When we hear that someone is applying for a mortgage these days, we get the details of the pain, the cost and the overall nightmare of the process. Months of paper pushing and phone calls and emails and waiting and then rejection! Even for the best borrowers- the chance of getting rejected for property or credit has become more common. 

In recent years, there has been very much a revamping of the mortgage lending industry, some good some bad. By May 31, 2010 all mortgage loan originators (that work at mortgage banker and broker companies only) have to be registered with The National Registry, take a 20 hour course and a national exam in order to continue working directly with mortgage borrowers. The class is only 20 hours, so truly only the basics can be covered. The exam is very difficult and has a rumored pass rate of 50%. On top of this the costs of this education and registration process can be upwards of $1,000 per person, and most companies will not pick up the cost for the individuals.

Mortgage industry insiders whisper that the prohibitive cost and grueling test are another method of eliminating the third party mortgage lender from the equation. Perhaps the big banks want all the mortgage business for themselves now that all of the loans moving forward are very clean. With third party mortgage providers (bankers and brokers) given such bad names, a greater number of mortgage applicants are going directly to banks for their mortgages. They think they will get a better deal as well as better service.

Well, I have always said that it does not matter where you go for a mortgage, the interest rate and costs should be very close. They only thing that matters is the service. So how has the service been at the big banks lately?

Not so good. Over the past month, I have taken in three new clients: two from Bank of America and one from Wells Fargo. One loan because, the bank could not figure out the building was a coop and not a condo, one because the underwriter could not calculate overtime salary properly and one because, the loan officer only knew how to put the borrower in an FHA product which would not approve the property. Each of these loans has been at the big banks for months.  By law, a lender must give a decision on the loan application within 30 days- typically approved or denied. However, these poor borrowers have been sending more paperwork to the inapt mortgage teams for months. Finally, after rate locks expired, appraisals expired and mortgage applicants got disgusted they all went to a mortgage broker!

A mortgage broker is a third party provider of a mortgage loan. The job of a mortgage loan officer is to provide education and service to their clients. A mortgage broker gets paid a commission only when a loan closes and is not on salary. This “weeding out” process of licensing and education of all mortgage loan officers should allow for a new level of service and education out there. Although it is forced upon the industry, this new level of transparency and higher education should allow the average mortgage applicant to go back to the hands of a competent professional rather than get lost in the system at a big bank only to be told the loan cannot be done.

Incidentally, mortgage loan officers who work at banks, savings and loans and credit unions are not required to take pre licensing education or have continuing education each year.  I always say, it is not where you get your loan from, but from whom. Ask your loan officer about their experience and education. If they have none, how much of an asset will they be to you!