Boxes, Part 2

In part 1 we discussed the advantages and disadvantages of being a direct lender.

In essence, if it doesn't fit in their box it doesn't fit and they have to decline the loan.

From a borrower's point of view...

Let's say our Borrower walks into Bank A, applies for a loan, a week or two later they find out they were turned down.

That's OK, they didn't really like that bank anyway.
So they go to Bank B.
Same application, same documentation, and unfortunately with the same results.

Undaunted, they go to Bank C.
Applied, Documented, and turned down!
3 strikes and your out!
"That's it, We are un-financable!"

End of story - right?

I can't tell you how many times I've come across people who were resigned to the fact that there was nothing they could do about their situation.
"We've already applied at Bank ____ and they turned us down too."

The problem is that the loan did not fit neatly into the lenders box.
It wasn't that it was a bad loan.
There was just something that kept it from fitting in.
It may have been something small.
It may have been something big.
The Bank isn't going to tell them the exact reason why?
They'll just turn it down and move on to the next one.

A broker doesn't have a box.
A broker does the math, understands the loans weakness as well as it's strengths and then applies that loan only to those banks (lenders) he knows want that particular loan.

So a Mortgage Broker has many boxes.
I have 7,000 different programs to choose from.
Which box a particular loan fits best into is the "ART" of what I do.

I like to say that if I do my job correctly, I will get the borrower the very best loan that fits their goals and needs at that time.

Broker's used to be at a disadvantage to lenders in underwriting.
Technology has changed that.
The playing field is even now.

As a Mortgage Broker, I can now pull credit in seconds.
I can then apply that credit record and supporting documents to an Automated Underwriter, something only available to lenders not so long ago.
I can get an approval in seconds if not minutes.
Submit the loan to a human underwriter via simple uploading of documents and in 24 hrs have a real approval!
That's pretty powerful stuff!

The one thing I still have to give to the lender side is the knowledge of products.
A direct lender should have better understanding of the quirks and features of their products.
Don't get me wrong, I'm not talking about your pimply faced bank employee, but the true mortgage professional (generally they don't work in a retail bank location).

Don't you love technology?