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Old 08-20-2008, 08:42 AM
 
4,543 posts, read 11,549,619 times
Reputation: 3063

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I would say the brokers here are doing quite the bank bashing. Maybe it is just here in MN, but the only lenders known for any kind of 'bait and switch' are brokers. I have yet to see a broker GFE here in MN that have lower junk fees than the bankers. I beat broker offers for our customers 9 times out of 10.

I work in a retail bank branch as a correspondent mortgage lender and I 100% decide what the net on the loan will be. I can do a $400k mortgage that nets $1k in total income if I want. I can also do all loan types, not just the 720+ FICO 20% down borrowers that Dave mentions. One post mentioned that the 'bank reps often don't have experience and knowledge of the process...please. Again here in MN it is a coveted position to have an office in a high volume retail branch where you can just let hoards of customers come to you and hence these are held by solid experienced lenders.

I think RC says it best..."A broker could be greedy and chage 3-4% of a loan amount, so can a banker. A broker can throw in "junk fees" and hope the borrower doesn't notice, so can a banker." The reverse is also true...a banker might offer you the best deal, so might the broker. Therefore, both options should be explored.

Dave says his typical fee is "my typical fee is $4k-$8k". Assuming this is the income on the loan I can say my typical fee is $2k-$5k. So who is higher??
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Old 08-20-2008, 12:12 PM
 
Location: Cary, NC
1,036 posts, read 3,628,214 times
Reputation: 503
Quote:
Originally Posted by TimtheGuy View Post
I would say the brokers here are doing quite the bank bashing. Maybe it is just here in MN, but the only lenders known for any kind of 'bait and switch' are brokers. I have yet to see a broker GFE here in MN that have lower junk fees than the bankers. I beat broker offers for our customers 9 times out of 10.

I think RC says it best..."A broker could be greedy and chage 3-4% of a loan amount, so can a banker. A broker can throw in "junk fees" and hope the borrower doesn't notice, so can a banker." The reverse is also true...a banker might offer you the best deal, so might the broker. Therefore, both options should be explored.

Exactly, I do both (bank and broker) so I bash both sides equally. There is no inherent "goodness" with a bank, credit union or broker. They are all made up of people and depening on the PERSON you work with the advice and fees will vary. Saying "banks are better" if you are in category X or "brokers can help you" if you fall under Y is all false perception.

I have seen both bait and switch their clients, lie, cheat, steal and commit fraud. They are both trying to sell a service and make a profit. Its about finding the right person by asking for referrals, interviewing them to gauge their education and experience and asking for referrences when necessary.


Quote:
Originally Posted by TimtheGuy View Post
Dave says his typical fee is "my typical fee is $4k-$8k". Assuming this is the income on the loan I can say my typical fee is $2k-$5k. So who is higher??

Defending dave... he works in an area with higher average home prices than Tim or I. If his average transaction is $1 million or he is dealing with difficult, niche scenarios his fees could be "cheap" for the services you provide. Its the same when people come on here and ask if 6.5% is too high a rate... how are we supposed to know, it depends on a lot of factors and without a full review of the situation its guesswork and assumptions.

Depending on loan amount and advice/service given those fees can be justified and may be less than the competition. It all depends on your local market, price range and specific situation. I have done a few small loans where I am lucky to make $750. Considering the amount of work, expenses and taxes it isn't much profit... but it's the right thing to do to help clients.

Last edited by rcarrillo; 08-20-2008 at 12:23 PM..
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Old 08-20-2008, 01:04 PM
 
Location: Fort Myers, FL
1,286 posts, read 2,595,258 times
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Quote:
Originally Posted by rcarrillo View Post
Defending dave... he works in an area with higher average home prices than Tim or I. If his average transaction is $1 million or he is dealing with difficult, niche scenarios his fees could be "cheap" for the services you provide. Its the same when people come on here and ask if 6.5% is too high a rate... how are we supposed to know, it depends on a lot of factors and without a full review of the situation its guesswork and assumptions.
Thank You, I appreciate that. And you are correct. My clients loan amounts here are typically a $500k plus, but not always. I also still do a substantial amount of work for clients in Michigan, because I am from there. Those loan amounts are usually half that. And being from a town with a large family, its usually a long time friend of the family. It was a town full of farms 60-70 years ago. Now its all developed. But I do give friends and family discounts and unless its a cashout-refi i usually credit back to help with closing costs and I would say my Michigan usually run $2-5k.

Perhaps I should have just said my fee is 1-1.5%. I feel that this is a very competitive rate. Especially when you see how FHA pays 3-3.5% I think it is? And if you have been in the business a while then you know what we used to be able to charge back in the 80's. I use a combination of ways to receive my fee. I am always up front about what I will make with the client. I explain to them the different ways I can charge for it. There are those few people who think the "no cost" loan is everything. Even when they are getting cash-out. And that is fine they understand the rate will be slightly higher.

Last edited by brokerdave; 08-20-2008 at 01:16 PM..
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Old 08-20-2008, 01:33 PM
 
4,543 posts, read 11,549,619 times
Reputation: 3063
Quote:
Originally Posted by brokerdave View Post
Thank You, I appreciate that. And you are correct. My clients loan amounts here are typically a $500k plus, but not always. I also still do a substantial amount of work for clients in Michigan, because I am from there. Those loan amounts are usually half that. And being from a town with a large family, its usually a long time friend of the family. It was a town full of farms 60-70 years ago. Now its all developed. But I do give friends and family discounts and unless its a cashout-refi i usually credit back to help with closing costs and I would say my Michigan usually run $2-5k.

