How to Choose the Right Lender

An insider's perspective provided by Mike Miller of Monarch Mortgage.

Last week I saw a restaurant review on a local blog that touted “The New York Times says  . . .” and I thought, wait a minute, the Times didn’t “say” anything, somebody that works for the Times did!  One person, one opinion, not the entire staff and their collective opinion, but one individual.  Invoking the mighty Times just because the reviewer works for the NY Times, transfers the credibility and credentials of the institution to the individual and turns an individual opinion into a powerful endorsement.

The mortgage lending business is hyper-competitive and mortgage originators come in all forms of education, training, experience and affiliation. With 25 years in the trenches, an undergraduate finance degree from a reputable university, countless hours of training and continuous education, and the trust and goodwill I have built with the many sources that refer their clients to me, you would think my capture rate would be bullet proof.  Not even close! I have lost business to mortgage people with less experience, less training and less education, simply because they work for lenders with household names.  A prospective client will tell me that they have “talked to” Wells Fargo or NFCU or TowneBank or whoever, and they have adamant and unwavering faith in the information they received.

When I hear “Wells Fargo told me” or “Chase told me” or “(lender name here) told me,” I recognize that I am competing with the institution and not the rep or employee of the institution that the borrower actually spoke with.  I am thrust into a mortgage contest with the Great and Powerful Wizard of Oz with the booming voice and the pyrotechnics, not the little man behind the curtain.  And it is the little man behind the curtain that is quoting terms and offering up the advantages of working with the “biggest” and most “amazingest” mortgage lender on the planet!


In the past I have proposed that the person spoken to was merely a representative of the institution, not the institution itself, often to no avail. Credentials are not a prerequisite for assessing expertise or even competence when consumers shop for a mortgage lender. Name recognition is a big deal. Transferring the credibility and credentials of the institution to the individual gives consumers a sense of comfort and security that eases the requisite leap of faith when choosing a mortgage lender.

Here is where I share an industry secret, are you ready?  Mortgage people are salespeople.  First and foremost, the primary goal of a mortgage originator/loan officer is to convince you to apply for your mortgage with them.  Financial acumen is helpful but not required; the best salespeople are the biggest producers in the mortgage industry.  Consumers looking for the most skilled financial mortgage expert often choose the best salesperson; expertise and wherewithal vary along a greatly disparate continuum.

Mortgage originators are fond of titles, so choosing a lender based on how remarkable the rep’s title is may be perilous.  Starting with Loan Officer and of course Senior Loan Officer, I have seen; Advisor, Consultant, Planner and the more impressive senior versions of these. Add in initials based on graduate education (MBA) or related field licensing (CPA) and title crowning can become quite prestigious. Although I have to admit that I have always been impressed with the CPA moniker on one of my colleagues business card. He is a very senior, highly respected loan originator and manager that I have worked with for many years and he is in fact a CPA, which garners lots of respect from his clients and appropriate deference from his peers, me included.  Initials as part of a title speak to credentials and expertise, originators with initials should go on your short list.


Even so, titles may not be the best starting point when selecting a mortgage originator, remember, even the Great and Powerful Wizard of Oz is really just a guy behind a curtain.


In 2003, I was a Loan Officer with Towne Mortgage in Virginia Beach, and the great Jackie Amato (legendary mortgage management hard nose), was upper management.  I knocked on her door one day and asked her what the requirements were for me to become a Senior Loan Officer.  She looked up at me, asked how long I had been there and when I said two years, she smiled and said “congratulations, you’re a Senior Loan Officer!”  And that was that, I had new business cards within a week.  No test, no additional training, no scorecard, just presto! Senior Loan Officer. Beware the fancy title!


Nowadays, just about every real estate office has an “in-house” lender with an originator right there in the office. Convenient and accessible, this must be the right answer; why else would the lender have such coveted positioning?  In-house reps exist because there is a mutually beneficial financial relationship, the lender has unrestricted access to agents and buyers, and the real estate company is compensated by the lender.  Marketing Services Agreements (MSA), Joint Ventures, Desk Rentals and whatever other form these relationships take, may seem counter to RESPA (Real Estate Settlement and Procedures Act), rules governing  compensation for real estate referrals, but they are industry norms. That being said, an in-house rep can be a great choice, but again, “expertise and wherewithal vary along a greatly disparate continuum.”


The web has exploded with “discount” mortgage financing options offering fantastic terms and lightning fast closings.  The idea being that the absence of “brick and mortar” costs associated with traditional lenders, allows for discounted, below market rates.  Sounds great but not true. The largest online lender has over 8,000 employees manning phones and populating cubicles in office buildings, getting loans closed.  Brick and mortar costs are part of their income statement.  Online financing is popular with tech savvy consumers and can be a convenient alternative to traditional lending sources. Significant interest rate discounts offered by online financing sources are advertisements, like everything else, if it sounds too good to be true, it is.


And what about all of those local or regional mortgage companies with names that are not so well known, the “correspondent” mortgage lenders (like Monarch Mortgage)?  Correspondent lenders employ their own processing, underwriting and closing staff, and use warehouse lines to fund loans.  They specialize in residential mortgages, they tend to have more entrepreneurial cultures and originators are generally independent and experienced.  But just like the big banks, the in-house lenders and the World Wide Web reps, “expertise and wherewithal vary along a greatly disparate continuum.”


So just how is a consumer supposed to choose a mortgage lender?  What should the decision tree look like?


Start by asking someone close in your universe that has recently gotten a mortgage, see if they can recommend their lender.  Ask a financial adviser, an accountant, your attorney or your realtor to help you with a short list of lender referrals.  These people deal with mortgage lenders regularly and can help you filter that continuum with the greatly disparate expertise and wherewithal and add real confidence to your decision.


Search the internet and thoroughly investigate offerings for details. Advertising is shiny, so squint through the glare and find out about fees, lock-in periods, points and qualification requirements for what is being featured.


Remember that the port of entry with every lender you consider is a salesperson, everyone you talk to will sound like the best deal.  Take notes, ask for things like Good Faith Estimates (GFE) and Truth-In-Lending (TIL) statements to be e-mailed or faxed to you.  The mortgage lending industry is electronic, everything is available to you in writing instantly.


At the end of the day, your mortgage loan will be originated, processed, approved and closed by people, software and institutions will be the platforms that allow individuals to do their jobs, but you are choosing people to help with the single biggest financial decision most people will make. Beware the man behind the curtain, but if trust in your lender’s rep is the result of your vetting process, chances are you have chosen well.

Mike Miller
VP Branch Manager
NMLSR # 119190
Monarch Mortgage | 300 32nd Street, Suite 200 | Virginia Beach, VA 23451
Office : 757-390-2240 | Fax : 757-452-4835 |

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