Few Questions on Industry Standards / Practices

akaagassi · Joined: 29 Sep 2006 Posts: 17 Location: Sacramento

I'm relatively new to the industry and just want to clarify some things so that I'm being a straight shooter for my clients...

1) Do lenders/brokers generally charge for a pre-approval??? (generally, $50-$200 right???)

2) Do lenders/brokers offer a free floatdown??? (My lender only uses floatdowns on loans closing > 90 days and it's far from free; many people have been claiming that they'r being offered free floatdowns)
(Haplo you may identify with this as I called Wells and asked a Loan Rep, and he indicated you guys do charge for the floatdown but the LO's have the liberty to waive it, so they basically sell the free floatdown upfront)

3) Do lenders/brokers generally quote with 1 point???

4) Why do all these quotes that I see my clients getting from other lenders only have $150, $350 for title related charges??? Granted they're third party, but be realistic...how do lenders get away with that crap???

I thank you all in advance...

and also will take any recommendations on actions that I can take to further my knowledge in the field, whether through any particular readings, web sites, or certifications/licenses...

I work for a bank and my major handicap now is that they really do not have a system for developing their loan reps...it's more learn as you go...also I can not offer any FHA/VA loans in my department, so I'm practically unaware of the capabilities of those types of programs...
(I am aware of programs such as the Community type ones and ACORN)

Any recommendations would be greatly appreciated!!!

m2c · Joined: 03 Aug 2005 Posts: 937

Around here:

1 -- No or if anything, the cost of the credit report

2 -- Yes although the market has been so benign of late, I'm not sure why someone hasn't used this as a marketing idea

3 -- No

4 -- Typically it's the banks that quote X dollars plus "title". From the amount you gave, I assume this is the fixed portion of "title" -- base search or whatever. The excuse the folks give is that "it's all a standard rate per thousand". Weak and not the way it should be done.

JasShapiro · Joined: 10 Nov 2007 Posts: 11 Location: El Dorado Hills, Ca

Hi akaagassi,
The pre-approval charge is neither normal nor wise. It would be hard to develop a long-term career in this industry by selling pre-approval services when most of the industry gives it for free. I remember years ago we used to collect for credit reports up front, now I don't even charge for them, it's too much of a hassle (mostly for Trust Account reasons). It's the same way with costs on electronic approvals, RMCR's, supplementals, etc.

There are lenders that offer free floatdowns but it's not the norm. You're right, usually when something's free it'll come at a cost, like available only on longer lock periods that have a higher fee.

Regarding points, you will usually find the answer when interviewing your borrowers and discussing their short/long term goals before you even mention numbers. Discuss the different options with the borrower and ask what is most important to them. Ex. today I spoke with a gentleman that wanted to pull $250k out of his 'free and clear' property worth $500k to buy some acreage in OK where he'll be retiring soon. My first thought was to opt for a rate that would keep the fees as low as possible as he would probably be selling the CA home when he makes the move to OK. A bit more probing and I found out he wants to keep the subject property for his son. He was happy to get the lower rate and pay a point.

As for the title/escrow fees, usually I see them accurately listed on GFE's or not at all (not sure why an LO would want to avoid disclosing these fees) but not usually inordinately low. You may want to shop title companies out there. You will find escrows as low as $250 and refi title policy rates as low as $450. If you're getting people to send you other GFE's for comparison you're doing great.

Look at the classes offered by the DRE like RE Finance and RE Economics. As for effective retention of your potential customers, well, unless they are a personal referral this is where experience is probably the best solution and hopefully you have a good mentor in your office that can help you refine your talents.

Try to not focus on all of the 'crap' you see and hear and on your competitors' niches. Find the best programs for the best rates and fees and couple it with the best customer service. Focus on what makes your offering the best choice. Expect and encourage the borrower to do what's in their best interest.

Best of luck to you,

Jason Shapiro
CA DRE Broker 01267009