interaction between the underwriters/closers and LO's to a minimum and usually have them in different locations. If you have an issue with a file you either e-mail or call the u/w and hope they get back to you. Its the same exact thing on the broker side. Its been my experience that you recieve better service from the banks u/w's when you are a broker because they recognize that you are bringing the business to them without the brick and mortar costs. Its the old "dont bite the hand that feeds you" mentality.

Matthew - You're exactly right about running DU, we still have more options!

Paul - Isn't that the truth? The 20% that work hard are always slowed down by the rest. Great response.

Rob - I agree completely about the interaction between LO's and underwriters. Thanks for your feedback!

Katie

Paul - EXACTLY!! We don't work bankers hours!

Ted - Isn't that exactly what our parents taught us? Or should have anyway... Excellent point.

Jeff - Good luck to you! It sounds like you definitely have all your bases covered.

Thank you so much for the great feedback!

Katie

What do you think about Mortage Bankers?

[/loaded quesion]

Ha! Loaded it is....

I think that Mortgage Bankers usually have the best of both worlds. In a sense at least. They are typically encouraged to use their own money, but they do have the option (usually) to broker out if necessary. I'm not sure if the borrower will get the best pricing everytime, but again, there's a better chance of getting the deal done.

I worked for a company a long time ago that was a banker. We were getting a higher split on deals that we kept in house, but it was really hard to compete because the rates were always higher than others.

This is all just from past experience. I'm sure that there are many bankers that offer competive rates. The owner of the my old company was known for being a bit greedy...

Katie:

Very well said. Realtors should have their head examined taking any deal to the bank especially in this market. A bank is going to disappoint. Why waste time.

Example: A buyer's agent in Philadelphia takes what they think is a bankline customer to the bank except the customer forgot to tell them about one little thing. The bank burned up two weeks trying to fit a square peg into a round hole. In the meantime, another offer was approved and accepted by the sellers. If this buyer's agent would have taken the deal to a broker they worked with, the broker would have been able to select the correct lender and program for the buyer and everyone would have lived happily ever after.

Hi Katie

You speak truths

I lose 3/8 on the back to seondary, but it is worth it. Lose one realtor over a bad broker deal and that 3/8 is nuthin'

I have been a broker my whole 4yr career. Just went to a Banker. WOW!!!!

Haven't experienced a Bank.... but have a friend at one.

Broker = best price, but iffy closings

Bankers = best of both worlds, with a little give on the price

Bank = solid but limited in products unless you get to broker

In the right situation, I would consider a bank. I actually have.... but they recruited me harder here. LOL

OCT

2007

Tom,

Thanks for the question and the response! You speak truth's too! "something is always better than nothing"!

Bill,

Great example, thanks for the feedback!

Katie

Katie,

Well put. I've tried a bank and am now with a broker and those points you bring up here come to a clear focus why brokers have a nice edge over the banks. One of the bigger ones is the choice of programs.

From a consumer perspective I have favored mortgage brokers because they have more options. With banks if you can deal on the wholesale side they too can be competitive.

The devil is in the details with any lender, points, application fee, interest rate, terms, etc. So look at bankers and brokers and see what makes sense. Nothing in lending remains static.

Nice post Katie ----

As a mortgage broker I agree with you..... especially the bankers hours comment...

or - when the bullets are flying, does your loan officer disappear.... not me!

OCT

2007

fantastic blog! I agree...I wrote a similar blog. I do think we care MORE because of the referral business that we work on. I was talking to an agent and she was telling me that she refused to send any of her clients to a broker because she felt that a bank was better...I quickly marked her off and wouldn't be sending any deals her way! haha... The agents that I work understand that a Broker can be better for their clients and they try to preach that to them. I just try to keep my agents educated on the benefits of my services so they can help me with clients. The more positive reinforcement the client receives about my services the better off I am.

Thanks Rick,

I think that education is key in todays market. I appreciate the comments!

