Why Recommending A DIRECT LENDER Could Make You Choke on Your Coffee

Mortgage and Lending with Platinum Home Mortgage Company NMLS #238304

Why do Realtors like to recommend DIRECT LENDERS?

Could it be that somehow the lenders who are dumping foreclosures have brainwashed Realtors by insisting that anyone making an offer must be approved with a DIRECT LENDER?

Or is it because you believe that an approval from one of those BIG BOX banks is somehow safer, better, more familiar? 

Now, please don't get me wrong. I work for a company that is a bank, and a bank is a direct lender. I can also BROKER a loan out to one of the BIG BOX banks.

But every time I do that, I regret it. I will tell you that the BIG BOX bank that is our biggest broker has gone from having 120 active mortgages with our company to less than 20 in the last six months.

I will leave it at that because it speaks volumes.

Lots of loans this year have come from people who took the advice of their Realtor and went to the BIG BOX bank. Typically they become so frustrated that someone finally says to them "Go find a broker".

Ironic, isn't it? I will then broker the loan to the same BIG BOX bank.

Or, I will do it "DIRECTLY" through my own bank, a smoother faster and more DIRECT way of closing a loan, where I retain far more control of the transaction.

Maybe, just maybe, some of the BIG BOX banks have spread themselves TOO THIN?

Imagine that we mortgage people sell coffee instead of money. You are just an average guy who wants some great coffee.

Everyone is different after all, that's why you have choices like this:



1.    Go to the supermarket and pick up coffee, stand in line to buy it, take it home.

You don't expect the store to answer questions, to recommend the newest brand, or to provide information, or to have any sort of communication with you.

It is laughable to believe they would answer a phone call at all. But the supermarket is familiar, you know where it is, and you are there anyway, once or twice a week.

2.    Go to the chain brand coffee shop next door that carries only their brand of coffee.

There, you have someone who will discuss every little detail of the coffee, and will let you sip samples.

But there is just that one brand. What if there is something better out there?

3.    You go to a locally owned gourmet coffee shop right in your neighborhood.

Someone actually smiles at you when you walk in. The name brand is there, at the same price as the supermarket.

But there is a much bigger selection than you have ever seen, and a person there to answer questions, and recommend the best new blends.

The owner of the shop lives right there in your neighborhood. It is clear he really wants to keep you as a repeat client, because his success depends on repeat business.

He answers his phone. He publishes a coffee newsletter. He sends you free samples, discount coupons, and is even interested in what you do (in case he can send you a referral).

Shall we ignore this guy because he is not direct? Or should we celebrate this guy for giving the customer a choice about how he wants to buy his coffee?


It makes me wonder if there will ever come a day when we mortgage people will recommend to our own clients, "Go find a direct real estate agent".

What would that mean?

That buyers would go to a BIG BOX bank that also has a real estate department.

I remain hopeful that buyers will recognize the value of working with a local professional, who can show them all of their options, and who will answer the phone, even on weekends.

Because sometimes, you really, really NEED your caffine FIX.


Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area.



Comments (54)

Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Janet - Quite a few of the clients that I'm currently working with were referred to me because they were tired of getting screwed around by some big box bank and in a couple of cases, these were the big box bank that their Realtors referred them to and in one case, insisted they use.  So much for going to the Realtors trusted bank.

Anyway, like you, I get irritated and annoyed with Realtors who don't know me and have never worked with me and who tell my clients that I have been working with for months that they (the Realtors) don't want my clients to work with me and that they want them (my clients) to work only with their banks.

I have never nor would I ever tell a client who came to me with their own Realtor, a Realtor that I don't know and have never worked with, that they (the client) can't work with their own Realtor and can only work with the Realtors I want them to work with.  Just because I don't know a particular Realtor or have never worked with them doesn't mean they aren't a good Realtor.

Furthermore, when my clients complain about the Realtors that they themselves chose, I will often advise them to talk to the Realtor and try and work out any differences and/or issues they may be having with their Realtor.  Only and I do mean only, if my clients tell me that they do not want to work with their chosen Realtor anymore and ask me for a Realtor referral will I provide them with a few.

