Keeping a Broker Honest

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

Ok, so I am about to make a purchase of a VERY expensive item that costs hundreds of thousands of dollars. First of all, with that amount of money at stake, I am not worried about hurting someone's feelings a little bit. I want to make sure I am getting a good deal.

So they do the credit check, and they receive my application and they make an offer for a loan. Wouldn't it be wise to get a couple of comparisons? (maybe not even reveal the fact that I have spoken to another broker).

What are some ways I can make sure I am keeping the broker honest?
Is it normal to "shop around"?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Shopping is expected in most cases. You are making a huge investment, that's why it's not dinged on your credit should you make multiple credit inquiries like that.

You'll want to get an idea of what people can do. Let them know you're shoppin em, you'll probably get a better deal that way.

Keep in mind however that in Mortgages, just as in anything in life, you get what you pay for ;) The cheapest is not always going to be the best option, and frequently isn't. However usually on conventional stuff you're going to find most people aren't too far off on pricing or fees.

m2c · Joined: 03 Aug 2005 Posts: 937

Reasonable amount of “shopping” is not a bad idea. Problem arises when some brokers give “low ball” quotes knowing they won’t have to lock at the time of inquiry – sucker folks in and then “the market has changed.” I suspect MPO is going to make it this go around and that should bring some integrity to “rate quotes” but it will be a jolt to many loan officers.

Shopping by itself does guarantee "keeping a broker honest" -- there a lot of after-the-fact tricks of the trade which will be reduced if HUD is successful.

chow · Posted: Tue Aug 09, 2005 1:46 pm Post subject:

I love those people that have a standard Good Faith Estimate and "Truth and Confewsion" forms sent out, and know nothing about the states tax stamps and fee's. I've seen GFE's that were so far off-and the LO never said a word-until a week before closing? I check GFE's and TIL's all of the time for people who didn't want me writing the loan, because they are good friends-but want to know if the deal is good.

(you don't always want to do family and friend loans-I don't mind a bit!)

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

It would be cool to start a service where people could have their paperwork reviewed for say $50-100 by people who know the pitfalls, and then receive a list of questions to ask the broker, etc.

chow · Posted: Tue Aug 09, 2005 3:33 pm Post subject:

As far as I see it, it would be a conflict of interest, and you would be dealing with people who would just STEER you into another broker's office. If the people (like me) were LO's, then it could create some more issues. I have faith that snake oil LO's will fade, or be found out. You're either honest, and let them shop-or you're not honest, and pull out a last minute issue. Most of us who have been around the block, know when we have to communicate with borrowers, and what to bring up. You just have to develop a level of trust, even if it's over the phone. Every one in this business has someone in this business they refer people to. I refer people all over and visa versa.

I honestly couldn't tell you if you were getting a good deal without basically underwriting your loan. I would charge more than $500 for this service, and how many people want to spend that?

Then I would have to have some weird E&O policy in case I advised you WRONG, or you felt I was wrong. (see where this can go? it's like an appraisal. You get an educated opinion!) Who's going to decide "educated"? :roll: :wink:

bfreeman · Joined: 06 Aug 2005 Posts: 15

yep if you are wanting buy a 200k $ item, it is best to shop around... maybe even 10 different brokers

then make an excel document, compare what each has to offer

then determine who is offering the best

thats how i do it :D

lenderama · Joined: 08 Aug 2005 Posts: 22

Ask for referals that have closed in the last 90 days. Ask him which Realtors he does business with. Ask him to show you the lender's lock conformation form.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Some people you could simply ask for a rate sheet ;) I have no problems showing someone how much i'm making on a deal. It usually makes em feel a bit better about it.

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

lenderama wrote: Ask for referals that have closed in the last 90 days. Ask him which Realtors he does business with. Ask him to show you the lender's lock conformation form.

Those seem like pretty tough questions, but I actually might ask some of these questions, as I would at least like to see how they handle themselves when they try to answer them.

