Protect yourself: Investigate your mortgage broker
Need a home loan? Here's how to check out salespeople in advance.
Hop on one of the Internet sites devoted to home financing or start poking around your neighborhood for a residential loan, and the chances are good that you'll end up in the arms of a mortgage broker.
That hasn't changed since the heyday of the housing bubble. Back then, brokers with no training, little knowledge and, in some cases, criminal histories helped foist all manner of exotic and ill-fated mortgages on the masses.
What has changed is that it's now considerably harder to become a broker and easier for potential clients to dig into brokers' backgrounds before sending them sensitive personal data, financial records and, quite possibly, a jumbo check.
Thanks go in part to the Nationwide Mortgage Licensing System & Registry (NMLS). It was set up by regulators as part of the 2008 Secure and Fair Enforcement for Mortgage Licensing Act. It requires individual brokers to undergo a stringent registration process and to list their professional histories in a consumer-accessible database.
"It prevents certain people who can't pass the tests from getting into the industry," says William Matthews, chief executive of the State Regulatory Registry, which was involved in the NMLS site's creation.
For those who have little knowledge of the mortgage market, it's important to understand that brokers are commission-based home-loan salespeople. Some represent numerous lenders, akin to independent insurance agents. Others drum up business for a specific bank or other mortgage lender. Bank loan officers often receive sales commissions, too, but unlike independent brokers, they come under the purview of bank regulators.
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Four years ago, the home-loan industry allowed anyone -- including criminals -- to broker mortgages as long as they coughed up a filing fee and took refuge under an employer's license. These days, new applicants must sit for 20 hours and existing brokers for eight hours of education. Everyone must pass federal and state tests as well as credit and criminal background screenings. States even fingerprint mortgage brokers.
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Consumers can now also check out mortgage brokers by going to www.nmlsconsumeraccess.org. You can plug in the names of individual brokers and browse their professional histories, disciplinary records and the states where they are licensed. The NMLS site plans to add bank mortgage-loan officers by this summer.
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Commercial websites can be useful as well. Zillow.com's Mortgage Marketplace includes 7,000 user-written reviews of mortgage brokers and bankers. Rival LendingTree is aiming to add a similar service later this year.
"We're out in the open, and you can see everything about us," says Michael D'Alonzo, president of the National Association of Mortgage Brokers and an active mortgage broker.
If mortgage brokers are such crooks how can we offer lower interest rates with lower costs? Call you existing bank for a quote (rate, total costs and loan amount). Next call a mortgage broker or banker and give them the same scenario (loan amount, credit score, estimated value) the bank used for their quote. I guarantee 9 out of 10 times you'll find the broker or banker will make a more attractive offer.
Using a broker/banker is comparable to shopping at Costco/Sam's Club. You'll receive the benefit of bulk purchase power without having to by a 5 gallon can of ketchup to save money.... I have friends that work with banks and we compare mortgages every week. As mentioned above, 9 out of 10 times I have the better deal to offer.
Brokers/bankers make a living SAVING YOU MONEY!!!! The Dodd-Frank bill that was passed protects consumers from being taken advantage of. It unfortunately also has increased the average cost of a mortgage since the bank/lender funding the loan may be responsible for 90% -100% of the misquoted fee.. Banks and lenders have increased their fees on every loan to compensate for their occasional expense.
I agree there were a lot of scumbags, but thankfully, most of those people have weeded themselves out.
Good night all-
You don't have the faintest idea what you are talking about. Learn how to spell too before you post comments online...idiot. It's whether, not wether and bux? Are you a 13 year old sending a text message?
i just dont get all you so called mortgage brokers? you clain you have to work so hard and fish through all kinds of files to get one to close etc etc..but so do all salespeople, wether it be cars, furniture, appliance, or what have you...and no other salesperson gets paid even one third of what you guys get, not even close!! way over paid for easy easy work, the banks, underwriters and processors do all the real work..all a broker does is chase people to get clients, thats it! a few phone calls and faxes later and you think you earned like 3500, when a regular joe salesperson working just as hard may make 100 bux...although banks and wall street are a big problem, so are you greedy overpaid brokers..i hope u all go out of business...oh yea? most of you did..Thieves!
Yes azmortgageinfo, Morgan doesn't have a clue. Or to be fair maybe she does, it's just difficult for me believe so because she was still in high school during most of the mortgage boom. Now that's not to say she can't be educated on the subject, but after reading this article I think it's safe to say she clearly isn't. I was a broker during "the housing bubble" but have been out of the industry for about 4 years. I have to admit though, when I read articles like this it really sticks in my crawl. Here's what happened and no one in the media or Washington will even touch the subject - all of these perfect and innocent banks created these loan products that all of us mortgage brokers "pushed". We sold and processed loans for people with as low as a 520 fico score and financed 100% LTV. Now most of these people never paid a bill in their entire lives but these banks were willing to take the risk because they had collateral. But now when the sh#t hit the fan and all of these dead-beats stopped paying their mortgage and forclosed suddenly they were the victims, both them and the banks. It's truly hilarious how the media and politicians spin this. The bottom line is the banks took the risk, the borrowers signed the dotted line and when they couldn't pay for the house they couldn't afford in the first place, they both got what they had coming. It's not the fault of a loan officer, we just do our job. Oh yeah and Mike down below, yes you are an idiot.
