Nobu Hata
By Nobu Hata
With the down market and the inevitable mass exodus of “those” loan officers, you’d think we could rest easy knowing that the loan officers left would be – for lack of a better word – decent.
Holy Hannah, would we be wrong.
In the last couple weeks, I’ve had various buyers shop their loan around, including those using FHA. What I thought were set guidelines and fees isn’t what it seems. One particular buyer of mine asked for Good Faith Estimates based on the same home, price and mock closing date, from each of the loan officers he’d met with who’d pulled his credit, on my recommendation. Lo and behold, one origination fee was $1,100 more than the other. The rest of the meeting was an eye-opening study of mortgage v. mortgage.
Now, I’m not going to get into specifics of big bank versus broker, nor the merits and drawbacks of each. But what I will say is that there’s no better time to brush up on the new GFEs and fees associated with them. Fees and guidelines for all types of loan products are changing at a lightning pace, and while it’s largely up to our clients to perform their due diligence, it’s up to us to impart some insight.
So if you’re unfamiliar with a bank, or its products, ask! Get to know the fee structure of your fallback bank and create an open relationship with a trustworthy loan officer to keep you abreast of changes. Don’t forget about YOUR broker fees as well! There’s nothing I hate more than hearing of an agent’s “Broker Admin Fee HUD omission at closing” horror story. I’ve been getting into a habit of asking for year one APR rate to go along with the interest rate; that’s what the new HUDs are based on, right? Then and only then can you get a real idea of what the true impact of the fees really are. Finally: Read the GFE. Don’t take for granted that the thing is broken down ad nauseum.
Don’t let the perception of an industry shakeout lead you to believe that the bad apples are gone. Think of these days as the perfect time to be a better advocate for your client.
Nobu Hata is a sales associate for Edina Realty in Minneapolis, and a founding member of the Minneapolis YPN group, the YoPros. Visit his Web site at www.nobuhata.com.
Comments 6
You bring up a couple of good discussion points Nobu.
One of the biggest issues from the other side of the fence (Disclosure: I’m not an LO, but I manage a ton of them nationally, and work with real estate agents too) is that Realtors and Agents cause quite a bit of confusion for the borrower/buyer when it comes to their loans for specifically the reason you mention, they don’t know the loan business. I’ve seen many deals go bad because the Realtor gets involved with dated or bad information leaving the mortgage professional scratching their head as to why the real estate side is getting involved. I’ve heard comments like, “I don’t get involved in the closing negotiations, why are the agents getting involved in the financing?”
That said, I understand why those agents want to get involved. They want to close on the home (so they can get paid), and they want to make sure the client does get burned by “Those” LOs. I’ve even seen real estate agents go so far as originating the loan, and insulating the borrower from the LO playing a middleman role to “protect” their sale. Your best point is about finding someone you trust to work with and refer your clients to, but remember that once you refer the client, you need to let go. If there is trust it will work. Remember that these LOs want to close the loan and sale as quickly/efficiently as possible, if you’re holding on too tight, you need to let go some or find someone you feel more comfortable with to refer your clients.
In many cases, the differences in GFEs and Fees exist because of how a retail bank discloses versus how a broker discloses by federal law. They are completely different in their fees and how each side makes their money for their work. Asking an LO for information about the borrowers file is not really the real estate agents place, it’s the LOs job to educate on the finances, and in many situations the agents don’t understand the finance side (as you say because of all the changes of late) which ends up causing confusion for everyone. Each side of the transaction needs to let the other side do their job. If you’re uncomfortable with the LO, you’re going to be more inclined to hold on tight. If that’s the case, find another avenue ASAP.
I’m sure most agents would not want their LO asking about their fees and how they’re getting paid. Too often it’s seen as a combative relationship. Remember, no one gets paid unless it closes, so it’s a safe bet that both sides want to shore the deal up as best possible. Both sides want to make money for their work, and get referrals for future business.
Our business (both sides) is in a state of flux and we’re all stressed. Luckily, the downturn has shaken out poor people from both sides which should yield better quality for the consumer. With the SAFE Act and NMLS your mortgage professionals are having to take further steps, and put their name on all files. Gone are the days of non-licensed LOs working under another’s license, and being able to loans in all 50 states through a federally chartered bank model. If someone does loans, they have to be nationally licensed via the NMLS system, and in each state they do business. You will see the quality increase. The people who can’t get licensed will no longer be in the business, and you won’t have issues with people doing business in places/markets they don’t understand.
Thanks Nobu for bring up an issue that is very important for real estate and mortgage professionals. Too often Side A tries to get involved in Side B’s business and vis-a-versa causing issues for the client/borrower. Both groups need to find the right people to partner with on the other side of the business. If you’re a real estate agent, make sure you find someone that can address all the products you may need. I hear a lot of complaints from RE agents I work with about how their worst experiences were with LOs they had to use because their regular guy/gal didn’t have the product the client needed.
If anyone has any questions about new GFE info, or need loan direction or assistance, just let me know. Helping create less confusion benefits us all in the long run. As someone who gets to hear complaints from both sides, I’d love to see the complaining lessen.
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First Ryan, I think that was an excellant comment back on the need for professionals in differant fields to respect each others expertise. Nobu, The new GFE nor the legislation that has transpired recently deal with having all lending institutions charge the same. As with any item or service bought, the lowest cost is not always the best solution. If a prospective buyer were to go to several realtors and ask for the best they could as far as the commision involved to sell or buy a home, my guess is that there would be at least one that would be differant than the rest. There are as many “bad apples” in the real estate profession as there are in the mortgage profession.
Hey guys, (been off the grid, out of town the last week or so) . There is no hurting become more involved in the financial end of the transaction, now, more than ever! Thanks so much for the comments!
If you put in a contract that a buyer will pay up to 3% points and you would like shop first on not to pay points and the lender says they need to see the contract and you have not signed it, because you don’t want to commit to paying points.
Can you still get an GFE from a lender without a signed contract?