Dennis' Mortgage Blog

In the current market with seemingly daily notifications of products being changed or pulled off the market, lenders leaving the market or not taking applications, lenders raising rates on non-conforming products dramatically and other surprises I am extremely glad to be a mortgage broker and not a direct lender.  Why? Because we still have the products and the sources for the overwhelming majority of our clients.

One national lender decides to hike their wholesale rates to mortgage brokers for non-conforming loans putting them about one percent above their competition? Not a problem, we still have multiple sources at lower rates.  Another national lender decides to stop accepting applications from brokers for equity lines and second trust deeds? Not a problem, we still have multiple sources for similar or better products.  A major lender's CEO decides to say on a conference call that the market is negative and raises concerns that contribute to the misinformation being disseminated hurting existing homeowners and prospective homeowners? No problem we do not reward his company with mortgages rather we direct them to his competitors who are reliable partners and working with us to help our clients.

As a broker I have the ability to be flexible.  The current liquidity crisis in the market affects perhaps 10-15% of our company's traditional client base.  What is happening is the number of options we have available may be shrinking but we still have plenty of options at competitive prices.  Historically we have had up to ten or fifteen sources for approximately seventy percent of our clients--A+ borrowers looking for fixed rate mortgages.  For approximately twenty to twenty five percent of our borrowers we have had up to four or five different sources--combination of minor difficulties with stating income, lower FICOs, lower down payment.  And for less than ten percent of our clients perhaps two or three sources--true sub-prime clients with large credit challenges.

In the current market for about twenty percent of our clients we have one or two sources, for about another twenty percent perhaps four or five sources and for the remaining sixty percent or so we have about six or seven sources depending on the day and who is competitive.  Direct lenders have one source for all their clients and if they do not match the changing and tightening criteria of many products those clients are out of luck and will be shopping for an honest and trustworthy broker to assist them.

As in any market when supply is reduced and demand stays constant prices will rise, conversely if demand drops and supply is constant prices drop.  Depending on the product and client financial capabilities we are straddling both markets.  As a broker I can evaluate a client's abilities and needs and match them to available mortgage products and rates and prices to assist them in choosing, most of the time, from different financing options.

An array of options allows consumers the best opportunity to enter into the mortgage solution that best fits their financial capabilities and family objectives.  A mortgage broker, like me, can provide more options than a direct lender.  Especially in a changing market like the one we are currently in.

It is good to be a broker, it is better to have a broker when looking for a mortgage.  Call me.

Dennis

 Tuesday, August 07, 2007