Mortgage Brokers vs. Bankers
In the last few years, banks have suffered some troubles with regulators and the public.
In June, 6 banks were cited for ignoring requests for loan modifications or failing to make good-faith efforts to prevent foreclosures, while regional banks continue to be hit with investigations by the Justice Department for bad underwriting of Federal Housing Administration loans, according to National Mortgage News.
Whom would you approach for your next mortgage? Who would find the right mortgage and the best rate for you? And, whom would minimize the hassle of the mortgage approval process?
In today's market, experts from all over representing mortgage brokers and mortgage bankers make their claims as to why they deserve your trust -- and business.
The Broker/ Banker Differences
By Mat Ishbia, President & CEO of United Wholesale Mortgage
Mortgage brokers are licensed residential mortgage professionals with access to hundreds of loan options for consumers looking to buy or refinance a home. They support borrowers by leveraging relationships and securing the most favorable loan options available. Brokers can help homeowners save thousands of dollars on what is likely the most important financial undertaking of their lives.
Brokers streamline the loan-shopping process by promptly lining up multiple options that borrowers would likely qualify for to allow borrowers to choose the best option for themselves.
While larger banking institutions serve customers well, they are not focused specifically on residential mortgage lending. They focus on auto, boat and personal loans, just to name a few. They are not focused on 1 area of expertise: mortgages. Large retail lending institutions can offer the loan products they have in house, but none other, and often pricing and fees are higher because of the overhead associated with larger institutions and banks.
Brokers, including local banks and credit unions, are typically smaller and more nimble; they adapt to change quickly and have less overhead to be more competitive in the mortgage market. Furthermore, the commission structure for a broker is highly regulated and broker originators have the same pay structure on all loans, no matter what type of loan or loan size.
Brokers streamline the loan-shopping process by promptly lining up multiple options that borrowers would likely qualify for to allow borrowers to choose the best option. Further, they are able to get loans closed at a faster rate than large lending institutions. Brokers partner with high-quality lending partners nationwide to ensure their referral and new business opportunities continue to flourish by utilizing the tools, products and overall support that lenders offer to their broker network.
Many consumers assume that large retail lending institutions and banks offer the best mortgage deals. However in fact, brokers are not beholden to a retail bank's overhead costs and can often secure a lower interest rate through that same large lending institution's wholesale division. Consumers who apply for a loan directly with the large retail lending institution or bank believe they are cutting out the middleman, but in fact, may be putting themselves at a disadvantage by not using a broker.
A Misconception. . . . . .
A little known shortfall of working directly with a bank is that its loan officers are not necessarily mortgage experts. In fact, federally insured lending institutions do not require their loan officers to be licensed. While they must be registered with the Nationwide Mortgage Licensing System database and hold an NMLS number, bank loan officers are not held to the same certification and continuing education standards and regulations. Annually, brokers are required to pass extensive testing and ongoing training on mortgage guidelines and changes that must be adhered to.
On the other hand, brokers must also submit to background checks, fingerprinting and pass other rigorous exams to hold their professional certifications and credentials.
Imagine for a moment that you are a professional tennis player and injure your knee. Your career depends on the right treatment, and your future ability to compete and earn money rides on the medical advice you get. Whom would you listen to? An orthopedic specialist who has dedicated his or her career to the study of knee mobility and performed hundreds of specialized surgeries, or a doctor who lacks a specialization but does a variety of procedures on everything including head, shoulders, knees and toes?
With their financial health at stake, consumers want and need an expert to guide them through the mortgage-shopping process. With the information now readily available to us all, my suggestion is a certified, licensed mortgage broker.