Mortgage Bank: The answer you could be looking for?
We have all heard the term at some point or another, mortgage bank, mortgage broker blah blah blah, but what’s the real difference and why should I even care? Actually, there is a HUGE difference as I am about to explain and you should absolutely care if you are in the market for a purchase or refinance mortgage. Years ago when I first started my business as a Phoenix Loan Officer I was welcomed aboard a small mom and pop shop mortgage broker where I began to learn the business and how I could help people achieve their goals through mortgage lending. I considered myself very green when I got into the business and had no idea what a mortgage bank was nor had I ever heard this term, but as times have changed over the past couple years it became a much bigger deal to me and my clients.
To give you a basic understanding, growing up in the mortgage broker world I can give you a quick explanation as to how this type of company operates. As a mortgage brokerage you did not have your own funds to lend to your borrowers nor did you have your own underwriters, doc drawers, funders or any of the operation staff in house. Basically, after you put the file together you submitted it to a mortgage lender (totally different company) who then took complete control over the file and with your fingers crossed and weeks later you hoped that your borrowers loan would be approved. A couple years later, still in the mortgage broker world, came the Financial Collapse of 2008, and boy was that a rough year. My business had grown quite a bit and soon to realize it was going to turn into a complete disaster. The mortgage lenders we were sending our loans too started tightening up their mortgage lending guidelines and it became a complete nightmare for my clients and I to close. Conditions on top of conditions to satisfy, extra appraisals and sometimes even a loan denial I slowly started to lose my mind.
About the same time I was losing my mind a good friend of mine was telling me all about the success he was having at this company he was working for. Quite intrigued I met with him to see exactly what was going on as I wanted to get to the bottom of it. He explained this concept where you had your own underwriters along with all of the operation staff that touches the loan files just down the hall as well as your own money to fund the loans. I was sold on the spot as I now had this sudden hope that I was able to deliver what I had promised to my clients. After a short transition period I was up and running, I could not believe how much a mortgage bank made a difference in what I was able to do for my clients. With these strict lending standards there’s always something that could cause an issue with a loan file but having the opportunity to be around your IN HOUSE underwriters and operation staff gives you a chance to build a great relationship with them and understand what they look for in a loan in order to approve it. I can say that there has been times where I have had a client whose file needs that extra attention and that quick pit stop at Starbucks for a Latte to bring your underwriter as she helps you put together a deal comes in quite handy! Across the board if you look at the Loan Officers that have the largest clientele and referral base whether it be here in Phoenix, Az or across the country 95% of them work for a mortgage bank, I have a hunch that this is not just a coincidence.
-Justin, Electric Loan Officer
Nice job Justin. Well written. I couldn’t agree more with the points you have made.
Thanks Matt, I really hope that this reaches the right people and that they can learn from others who have made the mistake in choosing the wrong company.