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   ARTICLE   |   From Scotsman Guide Residential Edition   |   May 2004

What to Look for in a Lender?

As a mortgage broker, there are several lenders competing for your business. Purchase money business relationships are becoming an increasingly important part of the mortgage industry.  Furthermore, due to a POTENTIALLY rising interest rate environment and a decrease in the number of refinance prospects, building partnerships with Realtors® can help brokers find new sources from which to originate business. However, because a Realtor’s primary concern is meeting a closing date for his or her borrower, the business objectives in partnering with lenders have changed. Reflected below are five criteria that a lender should meet in order to be a viable prospect with whom to do business:

1. Ask with how many different offices an account executive works: This will determine how thinly the account executive is spread. If an account executive tries to do business with forty different mortgage brokers, he/she will not be able to provide the level of service necessary for you to service your Realtor in a timely fashion. Remember, the Realtor cares most about meeting his/her closing date for the borrowers.

2. Take the focus away from price:  The lowest rate does not always mean the best service. I know of a borrower purchasing a home who took a quarter point higher rate because he had the confidence that it would close on time. The alternative means sacrificing service for price, which can cause a lender to over-promise and under-deliver for a broker; as a result, you are doing the same for your Realtor and borrower. This can lead to lost time in underwriting and a missed opportunity to have your loan with a lender who could have closed on time—assuming he/she had a full file. Remember, if your loan doesn’t close on time, a potential buyer could be out in the street with a moving van and no place to call home. This means that your Realtor loses the potential referrals associated with that purchase, and you lose potential future loans from Realtors. Additionally, the Realtor associates you and your office with being the primary cause for lack of business. Therefore, you LOSE the intended benefit that you are buying from the lender.

3. Make certain that the lender can be IN YOUR OFFICE at least three days per week:  If your account executive is trying to work with every lender in town, then you MIGHT see him/her once every two weeks. However, issues will arise with your customers that must be addressed immediately. If you have the lender there, he/she can anticipate these issues, giving you, the broker, more control over the file and enabling you to demonstrate to the Realtor that you are proactive and organized.  Realtors want to work with lenders from whom they can get fast, unwavering answers.

4. Find out specifics about their inside infrastructure:  Ask specifically WHO your underwriter will be before you work with a company. In fact, you should be able to have an actual conversation with an underwriter other than by voice mail and e-mail. This will help you to verbally sell the benefits of your loan. If the account executive says that the loan goes into a queue and whoever gets the file underwrites, then you will have less control over the file, making it more difficult to get quick and accurate feedback to your Realtor.

5. Find out their underwriting philosophy:  Flexibility in a lender is helpful when working with Realtors. Also, having an account executive that is knowledgeable about their own products and those of their competitors will yield more opportunities for you to deliver for your Realtor. Matrix lenders are dangerous here because they often pull their own credit right before closing.   If the credit score drops, this can leave you, your REALTOR, and your borrower in a jam. Look for account executives with underwriting skills and flexibility so that they can restructure loans and provide alternatives. For example, you have a borrower with a repossession of a car on his credit file, which would qualify the person for 80% maximum loan-to-value with a lender. However, that applicant co-signed a car loan with his fiancée, and the rest of the credit is clean. The applicant has never missed any other payments. Look for an account executive who will listen to the individual merits of the particular loan scenario and has the forward thinking ability to fight for the loan with the underwriter.   In many cases, this can enable you to obtain an additional 10-20% combined loan-to-value.

In summary, the account executive and lender should build a business partnership, as opposed to a transaction-based relationship. Remember that there are several people involved in a purchase transaction, including the buyer, seller, Realtor, broker, lender, title company, etc. If one of these parties drops the ball, it can stall the process of the loan and hinder future potential business. Choose the right account executive and lender so you are perceived as a most valuable role player, as opposed to getting cut in the first round.



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