I am always willing to give unknown and/or unaquainted Realtors the professional courtesy of doing thier jobs and earning my respect and appreciation.  Unfortunately, so many Realtors are simply too arrogant and self righteous to grant me the same professional courtesy. 

Furthermore, those particular Realtors will have etched their pompous and sanctimonious attitudes into my brain and anytime anyone ever asks me if I know anything about that particular Realtor they will certainly get the one and only impression that they (the Realtor) had left me with.

Sorry for yet another long comment (and bordering on my own self-righteous rant) that should have been my own blog but, once again, you have touched on a subject that is near and dear to my heart: buyers being allowed to choose me as their preferred lender regardless of what Realtors who don't know me and have never worked with me think.

Aug 22, 2009 05:26 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Ah, Donne. By now you know that we mortgage people (for whatever reason) are held to a different standard. I hope and pray that someday the tables will be turned and we can say this:

"I absolutely will not take a referral from a Realtor I don't know".  Why? Because it makes me cringe. LOL...that would be the day, huh?

Instead, I always hope for the possiblity of a great new realtionship, but like you, will endure silently if said Realtor is not up to my standards, even if client is unhappy...I will still support that Realtor. Its just what you do, ya know?

Okay, yeah, that's why they call me PollyAnna.

I wrote this because I actually feel like the tide is turning somewhat. I love that the Big Boxes are screwing up right now. Just when we think brokers are on the verge of extinction, the Big Box banks decide they can dish out crap service and no one will care.

Hey...guess what? Borrowers are finding themselves a broker or a small bank. (Smiling)

Aug 22, 2009 06:10 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Susanne, I have chosen to work with a small privately owned bank that also allows us to broker. I find this is the optimum situation to be able to provide my clients with the best of both worlds.

We are direct, yes, but we are ONLY a mortgage bank, and the focus is completely on MORTGAGES. I think that makes a world of difference, and many former mortgage brokers agree and have gone in this direction.

After the last little refi boomlet earlier this year, it became very, very clear that big box banks sink to a level of service so low that it drives away not only their retail customers, but their brokers as well.

They are understaffed and so afraid of losing money now that they are accountable to taxpayers, that quality has gone out the window in my opinion. (Oh, the stories I could tell that would expose this....but I won't)

Aug 22, 2009 06:18 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Joe P; You wrote: " the big box lenders who act like they could care less".

Yep, that about sums it up!

Aug 22, 2009 06:20 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Lenn: I am just wondering why you cannot get references, why you cannot get them on the phone..etc? I can understand if it is an Internet company, but other than that, I know of no mortgage person who would not return calls to a Realtor helping one of their clients. Am I just out to lunch here?

It may interest you to know that because of you writing so extensively about this subject, I have taken the time to PROVIDE references, contact info, web links to blogs, and a link to my bio to my borrower....

SPECIFICALLY TO HAND TO THE REALTOR ( who will not know me from Adam in all likelyhood )



Aug 22, 2009 06:28 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Dan, you wrote this:

It sickens me to work with a loan officer who doesn't answer phones, return calls, provide GFEs, yadda yadda.  I don't have time for that nonsense.

But will you take the time to call a mortgage person you don't know and let them know what you expect?

Do you pro-actively go out seeking great mortgage people that meet your standards who you can refer to your clients?


Aug 22, 2009 06:30 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

John, thanks for the reblog and also for being in agreement.  After Inman I decided to explore Trulia where often clients ask about financing. I began to notice how the Realtors would always jump in and refer a big box bank to the clients without any other choice.

And here I am getting calls from people all the time saying how lousy it was trying to get a mortgage from Big Box Bank.

There is some kind of disconnect going on out there, but then, that's why we have AR. To tell it like it is from the trenches.

Aug 22, 2009 06:34 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

B & C: Maybe brokers are coming off the extinction list?

Rick: I am the # 3 place too. Our bank is pretty big...we have 500 loan officers and lots of location. Main bank is near me, however, and having underwriters right in your office????