What is a lendor's lock confirmation form?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Basically a sheet that says you're locked in, this is the rate, this is when it expires, etc.

chow · Posted: Thu Aug 11, 2005 9:21 pm Post subject:

When I was a mortgage banker LO, as Haplo is now- I would show people what my expected "call rate" was from my marketing area when they came into an interview. if they chose to lock that day, I showed them what I was expected to charge, and explained the services we stood behind.

If they choose to float, I explained, I would fax them over a YSP/YSP disclosure, and to call me and we could select the best rate at that time, but my bottom line on Origination and Discount was: XXXX and they sign a float/rate lock agreement.

I've never had a problem explaining to people who want a loan, what I need to make. Do People expect me to work for free? Would you work for free if you were straight commission? 75% of America works with a hourly salary or a draw.

Try working straight commission. (and having a few ethical issues.)

I'll be really dead honest with all of you. If you all expect to get a Professional Loan Officer, Out of Bed-and to work....(okay-we're out of bed at 6am and on the phone, fax and email, or in the office.)

I can sell you on ONE point. And One POINT only.

Find People who are in lending for the long haul. No matter what, no matter where-even if we try to leave it....it drags us back in, because we know our business, we know our contacts, and it is:

Something we really enjoy. We enjoy working with others. We enjoy giving out referrals. We enjoy making transactions work.

I wish when I first started trying to rehab my property there was as much information as there is today-on the internet. I would call bank after bank, and with a 800 score, and both of us with the same score's and working-I couldn't find a loan to build on the property my husband bought.

I went through a MOC closing from hell on a FHA 203K, and then decided, I was going to HUD, I turned the original LO and Broker over to HUD-and Whined- I complained all of the way up the ranks. (I was a collector at the time) I paid all of the fee's, turned the broker into HUD, and then waited until Spring to start over.

The New LO: NEVER thought he would here from me again?
I walked into his office with a full package.

I signed the doc's, paid the inspection company AGAIN, kept the whole contsruction loan process in check.

6 months after closing I went to work for that LO, as a "newbie" in this business. I know a honest person when I meet them. I was honest, and ran up against a dishonest LO. Loan Officers come in many forms. Having been on both sides of this more than once. I'm not offended by a little cross talk.

Compare Apples, to Apples. Hey, we paid 25K for a property that is worth 10 times that now. I'm not here to tell you it was easy. It has been "blood, sweat, and tears".

I love my home! :wink: I want all of my customer's to feel the same! :P

m2c · Joined: 03 Aug 2005 Posts: 937

You get back to the MA law which I think is still in effect. How can a broker issue a rate lock?

The MA law is more of a reflection on the folks in Massachusetts -- after all they keep reelecting Ted Kennedy – but it’s a valid question. Most broker-issued lock agreements contain some sort of escape clause on an if-if basis based on the lock with the lender with whom they’ve locked. As a practical matter, this protects the borrower 90% of the time but over the last two years we’ve seen a number of wholesalers go belly up with large rate moves. Response to the borrowers seems to have been “sorry but I can get you a rate only .5% higher”.

One argument for using a mortgage banker. They are stuck with honoring the lock no matter where the market moves or if their “hedge” fails.

Most applicants don’t even read the lock agreements but it’s worth considering.

m2c · Joined: 03 Aug 2005 Posts: 937

Chow,

Why did you disclose a YSP if you were acting as a mortgage banker? In fact, what is a YSP to a mortgage banker? You have no idea (except a ball park) what you will make on the deal.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I disclose it to everyone that comes through my door. Some I disclose more too, others less. It becomes more about what they want to here and what they understand however.

I print out a rate sheet and point to it and say "I need to get to 101 on this sheet. There are two ways to do that, and it's your decision on how we do that." This really allows the buyer to feel that they get to choose their rate, and that I am being up front and honest with them in every way.

I have yet to have one person look me in the face and say 'ya know, I just don't care to know about any of that.'

So, do we have to disclose it? Naw. It does however add a great deal of credibility to me in the eyes of my customers.

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