Brokers, Banks & Loan Officers: Where Should You Get Your Home Loan?
When shopping around for a mortgage, it can be a little daunting since there are so many different titles of people that can help you get that house loan and so many different places to go.
You might see such titles as senior mortgage loan officer, senior residential lender, loan originator, mortgage planner, home mortgage consultant, mortgage broker, and banker.
There is also a big list of the different institutions that can help you get a mortgage including thrift institutions, banks, mortgage companies, and credit unions, according to the Federal Trade Commission (FTC), the nation’s consumer protection agency.
It can all be a little confusing, especially for first-time home buyers.
The difference between banks & brokers
While the largest number of loans are originated by the main depository banking institutions (Bank of America, Wells Fargo, Chase, credit unions, etc.), a continually growing amount of loans originated are completed by retail mortgage bankers and mortgage brokers.
“Mortgage bankers have their own funds, and actually underwrite and fund a loan,” said Marge Nogosek, sales manager at American Pacific Mortgage in San Jose, CA. “They hold on to the loan and then sell it in the secondary market after the closing.”
American Pacific Mortgage is a mortgage banker but also can broker for their clients – giving them many options of finding the best loan for their client’s particular scenario.
Mortgage brokers actually have access to many lenders and help arrange transactions rather than lending money directly, the FTC says. And mortgage brokers hold a license and have education requirements.
Senior loan consultant Michele Reen, who works with Nogosek, has been in the mortgage industry for 23 years while Nogosek has been working for 38 years. They have seen every type of housing market imaginable. But through it all, they believe people should pick a mortgage professional by reputation and references. You also have to feel comfortable with that person since you will be working with them closely and giving out a lot of personal information about yourself.
“We both believe it’s important to sit down with your client in person or through a conference call, if possible, to walk through the process,” Reen says. “You need to know what is important to them, and what their short and long-term goals are.”
Plus, Reen and Nogosek’s philosophy is to be with the client the entire way through the process. In fact, they attend the closings of their clients, which they are not obligated to do.
“We are at the title companies to see them sign their final loan paperwork. They often tell us that they don’t see lenders very often,” Reen says. “To us, being there is important. That’s another touch of being a part of the whole process. We hope to be their mortgage loan originator for life.”
Another step in finding the right person to help you get a loan is by clicking onto the National Mortgage Licensing System & Registry (NMLS). It is a free service for consumers to find out if the financial-services company or professional is authorized to conduct business in their state. The site also lets you see how long a loan officer has been in the industry and with what companies, plus if he/she has been the subject of any state disciplinary proceedings.
But some mortgage lenders are regulated at the federal level, and many times have federal in their name. They can be verified at helpwithmybank.gov. Credit unions regulated by the federal government can be verified through the National Credit Union Administration.
Mortgage safeguard: Required education for loan officers
But what kind of education or background does your lender have to have?
“Each state has different licensing requirements for a loan originator,” Nogosek says. “Some states have a requirement of 20 hours of education. Some license without any education. There’s a wide spectrum of requirements.”
To get a mortgage broker license, it takes at least two years of experience in the business and six college courses in finance and other appropriate classes. You then have to take a state test. To renew that license, you need to take 45 hours of continuing education every four years, and an additional eight hours a year to keep your NMLS license.
A loan officer at a depository bank (such as Bank of America, Wells Fargo, credit unions, etc.) is required to register with the NMLS as an originator. However, one isn’t required to obtain a license or take any continuing education, Reen says. There might be a regulatory change coming in that area.
“Banks have different auditing systems under the FDIC (Federal Deposit Insurance Corporation.) They have different rules and guidelines of what they require,” Nogosek says.
At end the day, real experience and compassion for the client are the keys of a great mortgage professional, Reen says.
The good thing is there are lots of choices available. Consumers should explore their options to find the right mortgage professional for them.