What are lenders doing well? And not so well?

by Ryan Smith26 Aug 2014
Lenders like to tout their wide product range, their lightning-fast turnaround times, their cutting-edge technology. But what really matters to brokers? MPA asked originators to give their honest feedback on what they look for in a lender – and the response was overwhelming. In our upcoming issue, we'll share what you liked -- and didn't like -- about your lenders.

In the meantime, we chatted with two prominent originators about what they think most lenders do well – and not so well.

“They all have their niches, and they’re not all good at the same things,” says Jodie Tanga, loan originator and director of business development for Pacific Rim Mortgage. “That’s why different originators will be attracted to different lenders.”

Still, most brokers are looking for a few basic things when they consider new lenders. Unsurprisingly, most brokers consider pricing and product mix to be vital factors when considering lenders. They’re also concerned with service, communication and compliance support.

Service and communication

Product and pricing may be the No. 1 concern of most originators, but Marc Savitt says he’s more concerned with the service he gets from a lender.

“The very first thing I look at is service, because most wholesale lenders are competitive in pricing,” says Marc Savitt, president of The Mortgage Center, a West Virginia brokerage. “That’s really not the issue. The issue is service, because we as brokers are only as good in providing service to our clients as our wholesalers are to us. That’s the number one issue right there. Now, we understand that sometimes they get busy or they get backed up. You understand those things, especially if you’ve been in the business a long time. But service is vital.”

Tanga says her biggest concern is communication. Even turnaround time is negotiable, she says, as long as a lender clearly communicates how a loan’s status is progressing.

“Communication is key. As long as they communicate the timeline so that we can set expectations and set our timelines correctly, there’s no issue,” Tanga says. “The problem is when there are certain expectations and they’re not met.”

Part of communication, Tanga says, is having underwriters available to discuss loan scenarios before an originator moves forward on a loan.

“We all probably work with hundreds of leads. Being able to answer a buyer or a potential refinance scenario in a certain time is very important,” she says. “…I think that’s a huge piece that most lenders are missing. Let’s say you shoot out an email and say, ‘Hey, I have this awesome buyer, but there’s just one little hiccup and I want to make sure that’s okay.’ Then the answer’s delayed. Now for the referral partner who gave you that lead, you’re not coming through. Everyone wants timeline and everyone wants rates, but the pieces that are even more important than that are communication and scenarios like that. You can set expectations accordingly.”

Clear and thorough

A clear, consistent standard of underwriting is also vital, Savitt says – and with today’s tougher compliance standards, “more lenient” doesn’t necessarily equal “better.” Most importantly, underwriting needs to be thorough – first time, every time.

“I do know there are some wholesalers out there who have even issued approval letters – have been down to the day of closing – and then found they made a mistake somewhere along the line,” Savitt says. “In other words, nothing has changed at the end with the loan, but they’ve made a mistake somewhere and ended up revoking the approval and denying the loan. It’s never happened to me, but if I were the consumer, I can only imagine – ‘Why am I just finding out about this now?’ It’s infrequent, but it does happen.

“Most everybody follows the guidelines, but maybe not to the same extent. You can take five different wholesalers and they may have five different interpretations of the rules. So as a broker, you really want to know the rules yourself. If not, you could have one wholesaler who’s very strict on the rules and another who says, ‘Well, we have a different interpretation.’ Now, you may want to go along with that, but in the end it could come back and hurt you. If there’s time to do it over again, there’s sure as heck time to do it right the first time.”

The difference in compliance protocols across the industry can be infuriating for brokers trying to keep track, Savitt says.

“That’s something we as an industry need to work on, and I think that’s something the CFPB needs to do as well,” he says. “These lenders all have their own compliance attorneys, and they all talk to the CFPB. And it’s amazing how everybody can come away with a different interpretation. That’s something that needs work for everybody to be on the same page.”

Strict scrutiny

Above all, Tanga says, lenders need to remember that when the process doesn’t go smoothly, it’s the originator who has to face the customer.
“I think a lot of lenders kind of mess up at the end, which is funding,” she says. “You can have a great process until you get the loan documents, but funding is the end piece, and it’s the last thing customers are going to remember.”

That’s why lenders need to know that responsible originators are going to be very picky when looking for a new lending partner, Savitt says.

“You want to do your due diligence. They’re going to check you out as a broker and you’ve also got to check them out as a lender,” he says. “What we generally do when a new lender comes in is ask for a couple of references from other brokers that they’ve worked with. Then we’ll check with those individuals. Social media like Facebook can be very valuable for that. You also want to check them out with the attorney general in their home state to make sure there aren’t a lot of complaints. If that’s been a problem in the past, those problems could arise again and end up hurting us. So just like they check us out, we check them out.”

How about you? What's your biggest criticism of lenders? What do you think they do best? Let us know in the comments below.
 

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