Mortgage situation in Shreveport Louisiana

To make your company's search for a quality mortgage lender easier, I would simply ask each of the lenders you speak with whether they can fund FHA loans and whether they are DE (direct endorsed by the Federal Housing Administration) underwriters.  DE underwriting gives companies the ability to underwrite their own FHA files instead of having to submit files to a direct endorsed lender.  If lenders or brokers are telling you about different programs they offer from each other, I would run for the hills because they are telling you what you want to hear on the front end.  A year ago, there may have been differences in program offerings between lenders.  Lenders and brokers may have had several outlets back then for subprime borrowers (580 FICO and below range) with little or no money down.  Go to mortgageimplode.com and check out what happened to the subprime lenders- they are all out of business.  Back then, Alt-A loans (Good credit borrowers with out of scope situations like hard to prove income with little money down but great credit scores) could get funded easily.  There are very few, if any, sources for these loans anymore and even if a lender would be willing to fund the loan, the private mortgage insurers will not.

As far as lenders being better than brokers, that depends on a lot of variables.  I know a lot of brokers who could work circles around lenders and vice versa.  I was a broker at one time.  Before starting my mortgage brokerage, I was a regional manager for a Fortune 500 mortgage company where I was in a position that managed 78 loan officers, 12 processors, and 10 underwriters.  I know lenders who hire people with zero experience and have them calling on referral business immediately.  If given a choice on who to work with, in that case, I would take me, the mortgage broker with a lot of experience over a brand new to the business loan officer working for a lender.  A good loan originator who understands the lending process can give you a good estimation of whether or not a prospect can be converted to a closing early on.  A lot of originators want to tell Realtors they can do something they, most likely, cannot do because they don't want to be told, "If you can't do it, I know someone who can."  This is a desperation tactic on the part of the loan originator that always ends in a losing situation.  

The issue of who is the best loan officer to work with- the most knowledgeable, the most experienced, the best salesperson, and something not often looked at- who can send you leads instead of rate sheets and donuts?- is a more important question than broker vs. lender.  It's amazing to me how few loan officers actually do things like apartment complex call capture systems, consumer direct marketing, Lending Tree purchase leads (although LT does want $15k to join and NO BROKERS- only lenders).  Loan officers seem to only do print ads which have a low conversion rate to closings but only have an image branding purpose.  I'm not as interested in image branding as I am closing deals.  I have done the majority of my business in Dallas and Atlanta because I also have a financial planning firm and my client base is larger in those cities, but with the housing market in Atlanta suffering, I am focusing on my Shreveport location which has been here six years.  Because I mainly refer out and receive referrals from financial planning firms, many Realtors do not know me in this area.  However, I am one of only three people in the entire state of Louisiana who has the CMPS (Certified Mortgage Planning Specialist) designation for which only the top one percent of loan originators in the United States earn this.  I was also the number one ranked loan officer within a Fortune 500 company's mortgage origination unit.

The company I am the managing partner of is a lender and we have the ability to broker loans, too.  You mentioned Aulds, Horne, and White in your piece.  They appear to have a similar business model to me.  I'm not sure if they have the ability to broker or not, but I'm certain they are a fine firm to deal with.  Basically, you have three business models in the mortgage profession: Bank related mortgages, correspondent lenders, and mortgage brokers.  Their business models are as follows:

Bank related mortgage- Bank funds loans from bank funds and securitizes loan in a pool of mortgage backed securities in a sale to Fannie Mae or Freddie Mac to replenish funds to bank.  Banks have commonly known names so many people use them for their mortgage lending needs.  The problem is that many banks do not have great pay plans so they take on a lot of new loan officers or they take on seasoned loan officers who are skipping over to that bank from another bank with a lower pay plan thus they don't stay long.  This is not the case everywhere.  There are some good loan originators working for banks.  

Correspondent lender (Commonly Termed Mortgage Banker)- Funds loan through what is called a "warehouse bank".  Has a period of time to sell the loan off the "warehouse line" or buy the loan and service the loan.  Basically, a large line of credit is used to fund loans.  Loans are sold or serviced after this.  If you are not a bank and you fund mortgage loans on you own, you are probably a mortgage banker. This is what I am and unless Aulds, Horne, and White is tied in with a bank directly (which they may be because I heard they were purchased a couple of years ago) they are probably similar in nature.  Correspondent lenders make what is called SRP (servicing released premiums) for selling the loan in the secondary market.  The speed of the process and the pricing will always be better with a correspondent lender as a company.  The correspondent lender usually puts up at least a couple of million dollars to access warehouse bank funding lines.  Brokers usually can't afford to go this route.  The bank rewards the correspondent lender with better pricing because of this.  However, going back to the "it all boils down to a good loan officer" statement, a bad loan officer working for a good company still slows down the file.