Big Banks run the show now, my only advise to consumers is this. Ask yourself do you want a loan officer handling your file that has not passed the NMLS test or do you want one that has. If your answer is you do go with a mortgage broker, a lot of the banks that mortgage brokers deal with cap there payment to like 1-2% unlike realtors who get to make 3% no matter what. Also mortgage brokers have their files pulled for inspection of fraud every 6 months, banks don't. Also the person sitting at the bank desk is not the one that will be handling your file they are basically there to say hi and take an application, other than that don't ask them any questions about your file because they will not know. Big Banks also don't have to show you what they make on there loans were as a mortgage broker does. So, If you want someone who will be out in the open and show you everything and get you a lower rate on your mortgage go with a mortgage broker, if you want to have fees hidden and higher interest rates go with a bank.
The BANKS have CLOSED down most of the "WHOLESALE LENDING" and the BANKS send out the RATE SHEETS listing the LOANS that can be offered. A NEW LICENSE really wasn't needed....Loan Originators only needed to have the BROKERS LICENSE and the "Level" of competence would have been where it should be.
But, it is the BANKS controlling and creating most of the Problem and, of course, they want the BUYER to walk into the BANK. They got rid of the Wholesale Lending but will they get rid of the SCAM Loans???
I don't think they really solved any Problem but swept an old problem under the Rug....
I've read some of the comments herein... and, I am currently a banker/loan officer (and have been for the last 9 years). To set the record straight, for those who apparently don't know.. Brokers and Bankers put a tremedous amount of time into every loan which they close AND some times don't close. The loan officer is the conductor of all the many processes, and checks and balances a loan must survive to come together for a given consumer. It's mostly on the fully-commissioned loan officer to get each loan closed. Each loan takes several hours of phone calls, not to mention about 20-40 hours of sales/origination/process/underwriting conditions/compliance/post-closing labor per file. So, the hourly wage may seem decent per-hour put in on a given loan; but, think again. All consumers are shopping around, and most loan officers I know spend more than half of every day interest-processing potential clients who may never begin to qualify, or make the decision to work with you... It's called application chasing and most loan officers are stuck doing it... We have to do this for free and we don't get paid until loans actually close.. So, ultimately, it's our fickle and unqualifiable consumer-base which drives up costs and creates a need for banks to push full commission jobs on their loan officers. Banks would end up paying way too much money in hourly wage, or salary, for all the interest that never closes a single loan. There are simply too many savy shoppers, and too many folks who can't qualify. It takes a long time to sift through all the BS to get loans out of just a few people. This is the truth, and why loan officers are generally paid commission. There are too many loan officers still left out there too.. To add, loans have many moving parts - it's not just a few phone calls and some faxes.. Not even close - it takes about 10 hours of work just to get a file in and looked at by an underwriter (and they are about 2nd base in the steps.. Loans are expensive for two reasons: they take a ton of time to process from start to finish; and loan officers also are FORCED to work with too many shoppers, and non-qualified people. Lastly, loans are expensive because there are 10-20 people who end up touching the loan file during it's life-cycle. Each person must have qualifications/licensing to sign-off on their task (so to speak).
your clueless to the real working man.. i hope you all go out of business..THIEVES!
what a hack job. this writer doesn't have the faintest clue what caused the mortgage meltdown. he's just regurgitating big banks pr propoganda, and furthering their agenda to do away with all independant mortgage professionals. With everything that has been unearthed the last few years on big banks and wall st, this moron has the gall to point the criminal finger at brokers? were there unsrupulous mortgage reps...absolutely, just like in every other profession. but wall st and big bank created, marketed, pushed, underwrote, and approved all the loans that came back to bite them...Mr. Brennan, I say to you sir....."take your head out of big banks a$$ and follow the money if you want to do some accurate reporting instead of being a shill and a stooge"
Independants maintain competitive balance in the market....do your homework and you will find many true professionals in the field with the consumers best interest at heart.....if big banks are successful in cornering the market, the days of fair pricing of mortgages will be gone forever
Wouldn't have an axe to grind Brennan would you? It's more than a little obvious. I am surprised you didn't picture the people in your line-up in prison stripes.
Regulation to protect the general public from any occupation out there that works for the public for a fee is a good idea, regardless of industry. Your not so subtle accusations targeting (those employed in) a whole industry is ludicrous and tantamount to a witch hunt due to an extremely low percentage of those in the profession that abused their position. And blaming those "salesmen/women" for pushing the products they were told to sell, to consumer's that would have done anything to be able to buy a house, is like blaming the car salesman when his customers new car blows a transmission a week later.
Your demeaning slant towards mortgage brokers (of which I am) is unwarranted and slanderous.
"Four years ago, the home-loan industry allowed anyone -- including criminals -- to broker mortgages as long as they coughed up a filing fee and took refuge under an employer's license."
This is a quote from your article-SLANDER- untrue information!!!!!!!
The above comment is ludicrous-I would think a writer from Forbes would do his homework and NOT slander any profession. This article has not been researched and does not contain facts! My opinion of the Forbes organization is ruined!
I have been a broker for 7 years. I passed an extensive test in 2004 and am tested every year. I was back ground checked by the state police, with ongoing checks that include 14 sets on random finger prints.
Not regulated, BS-Every 24 months I open ALL records including bank accts to the Office of financial Institution. My company is rated Extremly low risk based on independent audits.
Mr. Forbes, you may want to educate your columnists on printing slanderous articles, you may get audited also. May God bless.
Banks do not like mortgage brokers because beat their rates, their closing times, their appraisal quality(a drive by appraisal) and personal service.