I'm mid-way through a purchase loan. I've been advising this client ever since I helped his parents with a purchase transaction over two years ago. We have a great relationship.
A few weeks ago, he found a home and we began the purchase financing. I found excellent pricing at ING Bank. I was happy for him and he was excited about his great program and rate.
Two days ago, the borrower came across ING's retail lending website. I didn't even know ING had a retail branch! My borrower wasn't shopping me - he was doing due dilligence on the bank that was going to be his new lender. The bank I had introduced him to.
Their retail shop's rates are better than the wholesale side by a net spread of 1.5%!!!
Of course, I'm on the phone immediately to ING Wholesale to see what they are doing about it. Their response is complete ambivalence. They actually started insulting my salesmanship as a broker.
Hellooo!! There may still be some slimy snake brokers out there who would attempt to sell the borrower into sticking with them instead of taking advantage of a rate their brokerage can't touch, but I'm not one of them.
So here I am talking with my borrower on the phone and its going something like this:
He says, "Wow. I feel terrible. You've done so much for us and helped us so much."
I say, "Yes. Thank you for that. But I understand completely. If I were in your situation I would take that 5/1 arm at 5.25% with half the closing costs over the same loan program at 6% too. Let's keep in touch..."
Then I might say if I have the nerve, "...and maybe you could cut me a check for out of pocket expenses I've already had (the credit report and per loan fee I pay my cutting edge LOS)??"
Hey, I'm all for competition. And sometimes, retail pricing just works out better. But for a company that PORTFOLIOS all its loans to set its pricing so that the retail branch undercuts the wholesale side in such a way that all possibility of competition is completely stamped out - something is wrong with that.
Now that the Fed's rule has been modified to make sense and has passed, retail banks seem to be trying to force the brokers out of business in a more creative, passive-aggressive kind of way.
Wow. And this time it may work - on me anyway.
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