Why choose a mortgage planner?
Two out of three Americans do. Mortgage Planners provide consumers with:
Choice
Convenience
Expertise
The consumer receives an expert mentor through the complex mortgage lending process. The mortgage planner offers the consumer extensive choices and access to affordable home loans while balancing the consumer's financial interests and goals.
Have more Americans been able to buy homes because of mortgage planner?
Yes! Mortgage planners have pioneered the subprime credit market, using innovative loan packages to allow low-to moderate-income borrowers, with less than perfect credit histories, to start enjoying the benefits of home-ownership. Many low income borrowers with less than perfect credit histories would not have been able to purchase their dream home without the assistance and dedication of a mortgage broker.
Are mortgage planners lenders or bankers?
Neither. A planner is a real estate financing professional acting as an independent contractor. The range of products and services offered through mortgage planners is evolving rapidly. There are circumstances when mortgage planners may act as bankers, funding their loans. However, the majority perform origination services up to the point of funding.
Does the mortgage planner really care about the quality of the loan itself?
Yes, absolutely. The safety and soundness of the mortgage lending community is directly linked to the success and integrity of its home loan originations. Furthermore, mortgage planners represent the single largest residential origination source today, emphasizing that they play a significant role in the mortgage loan process. These numbers highlight the fact that consumers who exercise their choice, choose mortgage planners; most likely because mortgage planners are dedicated to their customers: consumers, wholesale lenders, and ultimately, American taxpayers.
Should mortgage planners be regulated?
Mortgage planners are regulated by several federal laws and regulations and dozens of state laws and licensing boards. NAMB supports reasonable and fair state and federal regulation of mortgage planners and lenders. The industry is regulated by 17 federal laws and numerous state and federal regulations.
What role does the mortgage planner pay versus the wholesale lender?
The wholesale lender underwrites and funds the home loan, may service the loan payments, and ensure the loans' compliance with underwriting guidelines. The mortgage planner, on the other hand, originates the loan. A detailed application process, financial and credit worthiness investigation, and extensive disclosure requirements must be completed in order for a wholesale lender to evaluate a consumer's home loan request. The mortgage planner simplifies this process for the borrower and the wholesale lender, by conducting this research, counseling consumers on their loan package choices, and enabling them to select the right loan for their home buying needs.
The mortgage loan process can be arduous, costly, and seemingly impossible to the consumer. The mortgage planner works as the liaison between the borrower and the lender to create a cost effective and efficient loan process.
Do mortgage planners work for the wholesale lender or the consumer?
Neither. As an independent contractor, the mortgage planner allows wholesaler lenders to cut origination costs by providing such services as preparing the borrower's loan package, loan application, funding process, and counseling the borrower. Mortgaqge Planners help keep loan rates low due to their minimal overhead and setup costs. Furthermore, the mortgage planner will seek the loan which best suits the borrower's financial circumstances, needs and goals. From the consumer perspective, with rare exception, the mortgage planner does not get paid unless and until the loan closes. Thus, the broker has the ultimate incentive to provide the best possible customer service to the consumer.
Isn't the mortgaqge planner supposed to get the best deal for the consumer?
Since mortgage planners offer the products of many wholesale lenders they often can offer consumers a wider selection of loan products. This question presumes that anyone can know what is "the best deal." While many would consider "the best deal" to mean "the lowest rate," a loan program with a very low interest rate may not be the best choice for a consumer with limited cash, if that rate comes with high points and fees. A 15-year loan may save a borrower tens of thousands of dollars in interest payments of a 30-year loan, but the higher monthly payments may be acceptable to the consumer. So, "the best deal" for any consumer depends on his financial circumstances, needs and goals.
Today consumers are choosing the superior options, service, and expertise offered by mortgage planners. Mortgage Planners have forced retail lenders to compete with other loan sources driving down costs nationwide.
Don't mortgage planners "steer" consumers to the wholesale lender who pays the highest fees to the mortgage planner?
While isolated instances of adverse steering can occur, the mortgage brokerage industry has predominantly armed consumers with a free-market economy weapon: open and vigorous competition. Any consumer exercising his or her basic right to shop and compare, will ultimately find the loan options that are in his best interests. The combination of government-mandated disclosures and vigorous competition has presented today's consumer with unprecedented levels of choice. While price is an important consideration in advocating a specific wholesale lender, mortgage planners also make their professional recommendations based on a number of other factors which include the lender's:
- reputation for service
- underwriting criteria
- ability to fund a loan on time
- compliance with consumer's requirements
Why do mortgage planners collect fees from both the consumer and the lender? Isn't this a conflict of interest or a duplication of charges prohibited by RESPA?
RESPA allows fees to be charged between settlement service providers, as long as those fees are reasonable for services, goods, or facilities actually provided. Mortgage planners provide the same services to consumers as do retail loan offices that typically charge the consumer an origination fee. These services include: taking the application, obtaining the credit report and appraisal, counseling the consumer on the loan process, and collecting the necessary documents. Mortgage planners also provide separate and distinct services and facilities to wholesale lenders. These include marketing the lender's products and assembling and delivering the completed loan package.
In addition, lenders may pay mortgage planners a premium -- "yield spread premium" or "service release premium" -- which may include compensation for the services and facilities, but also represents payment for the intrinsic market value of the closed loan. All of these are legal compensation. It is important to remember that regardless of which party compensates the mortgage planner (lender or consumer), in almost all cases the mortgage planner receives nothing until the loan closes