To be a True Mortgage Banker! What does that mean? To me, it means to truly lend the money as if it were your own; and if it IS your company, it IS your own. That is why I believe that the True Mortgage Bankers will have no problem with the new regulations ensuring the fiduciary responsibility that all mortgage purveyors confirm that a borrower can actually afford the mortgage they are giving.
Now there are certain Mortgage Bankers who have twisted the lending the money as their own concept to work for their greed. For decades, the aggressive asset based lenders, who were hard money, lent money based on their ability to foreclose and liquidate quickly a home. They lent money as their own with the idea they were covered to get a return on capital based on low ltvs or cross collateralization.
This world morphed into the subprime/Alt A risk world that said as long as I can sell the loan and use financial engineering to offload the risk, and then in essence I have returned the principal with a return and have successfully lent my money. But that assumed you didn’t really either read your contract or chose to ignore it because you arrogantly felt you were too good a customer to get a buyback.
A True Mortgage banker lends their money as their own without financial shenanigans and gamesmanship. They also lend as if they were lending to their friend, neighbor or relative. They want not just to sell the loan after and walk away but have financial and emotional skin in the game. When they are doing their job right, they are creating an annuity stream that has a borrower able to afford a home and glad to pay monthly a loan that builds equity that is an asset for them and a growing cushion of safety for the lender. Also when the mortgage banker is doing their job right they have created a healthy stream of annuities for investors and servicers who are secure to receive their payments for many years.
The best Mortgage Bankers have a never ending hunger to feed the demand of consumers to buy a home or lower a rate or to feed the demand for an annuity stream of income backed by the world’s favorite collateral, US real estate. They don’t try and churn borrowers to save a .25 knowing that restarting a loan may not be best for that small amount of savings or that early pay offs kill the investors who eventually figure out who is biting the hand.
This mentality of being one of the best, true Mortgage Bankers is something I have enjoyed often in my career. There are times when I haven’t seen it in a company culture and it attracts the wrong people who morph a company into dangerous shapes. Fortunately here at Mortgage Network, Inc. we have been an oasis for those who are looking for that true Mortgage Banker attitude. Now people may say they want that, but they may not be sure what that really means.
If you come from a large banker you are kept like penned veal from seeing the real world. You are fed their products on their system with no care for the customer. You don’t know what you have or what you are missing. It can take a while to transition to being a true Mortgage Banker and to make the money your own and understand the connection to the end investor and the customer because you have been kept separated from that vision for so long. But most good bankers have been thirsting for this change for so long that they adapt very quickly and thrive in the new environment of advocacy and partnership.
The same goes for the few mortgage brokers who are left who make the move over to True Mortgage Banker. Too many brokers have seen their role as; give a customer what they want (a loan for as much as they can get now) not what they necessarily need or is right for them and then see who they can get to buy it. Who is the dumbest lender with the easiest terms or with the biggest loopholes? The good mortgage brokers were true advocates and would not put their reputation at risk to put the customer in a loan that wasn’t right for them even if that meant the customer walked and went somewhere else. They also chose to work only with the lenders who thought the way that they did. These brokers can also make the transition to True Mortgage Banker smoothly. The hardest part is taking a loan that may seemingly be good for the customer but not be good for you as the mortgage banker. It’s an education to understand Contracts, Indems and Watch Lists, but once grasped you get it and move forward concentrating on all you can do.
The big benefit today of course is control of operations as a True Mortgage Banker vs. banker and broker. To be able to customize a flow of service with other professionals who are aligned with sales, the customer and the investor eliminates so many of the issues that plague the other models. I hear consistently from new hires “it is such a breath of fresh air to see everyone working with me to get this loan closed! It’s amazing I didn’t have to scream, pester or stomp my feet for my deals to close. I feel everyone is working with me not against me and it allows me to get out and sell.” I know that other True Mortgage bankers out there are able to achieve the same and it is why this sector is enjoying the market share growth it has these last years.
In the face of irrational implementation and interpretations of some needed regulation many have left the ranks. But I like to believe there has been a rise of True Mortgage Bankers that have expanded in their place. These professionals will be key building blocks for our economy and our industry. I only hope that the CFPB will see that and embrace it, not kill it with literal regulations that miss the spirit that it was intended.