FHA mortgages - Brokers vs Bankers - Part 2 of 2 - Do you want the truth?

In the ever changing world of mortgages, it's been tougher in recent months, especially if you have to rely on another company to help you close a loan. Which sets that tone for a debate between brokers and bankers. Let's start off by defining each of the two and give you examples on how both sides operate.

Mortgage Broker :  This is a company that has 15 to 40 lenders that they broker the consumers mortgage to. Now, you will see some brokers advertise that they have 100's of lenders to choose from. (this is just good advertisement to make you feel like you are getting a better deal) And think of this, consider that we all get the money from the same place, there is really no need to have more than 6 or so lenders.

Positives   :  Maybe for the fact that they have many to choose from.  Not much else.

Negatives  :  No total control. All they do is process your loan. They need to send it out to be underwritten. Now, there will be some out there that will tell you that they have these great relationships with their lender and they can get favors. This has changed in today's market. Besides, that lender underwriting their loan can change guidelines any time they want. Also, they are taking longer to underwrite loans. In my honest opinion, almost anyone can originate a conventional loan. Why do I say this? Any loan that is done conventionally, has to be approved in a system called DO, DU, or LP. If the system says Refer/Eligible, then the deal can't be done.

Now, if you have a FHA mortgae that comes back refer/eligible, then it can be manually underwritten by an underwriter. I have two clients just recently that went with other brokers that were sending their loans to other companies to be underwritten. One took 15 days and the other took 9 days. This is what can happen when dealing with a true broker, no matter what they tell you. And the one that took 15 days was denied. I just approved this same loan FHA.

 

Mortgage Banker :

• Traditional Mortgage Banker -- This would be a mortgage company that originates the loan, processes it, underwrites it, closes it, and services the loan. Examples of companies like this are Bank of America, Countrywide, and..... anyone left. The negative with this set up is that they can only use their own in-house programs.

• Typical Mortgage Banker -- This is a company that does everything mentioned above, but that they sell the loan to an investor after the loan closes. They have a handful of investors to sell this loan to. And this process doesn't affect the clients mortgage, even if the investor doesn't buy the loan from the lender. Once you go to closing and sign the note, the mortgage, and the HUD settlement sheet, it's a done deal by law. The company that I work for, Infinity Home Mortgage Company, falls under this example.

 

 

Summary : I have many friends that are mortgage brokers and this is not to say that they aren't any better. But from my experience and the type of loan that the consumer is applying for, it's best to go with a company that actually underwrites their own loans. Especially when it comes to FHA mortgages. I can speak from experience because I had a clean conventional loan that took an extra 2 weeks because the lender that we were brokering it to took forever and didn't get some of our conditions. And the only reason was because that client wanted a 5/1 arm with a great rate. This is the chance that you take as a true broker.

Another point to be made about my company, Infinity Home Mortgage Company. is that we have the best of both worlds. If we had to act as a broker to get you that special loan, we can do this. We have the same investors as everyone else out there. I prefer to do the deal in-house, since we have full control. The only time I go the broker route is when I need a lender that offers special deals such as stated loans or super jumbo loans. But as I stated, I don't care who you are or what kind of relationship that you have with that lender as a broker, you lose full control of that loan. Just recently, I can't tell you how many times that I heard from consumers that went with the broker who told them that there were delays, but not to worry. Not to worry because that they have a great relationship with that lender and it still gets delayed and sometimes denied.

                 A Mortgage Banker that has various investors to sell to after the loan closes. Who can underwrite in-house. We can take any risk that we want, a broker can't.  I, Jeff Belonger, Approve of this message.

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!

Copyright  © 2008    by Jeff Belonger

 

Author of this blog : Jeff Belonger

e-mail : jbelonger@ihmci.com