In the first four parts of this series, I provided some background info on what happens with most mortgages after the close of escrow as well as some of the different types of lenders available to consumers and the advantages and disadvantages of those types of lenders.
In Part 5, I want to explain how not all Mortgage Loan Originators (MLO) are the same. At this time, I would like to explain how to choose a Mortgage Loan Originator that is going to be able to serve your individual mortgage needs.
I recently came across a couple of posts, one by Susan Grant titled Getting Ready to Meet with a Lender; What Questions Should You Ask? and 8 Questions Your Phoenix Mortgage Lender Should Be Able To Answer About Mortgage Rates by David Krushinsky. While these are all really great questions to ask an MLO, I personally think it's just a starting point and there is much more you need to know about your MLO before deciding to work with them.
The following are just a few more questions you need to add to you list of questions you should be asking an MLO before deciding to work with them.
1. Are you a licensed MLO? - In today's world of Secure and Fair Enforcement (SAFE) Act and National Mortgage Licensing System (NMLS) requirements, it is absolutely vital that you find out if the MLO you're thinking of working with is a licensed MLO.
NMLS licensed MLO's must submit to federal and state testing in order to measure their education, knowledge and experience in the mortgage industry. They also must adhere to annual continuing education in order to continue originating loans.
Furthermore, licensed MLO's must be subjected to FBI background checks, they must be finger printed and they also must agree to personal credit checks. Lastly, there is a national complaint mechanism for reporting unethical and/or illegal activities on licensed MLO's. The MLO's that work for big, national, retail banks don't have to be licensed in accordance to the SAFE Act or the NMLS and do not have to adhere to any of these standards.
2. What types of borrowers & loan products do you specialize in? - This is especially important to know because so many MLO's don't do certain kinds of loans or they just recently started doing a particular kind of loan. For example, up until recently, many MLO's had never originated an FHA loan before. With the popularity of FHA loans now, many MLO's are just now starting to do a few FHA loans. If you are an FHA buyer, you may want to work with someone who is very experienced with FHA loan products and has been doing them for years.
Same goes for other specific niche products like FHA 203k loans, USDA loans, VA loans, down payment assistance (dpa) programs, etc. If you are a borrower who needs one of these types of loans, you want to work with someone who has years of experience of working with these loans and not someone who has either never done one or is still "learning" how to do these loans.
3. Why do I need to get pre-approved with other lenders if I'm pre-approved with you? - Unfortunately, this is a reality of the market here in Los Angeles and Ventura counties. Listing agents will tell you that it is to insure that you are qualified to actually purchase the property but rest assured, that is not their objective in having you pre-approve with their own preferred lender.
Many REO listing agents and their seller banks are using this process of requiring prospective buyers to pre-approve with their in-house reps in order to try and capture new, qualified and pre-approved borrowers and new loans.
However, having an experienced MLO who can manage this process for you by working with the listing agents preferred rep to provide the necessary information can sometimes not only save you the time and energy of having to get pre-approved over and over and over again but it can also maybe prevent any additional inquiries on your credit report. For some buyers who spend months searching for a property, having several inquiries over a period of several months can sometimes take a toll on a buyer's credit scores.
This is just a few more questions that you need to know about your MLO before you decide to work with them. Hopefully, you have enjoyed this series and I promise that it is almost over. Please stay tuned for Part Six, the last of the series.
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 1
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 2
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 3
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 4
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 6
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Donne Knudsen
Realtor® - CalState Realty Services
DRE#: 01364050 / NMLS#: 249822
805.2069123
Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance
Los Angeles County -- Ventura County
© 2010 - All Rights Reserved
Ah yes, the old bait and switch. As always, Donne an educational post.
I was really surprised at how many LOs are not licensed. I like to talk to as many as possible and get to know them. To me it makes for a better transaction to know your LOs and be able to match people according to their personality.
The number of licensed LOs is very small in Georgia, many did not make the cut. Not due to lack of ability, but poor credit (I do not know how a mortgage professional might have bad credit in the worst housing market in 30 years, sarcasm in full effect). Nonetheless, it's good to know who you are dealing with.
And the "incentives" being offered by these REO banks to use them to secure financing MAKES ME WANT TO PUKE!
Donne-A lot we'll said. I'll go to the bottom of the post first. I hate and despise that I need to have my buyer pre-approve, but not obligated to, a lender of the choice. And the sad thing, if a foreclosure for a bank it is NOT THE SAME BANK ASKING. And they offer the moon. Most only give a pre-QUAL not APPROVE.
As to the ability for the MLO's to do all things. All things are not for everyone. Especially VA and DPA's.
Great post, suggested.
Jane - It's hard to believe that nonsense is still going on but it is.
Janet - Most MLO's these days have to be licensed. The only ones that don't are the bank reps that work for large, national, retail banks and credit unions. Makes me wonder is those MLO's you're talking with are those types of lenders.
Jenna - I have not yet known any MLO's here in CA who could not get licensed because of their credit report. However, what I am seeing are good MLO's who not only already passed their tests and gone through the whole rigmarole decide afterwards that it's just not worth it anymore to stay in this business. It's just become too extremely difficult to serve our clients and close our escrows every single month and still not make a decent living. Myself included.
While I am still originating and serving my clients mortgage needs and closing their escrows every single month, I thank God that I have other options if I ever decide to leave this business. Quite frankly, if it gets much worse, I just may have to exercise one or more of those other options.
Ken - Thx for the support; I really appreciate it. As you know, our market here in Los Angeles and Ventura counties is a really tough market and not for woosies. You have to be really tough and good to survive here.
Thx for stopping by everyone; I really appreciate it. Have a good day and a wonderful week. :)
LOVE the series Donne! I would love to include this on my outside WP and will notify you when it is ready so I can get permission to RSS from my AR blog :)
Renee - I'm glad you like the series and of course please feel free to include in your outside blog.
Donne, first of all BRAVO! I read the whole series and have to say it is one of the BEST articles that explains everything I wish all of my clients would understand about the differences in lenders and how it works. I will definately re-blog this. Thank you!
Thank you for the emphasis on MLO's who have gone through the extra effort to achieve a mortgage license through the S.A.F.E. Act.
Chrystina - I'm glad you liked the series; I appreciate that. I wrote this after reading another post here on AR that really did a disservice to any lender that wasn't some big, national, retail bank. It was then that I realized that the public needed a lot more information in order to make an educated decision on what type of lender is best for their own personal mortgage needs. This is another reason why I emphasized that bank reps are not licensed and other MLO's are.
I noticed that I forgot to put the link to part six. So I invite you to check out that post too.
CHOOSING YOUR LENDER: How Do You Know Which Lender is Right for YOU! - Part 6
Yes, choosing the right lender is important.
Use an agent who has a network of lenders/banks with loan programs that allow the seller to carry the note. You want a specialists who understands what your needs are and has the ability to get it for you.
Check our backyardwealth.com/longbeach where you can find that specialist and those loan programs.
Denise - Thx for the link. I will certainly be checking it out.