Mortgage broker- Finds the most competitive bank (rate and/or underwriting turn time) and submits file to them.  Bank underwrites and funds loan.  Because in the past mortgage brokers could sign up with subprime lenders, Alt-A lenders, and conforming lenders, they had a wide variety of offering that individual banks which were limited to their own products could not compete with.  This is why the majority of mortgage loans were done by brokers.  The tables have turned recently, though.  Now that brokers don't have the many product offerings they once had, they will find it difficult to compete with correspondents who can offer better price and service because they are not bound by they lenders underwriting their file.  Also, many brokers cannot afford the $63,000 net worth requirement to get FHA approved.  If the broker doesn't do FHA loans, chances are they don't have $63,000.  Do you want to do business with someone in the lending business that is this thinly capitalized?  Make sure whoever you do business with is FHA approved (not just VA approved- that only costs $100 to get approved) for this reason and the fact that conforming lending is getting harder and harder to get approved.  Since the stimulus package was approved, Shreveport/Bossier's FHA limit is now $271,050.  75% of my business is FHA now.  I can't imagine how much longer a broker without this approval can stay in business.  If you send loans to them, your closings may not get done.

As far as a lender having better lending authority than a broker, this is simply not the case.  Very few lenders are going to the bank vault and loaning money to service a hometown loan based on a hometown lending decision.  If they are, they will have to price risk into the loan and they will not be able to compete.  Almost all lenders and brokers submit their files through one of two automated underwriting platforms: Fannie Mae's Desktop Underwriter (DU) or Freddie Mac's Loan Prospector.  Some investors have their own proprietary u/w system like Countrywide CLUES/CLOUT system, Chase Zippy, etc. but those systems are all built on infrastructure bases provided by Fannie or Freddie's system.  FHA loans are also run through DU or LP for decisions through a system called FHA's Total Scorecard.  The findings from these automated underwriting systems must be followed whether you are a broker or a lender.  Otherwise, the loan will not be allowed to be purchased by one of the agencies (Fannie or Freddie) or insured by HUD (FHA).  The only time a lender can go outside of this where a broker cannot is when they offer a portfolio loan.  This is a loan they will service in their lending portfolio.  Although lenders will sometimes portfolio a loan, the majority (like 99% in this market) will either be an agency loan (often called conforming, as in conforming to Fannie Mae or Freddie Mac guidelines) or they will be a government loan (FHA or VA).  Therefore, the underwriting decisions will almost always be the same broker or lender.  The service and professionalism of a good loan officer is the edge to look for.

The reason a lot of brokers have let you down is due to the fact that there are few barriers to entrance into the lending profession.  There are people I know who have started mortgage brokerages in Dallas and Shreveport that I still have trouble believing they are in the industry.  When I started in the mid-1990's in Dallas, the company I started with hired me with a college degree but preferred I had an MBA.  I had to work on my MBA while getting started in the mortgage business to be in line with other co-workers.  Nowadays I see people without a high school education calling themselves mortgage professionals.  They put an ad in a real estate magazine, buy some lunch for a few Realtors, tell them how great their rates are, tell them how great their service is, and then hope to God they can deliver as promised.  Hopefully, these types will be part of the cleansing process our industry is going through. 

In summation, their are good and bad mortgage lenders out there.  There are good and bad loan officers.  The perfect fit is a quality loan originator with a quality company.  Keller Williams always had a strong presence in the Atlanta, GA area.  I was always surprised to not see one in Shreveport.  I'm glad to see you all here.  I wrote this lengthy piece to hopefully shed some insight into the mortgage lending problems you had spoke about.  Maybe you could share this with some of the colleagues at Keller Williams.  If you are interested in some of the marketing ideas I spoke about that have worked well for my company or if you are interested in discussing a co-marketing effort (I have thousands of past applicants that I use a database marketing system to contact that I can also co-brand to), feel free to contact me (see my blogger info at Active Rain).  There are a lot of us top loan officers who are not banging on Realtors doors to tell them what they want to hear about service and rates.  Good service is a given.  You seem to be like me in that you are a student of the game.  I have some great cd's called "Gift of Knowledge Interviews" from a place that top producers in the mortgage industry are a part of called Loan Toolbox (including an interview with Dave Jenks- Dean of Keller Williams University) that I would be glad to give you or anyone in your company.  I am also going to be doing real estate agent FHA training in April that will include a few financing ideas that will help sell more homes through FHA financing.  If you are interested in any of this, give me a call or email me.  It's not just about a company being able to get deals done.  It's partnering with a company that can generate ideas to help sell more homes and potentially generate leads.  As Zig Ziglar says, "You can have everything in life you want, if you help other people get what they want."