Blog with MAE Capital


So What is the difference between a Mortgage Broker (Like MAE Capital Real Estate and Loan) and a Banker or Direct Lender?  The obvious difference is that a Mortgage Broker has a smaller firm than the larger Bankers and Banks.  As you have learned in life bigger isn’t always better and in this comparison you would be correct.  Both types companies will appear to be the same with licensed Loan Officers, however, the big difference is in the interest rates which we will address shortly.  A Mortgage Broker is also required to hold both an NMLS license and a California Department of Real Estate (DRE) License whereas a Banker will only hold an NMLS license.  With both licenses a Mortgage Broker will most likely have more knowledge of the Real Estate transaction than a Banker as they have to maintain their Licenses with both agencies and take continuing education for both Real Estate and Loans.  That in it of itself shows that level of knowledge you will get from a Broker will be superior, but there are even more reasons to use your local Mortgage Broker than a Banker or Direct lender.


When shopping for a home loan even your Realtor may not know the differences between a Broker and Banker, so even if they recommend a Loan Officer to you, because they have used them in the past, you should do your research as you might be able to save yourself thousands of dollars.  Your Agent may think a direct lender is a better deal for you as they underwrite their own loans “in house”, but the fact is it might be in the Realtor’s best interests not yours. “In House Underwriting” sounds sexy, however, in today’s automated world every Loan Officer be it from a Banker/Direct lender or a Mortgage Broker has the same automated underwriting systems available to every underwriter.  So when you apply for a loan with either a Big Banker or a Small independent Mortgage Broker they all have the same access to an underwriter or underwriting systems.   So the myth of having your own underwriter as a selling point is just that a myth and what happens when their underwriters have a bad day, you pay the price.  A Mortgage Broker can deliver your loan file to several different underwriters that will have different rules and guidelines to get your loan approved.   Technology has improved so much that all of the paperwork necessary to process a loan can be uploaded and transmitted to an underwriter instantly and that underwriter can make a decision quickly and if a Banker’s Underwriter declines your file you are done with them.  If a Mortgage Broker submits your file to an underwriter and they decline it a Broker can take your file to another underwriter without you having to gather all your information again and again.  Most underwriters today use either the Federal National Mortgage Association’s or the Federal Home Loan Mortgage Corporation (Fannie Mae or Freddie Mac) automated underwriting systems to underwrite traditional home loans and those same systems are available to all Loan Officers either from a Large Banker/Direct Lender or a Small Mortgage Broker.

You may say that all of that is good but all I care about is getting the lowest monthly payment and the lowest costs.  Although both a Banker and a Broker inevitably get their interest rates from the same sources it is how much that is charged by the company that makes the difference in interest rates and fees that are quoted to you from lender to lender.  We have already discussed earlier that Bankers have bigger and shinier offices than that of Brokers and with that comes a larger overhead and more expenses than that of a smaller Mortgage Broker.  That all has to be paid for and they do that in the form of higher interest rate and fees.  The smaller firms like MAE Capital Real Estate and Loan can keep that overhead low thus being able to offer a lower interest rate and lower fees and can save you thousands of dollars upfront and monthly.  

In addition, the regulator in California for Bankers is the Department of Business Oversight (DBO) and they have different laws then that of the Department of Real Estate (DRE) who regulate Mortgage Brokers.   We talked earlier about Bankers having a larger overhead and expenses than that of a Mortgage Broker and thus the need to make more profit per loan closed for the company than that of a Mortgage Broker but what exactly does that mean?  The Direct lender has to pay more staff, more rent, more insurances making their costs much higher than that of a Mortgage Broker and their Regulator, the DBO, knows this so the Banker has no limit on the amount they can add to the interest rates and fees to maintain their profitability .    A Mortgage Broker, on the other hand, is limited to a maximum of 3% of the loan amount they can make on any one loan from the DRE.  A Direct lender does not have that limitation and they can charge what they want to be profitable costing you money.   The Mortgage Broker has to keep their overhead as low as possible being limited by law on how much they can charge is your benefit with lower interest rates and fees. 

