Walk into any Countrywide retail branch for a an A Paper loan, and you will probably get the same rate, if not better, then using a mortgage broker who is set up with Countrywide wholesale. In 2009, brokers will not be able to order appraisals if it is a fannie mae loan. They must be ordered from the lender. Looking at all the basket of goods available to the untrained eye, and you will see everyone is super conservative. 286 lenders, and countless mortgage companies have went out of business since late 2006.
Now keep in mind, many of these lenders and brokers that are now out of business, only had one thing in mind to grow their business. Sub prime loans, option arms, rate and term refinances, no money down purchases, 125% LTV loans, all the while charging 3-5 points, and putting borrowers in 3 year arms with 2 year pre-paymen penalties. It is no surprise that the smart people saw this coming a mile away, but it seemed everyone turned their heads until it became too late.
Welcome to the new mortgage world. Where banks will condition you for every little margin of possible error, where loan approval can be something that you get the day of closing. My prospects remind me of taking a free throw shot from the foul line. The shot is up, looks good, could have a swish here, and then, doink, the ball bounces of the rim, ie, doesn't qualify. So with the state of current affairs, many mortgage brokers are looking at a plan B. If the trend continues to where all that is left is the big banks, who lend only to people with 20% down, what would the need be anymore for a mortgage broker.
In my humble opinion, you really have to have a unique selling proposition. Why would someone want to do business with you? What wow experience are you going to give me? How do you seperate yourself from all of these other mortgage brokers? Going into a loan, if it is not a personal, qualified, referral, I will usually have 2-3 three mortgage brokers competing with me on a loan. You need to provide exceptional customer service on the onset, deliver your good faith estimates ahead of schedule, answer your phone all the time, and have value added services as part of your job description. Service is what closes loans, not super low rates.
What I mean by that is that everyone can quote a rate, and everyone wants that 20% down A paper loan. Well I got news for you, they probably will end up at a bank. As brokers, we get paid to be the eyes and ears on the street for our clients, and that not only means getting the lowest rates. It means finding a program to fit our borrowers needs. And most of the time, especially in this market, you need to have value added resources in place. Whether it is a quick rescore on your clients credit to qualify them, or finding a lender that does a refinance one day off the multiple listing service, a retail banker cannot be flexible like that. He will tell you whether or not you fit his guidelines, and if not, good day. So the next time you hear someone say the mortgage broker will be obsolete, think again. Unless everyone has high credit scores in this country, plenty of assets, and 20% to put down on a mortgage, the broker will be here to stay. In addition, once this market turns around, and it will, investors will assess risk again, and you will see those products of the past, slowly be introduced.
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