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Google the Loan Officer you are thinking of working with! Do you get any hits? What are they? Does the Loan Officer appear to be highly respected and quoted with lots of links? Then you are probably working with a professional. Can't find anything, or maybe just a listing on the company web site? That probably wouldn't be who I would pick to handle my largest financial transaction.
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Our company, Mortgages Unlimited, Inc was again recently rated one of the top lenders in Minnesota by Minneapolis / St. Paul Business Journal. Who are you doing thinking of doing business with?  |
BIG Bank Loan Officers versus SAFE ACT Licensed Loan Officers? You Make the Choice!
Washington has been busy protecting consumers from bad lenders right? Wrong! They have only done half the job, and sadly, the general perception by the public as to who is the better lender choice is completely wrong. Most people feel the brokers and the non-bank mortgage lenders have created all the problems. This isn't true. Just the opposite. Consider the fact that Fannie Mae, Freddie Mac, and banks make the rules, and the banks review, underwrite, and fund the loans for brokers.
So who is fooling who? Fat cat banking industry lobbyist are spending your tax dollar with their bail-out money to portrays themselves as innocent victims, and have done a wonderful job getting that incorrect message sent to Washington.
Effective January 1, 2011 all Mortgage Bankers and Mortgage Brokers across the county will be require to meet new strict standard, and to be licensed according to the SAFE Act. UNLESS they work at one of the big banks!
 An exemption in the consumer protection laws allows Loan Officers at the big Interstate Chartered Banks to NOT have to follow the same rules! Who are these banks? All the big names (Wells Fargo, Chase, Bank of America, etc.), plus plenty of smaller ones.
Now I am not trying to make this into a David versus Goliath story, but I am trying to emphasize the huge differences and implications this change will have on the consumer. As the new requirements have been rolling out across the country, many of the current Loan Officers who have been unable to meet the new requirements, and especially those who have failed the new tests, have simply gone to the large banks to spread their incompetence.
Here is a chart to show the differences:
| |
SAFE ACT |
Bank LO’s |
| Licensed |
Yes |
No |
| FBI Background |
Yes |
No |
| Fingerprinted |
Yes |
No |
| Surity Bonded |
Yes |
No |
| 20 hours upfront education |
Yes |
No |
| 8 hours continuing education |
Yes |
No |
| Personal Credit checked |
Yes |
No |
| Federal and State testing |
Yes |
No |
| Complaint mechanism's |
Yes |
No |
| Licensing fees and renewals |
Yes |
No | |
I think the choice is clear. Who would YOU rather be working with on the largest financial transaction of your life? Trained, licensed, fingerprinted, and background checked - or the person with none of that?
The funny part is the cost for the service based on rates and fees are usually about the same, but more often than not, non-bank lenders are slightly cheaper in both rate and costs, close the loans faster, and have more knowledgable and experienced Loan Officers. Plus, based on the new laws, the banks are about to get even worse.
The best SAFE ACT Loan Officer (non-Bank) analogy I can use is having a choice of working with a CPA to do your taxes vs. using Turbo Tax, but paying the same price.
Finally, THIS IS A CLEAR REASON why people should follow my #1 mortgage shopping rule: GOOGLE THE NAME OF YOUR LOAN OFFICER!
First, IF IT SEEMS TO GOOD TO BE TRUE, IT PROBABLY IS. But you didnt really need us to tell you that, did you? Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?
Second, YOU GET WHAT YOU PAY FOR. If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Would you ever want to travel in a car or airplane that had been built using the very cheapest materials, built by the very cheapest laborer? Probably not. Best case, expect very little advice, experience, or personal service. Expect things to go wrong, rates and cost to change, and to not close on time. Worst case, expect that you may not close at all. All too often, you dont know until its too late that cheapest isnt BEST. That being said we are not the cheapest. Of course our rates and costs are very competitive, but we have also invested in the systems and team we need to ensure the top quality experience that you deserve. If you want the cheapest head on out to the Internet, and we wish you good luck. But remember that the cheapest rate or cost on the wrong strategy can cost you thousands more in the long run. Remember, this is the largest financial transaction most people will make in their lifetime.
Third, MAKE CORRECT COMPARISONS. When looking at estimates, dont simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not hidden down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.
Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. This means that you can have any interest rate that you want but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all but understand that this comes at the expense of a higher interest rate. Do you honestly think Ditech can charge only $395 and NOT effect your interest rate? Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.
Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY. This means that if you are comparing lender rates and fees this is a moving target on an hourly basis. For example, if you have two lenders that you just cant decide between and want a quote from each you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.
As you can imagine, we wouldnt be encouraging you to shop around if we werent pretty confident that we feel that we can give you a great value and serve you the very best.
More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life, but we do this every single day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest.
Thank you for giving us the opportunity to compete for your business. - Joe Metzler
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