Should you pick a (a) bank, (b) non-depository lending correspondent (direct lender), or (c) mortgage broker to secure mortgage financing when you purchase your new home?
The answer is (d) all of the above if you want to shop for a mortgage.
The mortgage lending industry has been, for all practical purposes, nationalized at this point in time. Massive regulatory efforts like the Dodd-Frank Act were enacted to "prevent consumers from 'abusive' practices" regarding loan originator compensation, In practice, this Act actually penalizes the SMART consumers and buttresses the profits of the banking cartel. One of the most anti-competition regulations just took effect and you, the smart consumer, can get really rooked; I'm going to show you how to beat these guys at their own game.
The Federal Reserve Bank (the Fed) , under the authority given it through the Dodd-Frank Act, specifically outllawed the ability of a consumer to negotiate individually with a loan originator. The Fed demands that all borrowers be treated equally, by each loan originator (regardless whether he works for a bank. lender, or brokerage), when that originator charges for his or her services.
Sounds fair, doesn't it? I mean, everyone wants to be treated equally, right?
Except, lending terms, like life, isn't supposed to be about equality of outcome. Each borrower is unique, with her own set of strengths and challenges. Those can present certain risks to lenders (and loan originators). If you are a well-heeled borrower, meaning you manage your credit well, have ample income to service the mortgage payment, and have saved a healthy down payment, you have been lumped into the same category as the sketchy-paying, pie-in-the-sky dreamer, who wants to buy the biggest house for the least amount down, regardless of his financial status.
Stated differently, we could offer flinty, prudent, educated consumers, a discount, for being well-prepared for the loan process, prior to April 1, 2011. Today, we have to charge you as much as the haphazard loan applicant. In a sense, you are being penalized for your hard work and dliigence.
I'll show you how to get around that by employing a process I call the shotgun application. I'll catch some heat for letting you in on this secret. This is a real estate industry website, which allows comments from lenders. They will hate that I'm telling you how to negotiate, by pitting the banks, direct lenders, and mortgage brokers against one another, so that YOU get smokin' mortgage terms. Watch how they act in the comments section below.
The real estate agents may go so far as to suggest that you should use only a lender whom they know , or that you should only use one of the government-subsidized banks ( the ones the taxpayers had to bail out because they couldn't manage risk). Ask yourself why they give such advice.
This game has been rigged against you, by the Federal Reserve Bank, at the behest of the bailed-out-by-the-taxpayers banking cartel. The Fed regulation which prohibits you from negotiating with the loan originator was designed to penalize the more nimble loan correspondents and mortgage brokers BUT...
...as with all government regulation, it's filled with loopholes. I'll show you those loopholes, so that you can play the game by your rules , and win.
I expect this series to be about 4-5 articles so keep checking back. I'll provide links to each article at the bottom of the page.