Understanding The Similarity In Baltimore Mortgage Lenders
Understanding The Similarity In Baltimore Mortgage Lenders., If you read the news or listen to it daily you know that the mortgage industry is changing forever or should I say changing more back to what it was years ago, fortunately. It has been said in the past that all lender, mortgage companies, brokers are all alike and that is not necessarily the positive truth. Having worked and all areas of “Mortgage Lending”, I am telling you that they are not all alike. It does not mean that anyone of them are fraudulent, it just means that some lenders quote rate, some cannot their own rates and that fees are usually different for the Direct Lender and the other loan providers in how they charge fees and just what they can offer you..
You have the freedom to choose your own lender and my advice is to do so, unless you can get a better deal from the Real Estate Agent referred lender regarding cost of the loan to you directly. There are rules for all areas of mortgage lending. Ask yourself economical upfront cost in the origination fee, discount fee, underwriting fee, processing fee etc?
Normally a Direct Lender/Bank can offer you a loan without an origination fee and discount point. Normally know as 0/0. What your fees are is an important part of lending just like your income. If you choose a Broker it is futile for them to charge 0/0 and the Correspondent Lender also. This is how they make their income so you can see it is not to their best advantage. The new RESPA rules and new Good Faith Estimate have changed some very important thing for you to know.
Direct Lender: originates the loan, processes the loan, underwrites and funds the loan, per the agency guidelines and the loan is sold to the investor they do business with. They are approved to sell loans to either Fannie Mae or Freddie Mac and sometimes Ginnie Mae. Some banks will have their own portfolio loans which they service themselves and do not sell at origination.
Correspondent Lender: They do not quote their own interest rates; they are rates of the Direct Lender whom they do business with. They can be allowed with more than one lender and usually their rates are better than the Broker. They are approved to do business with a Whole Sale Lender or Direct Lender to lessen their risk level. Usually they do not service the loan and it is sold to the Direct Lender. They do sometimes underwrite and fund the loan and then sell it to the Direct Lender. They must be approved to do so by the Whole Sale Lender. This is called table-funding.
Broker: They quote a rate from a Lender, just like Correspondent lenders. A broker normally originates the loan, gathers paperwork, and processes the loan for the Direct Lender who approves and funds the loan. Therefore, normally the Broker does not guarantee the loan and the funding is my the Direct Lender. Brokers are audited by the State in which they do business. Sometimes Brokers are allowed, if approved by a Direct Lender, to close the loan in their name, fund it from a line of credit and then immediately it is assigned to the Whole Sale Lender, (rarely) do you see this.
Either of the above loan providers must provide financial statements with certain net worth, license, surety bond and levels of experience, to name a few. You can’t just up and open up an
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Posted by Carlos Sagastume on February 22, 2010. Filed under HUD Homes.
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