Banker
Broker Lender
Tell the
truth, or I’ll point it out.
Not all
mortgage companies are the same.
The type of
mortgage company or “shop” rules what home loans a Borrower can access. Differences
in skill, speed and ability to close is hidden from the public when applying
for a home loan. A variety of titles for the shop confuses consumers. Banks,
lenders, Mortgage Bankers, Consumer Direct, Call Center, Retail, Wholesale, Correspondent
Lenders, Direct Lenders, Mortgage Brokers and online entities are among the few
styles of business.
The United
States Government funds ninety five percent of mortgage loans in America.
Fannie Mae and Freddie Mac purchase conforming and high balance conforming
loans. Both Fannie and Freddie are U. S. owned and regulated. A bank such as
Wells Fargo only sells conventional loans to Freddie and Chase only sells to
Fannie. There are grey areas of rules and guidelines but Fannie and Freddie are
similar in this heavily regulated industry. FHA and USDA loans are also “owned”
as I like to call it “by mine government.” I mean to say the Underwriting guidelines for
all these loan types are written in a huge long form tablet, in stone.
There are
now a few sources for smaller niche banks, credit unions, hedge funds and
portfolio lenders that only a large based mortgage banker has access. These
special exception loans are the other five percent of all loans closed in the
U. S.
The systems
used for approving loans are: DU, LP, GUS and manual Underwriting to a list of
rules. Computer platforms also differ in mortgage companies. Some systems are
web based, some rely on paper files. A loan is touched by nearly eighty people
and systems that verify each piece of information on top of the eyes of Processors,
Underwriters and Funders. Gurus for years said a monkey can be a mortgage
originator. They thought the progress in computer automation would take out the
human aspect of closing a home loan. This today is very untrue. A person can pass the testing and background checks
but good looks and salesmanship do not overcome being on an inferior platform
or not having intellectual skills to match what a customer wants.
As in buying
real estate, location is the most important fact. The type of shop makes a
difference. What makes Mortgage Banker, Loan Officer or Mortgage Broker
dissimilar is the company/stage they work upon.
Mortgage
bankers work in the most flexible model. They sell loans to both Fannie and
Freddie directly. Mortgage bankers offer products outside of their “in house.”
This system sells loans to the U. S. government, niche secondary credit unions,
hedge funds, and small banks. Mortgage bankers close loans with their own cash or
warehouse line and deliver the package to the end buyer to service. Licensing
for mortgage bankers is stringent. Risks are high. Loans that are not an exact
fit to the end game must be bought back with cash. Mortgage banking however
allows for greater speed and variety.
I sit in a
Mortgage banking office alongside of Underwriters, Processors and Funders. This
allows for quick closings. It also provides a landscape of a hundred thousand
products and rates at any given hour. Some products we are “delegated direct.”
Delegated directly is when Underwriters in my office have the vote of
confidence from the end purchaser to approve, fund and deliver the loan to them
for servicing in days. We don’t ship delegated direct files to end user until
after closing.
Besides
closing standard loans quickly we broker to other special sources using their
platform to disclose, Underwrite and fund. In brokering to Union Bank, Bank of
the Internet, UBS, HSBC and others the mortgage banker him or herself takes on
responsibility to understand the parameters the end user will or won’t accept. The
file is sent to the secondary source to grant final approval.
On the other
side of the spectrum the mortgage officer sitting in a bank has far less
products and control to offer consumers. Banks employ loan officers. L. O.’s
are paid less commission in exchange for promise of leveraging the bank brand,
in house referrals and walk in traffic. Big box banks sell all loans to our
government. Banks no longer earn large profit from selling home loans (credit
cards make more and require less labor costs). Banks centralize all the people
and systems that check and triple check a loan for truth. Although a consumer
may meet the sales person (L. O.) in a bank branch the information is packaged
and shipped often out of state to be processed, then to another location to be
underwritten, a third for funding and fourth to audit. Banks work a loan in a
production line and measure the speed of each of the employees who touch the
loan. For example, a complex file of a self-employed borrower is triaged and
separated to bottom of stack because it is better to close three files of w-2
earners than hog the utility of skilled employees. Banks do not hire additional
employees with the flux of business. Mortgage applications increase when
interest rates fall and turn time at a bank slows.
Call centers catch consumer’s eyes with advertising on Zillow, Realtor.com, radio and
print. This type of mortgage origination platform is an online presence with a
boiler room. Quicken loans regional call centers take applications
on a production line. This works for a Borrower who only receives a w-2 from
same employer past three years with good credit. Sales persons on the phone
must take a greater number of applications to make a living. Call Centers can
work through simple loan applications but often are unable to overcome any glitch
or variation from the cookie cutter loans.
As a consumer ask questions about who and how your loan is reviewed. When things
get sticky, and they do with the pile of paperwork needed to close, it is good to know
the person you are applying with can give answers and close.
Thanks for reading
Caroline Gerardo NMLS 324928
(949) 784-9699