Perhaps I should have just said my fee is 1-1.5%. I feel that this is a very competitive rate. Especially when you see how FHA pays 3-3.5% I think it is? And if you have been in the business a while then you know what we used to be able to charge back in the 80's. I use a combination of ways to receive my fee. I am always up front about what I will make with the client. I explain to them the different ways I can charge for it. There are those few people who think the "no cost" loan is everything. Even when they are getting cash-out. And that is fine they understand the rate will be slightly higher.
It sounds like we are on the same page at 1%-1.5% (1.25-2.0% on gov't)
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Old 08-20-2008, 01:36 PM
 
Location: Cary, NC
1,036 posts, read 3,628,214 times
Reputation: 503
Quote:
Originally Posted by brokerdave View Post
Thank You, I appreciate that. And you are correct. My clients loan amounts here are typically a $500k plus, but not always. I also still do a substantial amount of work for clients in Michigan, because I am from there. Those loan amounts are usually half that. And being from a town with a large family, its usually a long time friend of the family. It was a town full of farms 60-70 years ago. Now its all developed. But I do give friends and family discounts and unless its a cashout-refi i usually credit back to help with closing costs and I would say my Michigan usually run $2-5k.

I am from South FL (moved away in 1999, pre-boom) and I do hold a license there to help family/friends same as you. Im in NC now, my average price range is the $250-300,000 zone. I still do plenty of loans in the $90-150,000 range as well where a $4000 fee would be a predatory and unethical. Still, I have seen loan offciers that charge the maximum 5% allowed every single time even on a simple transaction.


Quote:
Originally Posted by brokerdave View Post
Perhaps I should have just said my fee is 1-1.5%. I feel that this is a very competitive rate. Especially when you see how FHA pays 3-3.5% I think it is? And if you have been in the business a while then you know what we used to be able to charge back in the 80's. I use a combination of ways to receive my fee. I am always up front about what I will make with the client. I explain to them the different ways I can charge for it. There are those few people who think the "no cost" loan is everything. Even when they are getting cash-out. And that is fine they understand the rate will be slightly higher.

That's why I said I wasn't being mean in the other post. Just try not to sound like its "boasting" about how much you know, the $ amount you make or how its "earned". It sure might be and if you are upfront and honest with clients and they agree to pay, there is nothing wrong with it but it still sounds bad.

I can find cheap insurance, legal advice, tax services or others... but sometimes its worth paying more for an expert as long as they disclose the fees, explain why they are charing them and provide real value in exchange. The same is true for us, consumers have options and should be explained what the real cost is to a "no cost" mortgage. If they like that, then fine... but they should be presented with the options of "no cost", "no broker/bank fees" (YSP/SRP only compensation) and "borrower paid compensation" (par pricing).

There are pros and cons to each and that is where a mortgage professional can sit down and discuss options. Its about finding the right product at the best cost for the client, not about running credit and spitting back a % rate.
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Old 08-20-2008, 03:03 PM
 
Location: Spring Hill, Florida
58 posts, read 183,182 times
Reputation: 18
Default broker v. banker fee

A guy came to me for a loan and said a bank would give him a "no-fee" loan and could I match that. Interest rate 6.625. Guy's got a 750; so I say yes and get a par from a lender of 6.125 and put 6.625 on the back. He sees the GFE and says he heard the farther apart the interest rate and the APR is the worse the loan is. He wants me to change the interest rate to 6.625 so they match. That's right, sports fans, he did not ask me to change the APR to 6.125 he asked me---nicely--- to PLEASE change the interest rate from 6.125 to 6.625. What would you do? Anybody.

Keith G.
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Old 08-20-2008, 03:32 PM
 
Location: Fort Myers, FL
1,286 posts, read 2,595,258 times
Reputation: 249
I would explain the pros and cons of each way. Find out what his short term and long term goals are. Is he buying a home to start a family with his wife? Does he plan to move in a few years or stay there for a long period of time? Is he self-employed? Does he want to have a more affordable payment or does he want to pay the home off sooner?
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Old 08-20-2008, 04:37 PM
 
Location: Spring Hill, Florida
58 posts, read 183,182 times
Reputation: 18
Default Broker v Banker

brokerdave

He's in the Army moving from another State but has a lot of family here so I figure on referrals. I'm a Realtor and mortgage broker so I'm getting both commissions and so I don't want to be greedy and I want referrals; so I figure if I'm straight up with him he'll understand that and throw some more business my way. I mean, he should understand that I'm giving him a rate that the banker can't---won't---and just making a little---about 11/2 points---on the back-end. Of course, I could still move from par to say 6.275 or ? and make some more from the lender but ... I don't really know what my conscience is up to? Know what I mean?

Keith G
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Old 08-20-2008, 05:06 PM
 
Location: Fort Myers, FL
1,286 posts, read 2,595,258 times
Reputation: 249
People always promise referrals but rarely come through on them. I hope that works out for you, though. Its not that they have bad intentions, its most people don't talk to other people when they do financing, even family. I'm going to send you a PM, may help you really build referrals though him when other people see what you can do for them.
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Old 08-20-2008, 05:59 PM
 
Location: Spring Hill, Florida
58 posts, read 183,182 times
Reputation: 18
brokerdave,

Got that man and I'll pass it on, a great story, if only we were all capable of a similar story it would be a much more peaceful world---we'd be too busy.

Keith G.
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