Russ: If you go back and forth, you should give you clients the choice and hand out both names. Then I would follow up to see whether bank or broker is giving the best service.

I also believe that some people like no frills and K-Mart style shopping. Some like Nordstrom type shopping. Having choices is what matters. But Big Box Banks do not start ahead of Brokers. That is a misconception.

Aug 22, 2009 06:44 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Janet - I'm going to have to agree with Dan (#31), sort of.  From a little different perspective,

"it sickens me to work with a Realtor who doesn't answer any of their phones (cell, office, direct, etc...), return any calls (to me, our clients or anyone else in the transaction), provide guidance and/or status updates, yadda, yadda, yadda.  Neither I, my clients nor anyone else in the transaction has time for that absolute nonsense."

Aug 22, 2009 06:50 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Kevin and Monica: A good compromise for you would be a smaller mortgage bank, IMHO

Elanor: I agree! At this point in time, going with a mortgage bank RULES.

AS Remax Team: Do not even get me started on Big Box Banks insisting that they will only accept the offer if they have approved the borrower.

We had a version of this in the car business: dealer would only "let" you buy the car if you financed with "his own" finance department.

In other words, unless we get that second layer of profit we ain't sellin' to you!

It makes buyers furious and exposes an ugly greedy side to companies that do this.

Aug 22, 2009 06:50 AM
Bonnie Vaughan
Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

Janet, In our market there are two or three community banks who do a good job.  We know the loan officers in in all three.  We have never had a problem with them. We recommend them equally. 

The big name banks are unreliable.  They come up with any number of obstacles and delays.  They are so big they don't give a damn whether they ever see your business again or not.  We have had clients who thought they would get the best service from the bank they used for other financial needs.  In each case they were unpleasantly surprised.

In my opinion, Realtors in my area of practice became disenchanted with mortgage brokers due to incompetency and outrageous fees.  There are a couple of mortgage brokers in our area who have very bad reputations. Not unlike Lending Tree except no one is competing for the business.

Realtors have to overcome the stigma of unprofessional Realtors the general public may encounter.  Mortgage brokers need to overcome the same stigmas Realtors have experienced caused by the unscrupulous who are practicing.  We face similar obstacles.



Aug 22, 2009 07:55 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Janet - As you and I both know, stories like Erica's happen every single day.  Erica, that is one of the many differences between retail lending and correspondent lending.

On another note, regarding Bonnie's comment - BRAVO!  AMEN BONNIE!  It's nice to read comments like Bonnie's; a Realtor who admits that the mortgage industry is not the only industry with unscrupulous, sleaze bags still working in it and that there are just as many unscrupulous, sleaze bag Realtors still working in the industry too.

Bonnie recognizes that both Realtors and LO's have the same stigmas to overcome, which is a lot more than many Realtors will admit.  As you stated earlier, many Realtors seem to think that they are regarded in a higher standing than we (LO's) are.

Here's a thought, in an effort to overcome the many stigmas that we (Realtors & LO's) have to overcome, let's start by granting each other the professional courtesy that we may be really good at our chosen profession and that is why our clients have chosen us as their preferred choice of either their Realtor or LO regardless of whether or not we know each other or anything about each other or have never worked together.

If you grant me the professional courtesy that I may be a really good LO who's great at my job and that is why our mutual client has chosen me as their LO, then I PROMISE, I will grant you the same professional courtesy that you are a great Realtor and that is why our client chose you to represent them.

If we can just start doing that one thing (as opposed to trashing each other), I strongly suspect that we will not only get along much better during our clients transaction, but we might even become professional partners who refer business to each other and who knows, in time, we might even become friends.  I speak from personal experience when I say this.

Aug 22, 2009 08:54 AM
Jessica Steele
Welcome Home Realty - Surprise, AZ

Loved your metaphor! It is so important to connect with LOCAL industry experts. It facilitates the home buying process for not only the client, but for the agent as well. Knowing who is involved in the lending aspect of the transaction - and who is available, regardless of the hour - is vital in the hectic and tumultuous real estate world!

