November 1, 2010
Having worked in the mortgage industry for 10 years before becoming an agent and registered representative for New York Life, I am concerned with the idea of broker/deal competition. I watched loan officers and brokers charge whatever fees they thought their service and experience provided interestingly enough, it always seemed to be the more inexperienced and less professional loan officers and brokers who charged more. They didn't sell the loan that was best for their client or gave their client the best rate/payment, what they sold was the product that paid them the most. The fees allowed to be charged on conventional conforming loans were up to 5% - which is ridiculous, it just wasn't that hard to take and application and submit it to underwriting, but I saw many loan officers and brokers making $6,000 - $10,000 on loans of $150,000 to $200,000. It was much harder for these same loan officers or brokers to take advantage of the person buying or refinancing a jumbo or non-conforming loan as these borrowers tended to be more money conscious and savvy financially in other words it was easier to take advantage of the lower income, less money savvy people into a loan that wasn't in their best interest as much as it was in the interest of the loan officer or broker dealer.
Same thing will happen with investors in this market...the person investing a $1,000,000 will understand a lot more than the person investing their $10,000 nest egg and will get a better product, better advice, and a better price.