Comments on: Bank Versus Broker

By: Mark Flanders

Mark Flanders — Tue, 03 Apr 2007 00:09:15 +0000

Well written and accurate on all counts in my opinion (of course I am biased, I’m a broker). In a way, I feel sorry for the bank LO. They work with limited resources and are even told when the CAN work. Right off the bat, they are at a disadvantage. Most clients work Monday through Friday, daylight hours. Bank hours do not cater to their clientele. Bank hours force clients to change their normal shedules. It is at the bank’s convenience that a client gets an appointment, not the client’s convenience. This may be a very small point, but it is bound to change the LO’s perspective from one of customer service to banker’s convenience. In every situation where I have had a client determined to use a particular banking institution, I have closed the loan, at the client’s bank of choice, with a rate and terms the local branch did not beat. The list of disadvantages goes on, but I don’t want to take over the post.
Thanks for the article.

By: Rhonda Porter

Rhonda Porter — Sun, 01 Apr 2007 21:24:36 +0000

Great post! I go “around and around” with Jillayne at RCG when she recommends that consumers contact a bank, credit union and a broker to shop rates. Which, I disagree with selecting your mortgage professional just by who is quoting the lowest digit of the day. I have always felt that it is in the consumers best interest to receive three referrals from three different indivuals they respect (CPA, CFP, co-worker, friend, family, Realtor, etc) to determine which INDIVIDUAL NOT INSTITUTION TYPE is best suited to meet their needs.

With that said, I do believe that a mortgage broker or a correspondent lender will best meet those needs. Simply because brokers have more products and programs available than a bank. Even though bank LOs can broker, many will not since their commission split is less on “out side loans”.

In addition, in the State of Washington, Mortgage Brokers are now held to higher standards with the new licensing requirements than LOs who work for banks or credit unions (who are not required to be licensed).

By: Morgan Brown

Morgan Brown — Sat, 31 Mar 2007 06:17:24 +0000

Gollum,

You are correct, when I spoke of “bank” I was referring to depository institutions like Washington Mutual, Wells Fargo, etc. I was not referring to non-depository mortgage banks.

Point 2, they should use resources such as the Better Business Bureau, conduct licensing searches on the state licensing web sites and/or use someone they trust via a referral.

Point 3, I agree, non-depository mortgage banks work much longer hours – similar to a broker.

Point 4, While I agree that there are inherent risks associated with commission-based pay, I don’t necessarily agree that being paid commission vs. salary is the main driver as to whether someone cuts corners or not. I think it has more to do with the individual than the pay structure.

Thanks for the well reasoned comment.
Morgan

By: Gollum

Gollum — Sat, 31 Mar 2007 00:08:00 +0000

1) By “bank” do you mean savings bank, commercial bank or non-depository mortgage bank?

From your description of bank employees I think you mean savings bank or commercial bank but I think it is the non-depository mortgage bank that is often used by customers.

2) How does the customer ascertain which mortgage brokers are reputable?

3) If you mean non-depository mortgage bank, I believe you will find many of them open long after 5 pm.

4) You say, “it has to do with the person, not the institution.” I think it has to do do with the method of compensation. Savings banks and commercial banks are more apt to pay straight salary. Mortgage banks and brokers are more apt to pay by commission. A person paid on commission is more apt to cut corners to get the deal done.

By: Jeremy Hart

Jeremy Hart — Fri, 30 Mar 2007 13:42:23 +0000

I agree – for conventional loan programs, I’m not certain that a broker isn’t the best alternative. I’ve found most of our brokers to be incredibly hard-working and diligent, and so we refer them all to our clients and let the client choose. In those rare cases where something a little more refined is necessary, like a shelf-loan, a bank is a good card to have in your pocket but for the most part, all of our loans go through brokers. They work hard for the business, and we appreciate that.