Esko - I agree, we do have a nice edge over banks. Well said.

Gary - Great point about nothing remaining static. That is the truth these days.

Lewis - I love that! "When the bullets are flying..."

Thank you so much for your feedback!

DEC

2007

Katie,

I am curious to see if your opinion here has changed at all in the last few weeks? I am noticing the trend of banks to offer lower than normal interest rates and closing costs to lure customers in. Is it still in the best interests of the clients to go to a broker? I personally would go to my bank first. And I have been advising my clients of this as well.

Katie sorry for jumping in but to answer Jessica's question please keep send them to the banks. I get more business that way.. Just picked up a loan on Monday from Bank of America Loan officer not knowing what they where doing. The truth of the matter is experience and knowledge is what counts not names..

DEC

2007

Hello Katie,

Great Post, all I can say is Amen Sister!!!

DEC

2007

Jessica,

My opinion really hasn't changed. Banks can lure customers in all they want with "great rates" but the end result is the same. Brokers still have more options available, and we ALSO have great rates.

You can advise your clients to go to a bank first all you want. If they fit exactly into the perimeters of the program, your client probably will get a good deal. But that's just it - most people don't fit into that small box.

Ronald,

Thanks for the feedback!

Matthew,

That's exactly my point! Experience and knowledge is absolutely what counts. You get what you pay for in pretty much any situation. Thanks for your comments.

Great Post.

Banks are good only at what they do. Brokers are good at what EVERYBODY does. We also "represent" the borrower when we share their info with lender.

A bank just takes the application, turns it in and hopes for the best. Brokers shoot for the best and a good one knows what the best is and if the borrower can get approved before the file is submitted. Saving the borrower time.

Broker or Banker - Can't we all just get along? In my 30 years I have been all 3 and they all have a niche they fill.

DEC

2007

Charles -

That's an excellent point, and that's exactly it. Sometimes we take criticism for being a "middle man", but it's our job to find the best deal for our clients with options that they themselves don't have.

Joseph -

Of course they all have a niche to fill! And I think that we do all get along - it's just that brokers tend to have the advantage in my opinion ;)

About 20 years ago, a Mortgage Broker was a hard money lender. You did not have the origination stream you have now. The Banks and the Mortgage Banks did all the so called prime loans. As the Mortgage Broker evolved into a third tier of origination, they added to the production of the other 2 and were a good fit. Banks feel because of the amount of money offices they have why not put a LO in the office and originate loans that way. They feel they can get a better quality of loan at a lesser cost because their bank client is right there. In some cases they are correct but in most cases the Mortgage Broker fuels the origination economy. As more of the big banks shut down wholesale, our sources are being depleted. As the sources fall off the map, the competition for our becomes less aggressive. And as the competition becomes less aggressive, so does our price. The Mortgage Broker has always been the red haired step child of the industry. Since the Banks let us in, they have been trying to get rid of us. This is their most conserted effort to date. Will we survive? Time will tell. My feeling is align with a Mortgage Bank that allows brokering. As some has said, best of both worlds.

Katie, For everyone that feels they should go to the bank.. I think they should read what I just posted today about my client who only went to the bank...

Joseph,

That's a very interesting take on all this. I don't think that I have ever heard it explained that way before - great point. I try to keep positive and my feeling is that brokers will be around for a long time, but there are some things to be concerned with.

As for working with a mortgage bank that allows brokerering - that's where I started. I found out very quickly that we brokered out MUCH MORE than we did in-house. Maybe this will start to change, I don't know, but that seems to be the general consensus from what I've heard over the years.

You make some good points here and I really appreciate the different view on this subject. Thank you!

Matthew,

I read your post, and it's another great example of exactly what we've been discussing here. Brokers are VERY competitive! Much more so than most people think. Thanks for sharing that!

Katie, Thank you for reading my post. I agree we are very competitive.

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