Bank Or Mortgage Bank? Which Should You Choose For Your Lending Needs?
With all of the new regulations and compliance with the Dodd Frank Act, we are seeing an ever changing world in home loan lending. Some of these changes will apply to you, however all of the changes will apply to the mortgage industry and to any firm who is originating and funding mortgages (banks, brokers, mortgage bankers).
There are some differences between Banks and Mortgage Banks and I would like to share them with you.
* FDIC (Federal Deposit Insurance Corporation) regulated banks will only require a Mortgage Loan Originator to obtain a National Mortgage License System, identification number. You can check this out on your own, but it is true. While FDIC regulated Mortgage Loan Originators may have a license, they are not required to. On the other hand, Mortgage Banks in the state of California must only employee licensed Mortgage Loan Originators to originate residential loans. You can go to this web address to check out the license status (or number) on an individual prior to making your decision on whether to hire that person for your mortgage needs: http://www.nmlsconsumeraccess.org/ Those who are licensed in the state of California must undergo two tests, one for state and one for federal. This could help you to choose the best qualified lender on whether they are licensed or just numbered! The pass rate for the licensing is about 69% (last statistics that I viewed).
* Mortgage Banks may have more products than Banks. Most of the large banks do not carry an array of loan programs, but may only have certain core products (ex. conventional, conforming loans, etc). Mortgage Banks tend to offer a larger variety of loan programs like conventional, FHA, 1st time home buyer loans, VA, Home Affordable Refinance Program(HARP) and more.
* Banks may offer home equity lines where Mortgage Banks generally do not
* Mortgage Banks may have more flexibility to shop your rate from multiple investors that have relationships with that mortgage bank, to find the best rate of those investors. Large Banks offer their rate and in generally do not offer rates of other banks.
* Mortgage Banks may have the power to Broker your loan. This means they can shop your loan externally to another lender for a particular product. For instance, Bay Equity Home Loans, the bank I am employed by has set up internal investors to shop rates and programs, as well as external investors (wholesale loan brokers), to offer more products, and more flexible parameters.
* Banks generally employee their Mortgage Loan Originators during normal business hours, while Mortgage Banks tend to allow their employees to work nights/weekends. Much of the home buying acitivity happens on the weekends (view open houses and submitting offers) or in the evenings after work. You will need to ask your Lender if that person works nights/weekends or just during common business hours.
Ask tough questions of your lender. Just because they work for a name brand bank, does not mean that they are skilled or experienced. Ask the person questions like:
1) How long have you been a Mortgage Lender and are you full time or part time?
2) How many transactions have you handled (Funded)? How many were refinances and how many were purchases?
3) How many loans have you closed for the type of loan I need (ex. VA, FHA, etc.)
4) Do you work nights and/or weekends?
5) Do you have references
6) Are you licensed or just have a National Mortgage License Number?
7) Can you offer same day Pre-approvals
8) How long does the loan process take to complete with your firm?
9) What makes you stand out from other lenders
These are just some of the questions which should be asked when shopping for the right lender for you!
Authored by,
Roger Farah
NMLS: 508446
For questions, please contact Roger Farah at (707) 583-8107, Bay Equity Home Loans, Santa Rosa, CA
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