Aug 22, 2009 09:05 AM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

I work with a Mortgage Lender who has the ability to place the loan with one of probably 100 investors.  I am not a fan of how our local Brokers work and if I never have to deal with Bank of America or Suntrust again I will only be too happy.  Great post.

Aug 22, 2009 11:09 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Well, Rick, what a great comment. Nice to know I am not the only one who has come to the rescue of those abused by big box banks.

They are now big (thanks to consolidations) They are now beholden (thanks to taking money from the Feds) and they are woefully understaffed (thanks to needing to be "profitable")

But the competition is small, and fast, and not hampered by the feds. They are local, they are hungry and they are proving they can compete.

HA! excuse me while I laugh. I bit when they laid out the bait, but I learn fast. They were horrible and it was only a bait and switch.

 If they treat their brokers like sh__ they  are going to treat their clients the same way.

I'm not a fan. Guess you can tell.


Aug 22, 2009 02:12 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Janet...  I didn't read many of the comments, but I think what you are stating here is those that thought this at one time... or those inexperienced realtors that make these referrals to the big banks now. Yes, I hate those realtors that think the bigger banks are better...  but I am not finding this coming from realtors that much anymore.  I am getting this from consumers that are saying this or thinking this.

I will say this... I do think your title is very misleading, because just like yourself, I am a banker, a direct lender, that can broker.  But why would I broker a deal?  I have full control by keeping it in-house.  But again, I am a direct lender.  This is my opinion, but I think you should have defined the certain types of lenders out there.  Because the title would be used against me also then.  Just my opinion, the no fluff opinion.

jeff belonger

Aug 22, 2009 04:09 PM
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

I personally send them to whomever is getting the job done. Brokering is a former occupation of mine and I prefer broker.

Aug 22, 2009 11:38 PM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Hi Jeff: Your no-fluff opinion is always welcome around here and your perspective is always compelling. Good to have you here.

I am going to need to agree with you here on some of the points you make.

Maybe the title should have said "Why would you send your clients to a big box bank?"

Actually, what inspired this post was spending a little time over at Trulia and observing the comments that Realtors were making back to consumers. Many times they would write this: "The first thing you need to do is go out and get approved by a direct lender."

I do think most consumers also think this means Wells Fargo or Bank of America.

So believe it or not, I did write a blog about the differences (posted to my Trulia blog entitled Yours Trulia). I figured most of the Realtors here would already know the difference...but maybe not?

The reason I broker a loan is because our bank cannot fill every niche out there. (All FHA must go through the bank.) We don't have lenders that will go over a million on loans (for example) so that I would broker.

Aug 23, 2009 06:28 AM
David & Lisa Webber
RE/MAX Executive - Crofton, MD

I do not recommend "big banks", I do have a list of brokers that I have had good service from in the past.  Just like Realtors, mortgage brokers can be good or not so good depending on the person.  If you are using a good one, they are an invaluable part of the process.  If you get a bad one, they may roll you under the bus if they screw up and then you obviously wouldn't use them ever again. Only had that happen once though, but I've had brokers treat me as if I were not a client, which is a big mistake.  If they do not communicate with me and take care of things promptly, I also will not use them again.  Love the description though and agree with you!

Aug 23, 2009 11:55 AM
Damon Daniels
Sierra Pacific Mortgage - Midlothian, VA
Mortgage Loan Officer | NMMLS 193536

A good broker or banker can do much better than a Big Box Bank 99/100 times. I began my career as a broker but recently switched to a banker because the wholesale broker model is slowing being suffocated. As a banker, I have the best of both worlds. Given the choice, I prefer to stay in control of the transaction by funding it myself. I recently had a VA deal that almost went belly up because the BBB never requested the Cert. of Elig and the LO went on vacation a week before closing! It so happens my fiance works for that BBB and I hear daily horror stories from the inside. I avoid them at all costs. I find it ironic that the four largest banking receipients of TARP money funded the most loans in Q2. Where's the incentive to do any better?

Aug 28, 2009 08:33 AM