Having been on both sides of the fence I understand completely how this process works and will tell you that you will save thousands by working with a company like MAE Capital Real Estate and Loan.  Every Loan we close is a testimony to this as the client’s rates and fees are significantly lower than that of a Banker on every loan transaction.  As a Mortgage Broker we can also offer other loan products that a Banker can’t such as Private Money Loans for investors, Certain Bank Statement only loans to qualify borrowers that can’t show enough income to qualify traditionally.  Overall we as a small Mortgage Broker can find the best loan for your needs with he lowest interest rates and fees.   An example of this is; MAE Capital closed a VA loan that came to us from a Veteran who works for the VA and he received a quote from one of the Veteran’s Administration’s “Approved Lenders” that is a Banker/Direct Lender and we beat them by .5 in interest Rate and $13,000 fees.  We closed the loan a 3.875%  and the veteran paid $0 down and $0 closing costs, saving him $13,000 in costs and has a lower monthly payment.  We have many stories like this and most of our clients don’t even realize the savings they are receiving as most clients don’t shop for a loan.  So if your Agent is recommending a Loan Officer Check the rates and fees and then check with MAE Capital Real estate and Loan and you will be shocked at what you will save.  If you are buying in the Greater Sacramento Area (El Dorado, Placer and Sacramento Counties) ask about our Bundling of Services where we represent you as the Realtor and the Loan.  This has saved our clients even more money as we can bundle our commissions and get you a home warranty and even lower interest rates and fees.  MAE Capital Real Estate and Loan is one of California’s best kept secrets when it comes to saving people money on their home financing.  Trying to change this secret into mainstream facts by educating our clients and future clients.  Call us today to find out more or have us compare your Direct Lender’s Loan Estimate with ours and see how we can save you thousands of dollars.  We can Lend all up and down the State of California.  Our phone number 916-672-6130 or go directly to our site at www.maecapital.com

Posted by Gregg Mower on March 18th, 2019 1:11 PM

I usually write on specific topics but this time I am going to have some fun with Real Estate and Real Estate Services.  I am asked almost daily the same question “how’s the market doing”.  I personally hate this question as it is not specific to all the things I do.  I have to ask if they are referring to the Interest Rates, as I have been doing mortgages the better part of my 30-year career, or are they talking about the Real Estate market.  Not a hot question, but since we are there I might as well elaborate.  Interest Rates are hot right now.  Interest rates are as low as I have seen them this year.  What is not hot is the demand for the money.  Ironically, the Federal Reserve (Not Hot) has kept the Fed Funds Rate or the Inter-Bank lending rate to right around 0 for the last seven years (Hot you would think) but during the same time lending laws have tightened, so tight that it makes it very tough for the average person to get a loan to purchase a home.  So with hot interest rates we have a lackluster demand for the cheap money (Not Hot).  As far as The Real Estate Market it is hot for price ranges up to $350,000 in the Greater Sacramento, Placer and Eldorado Counties.  As for the San Francisco Bay Area that market is hot, in the Los Angeles Area that market is hot and not depending where you are at. 

Not hot is the new Truth in lending RSPA Integrated Disclosures, or TRID rules that just went into effect October 3 2015.  This is the Federal Government’s (Not Hot) way to help consumers to make the right decision on their home loan by giving them more time to think about what they are getting themselves into.  That’s right the Government is telling the consumer that they are uneducated, ignorant, and that they should probably pay for an attorney to look over their loan documents before they sign (Not Hot unless you are an attorney, oh the law was written by attorneys for attorneys, double not hot).  Although, the new TRID procedure is ominous at best, the “Good Faith Estimate” of fees and costs and the Truth in Lending statements have been combined into one form (Hot) that is more user friendly for consumers called the Loan Estimate Form.  The Government actually consulted private industry (Hot) before imposing a form that had no relevance like the old Good Faith Estimate.   With the onset of the new TRID procedures the consumer will have to wait longer at the end of the transaction (not hot).  The new procedure will make lenders, after the loan has gone through underwriting, issue a new form called a Closing Disclosure before the lender can issue the closing documents for settlement (Not Hot).    What this intended to do is give the consumer an additional “cooling off” period of 3-8 days depending on when the consumer receives the form.   The way this works on a new purchase loan is that after the consumer has found a house, applied for a loan, received their initial disclosures, the appraisal has been completed, and the lender’s underwriter has reviewed and received all the conditions needed for an approval, the Closing Disclosure will be issued to the consumer.  The Consumer will have to acknowledge that they have received the document or the wait time will be an automatic 8 days, once they acknowledge receipt of the form they will have 3 business days from midnight the day they receive the form to reject the loan or make any changes.  If any changes are made there will be a new form issued and the same wait periods begin all over again (not hot).  This has the potential to add up to 2 weeks to a purchase transaction (not hot).  In a refinance transaction the procedure will be the same but there has always been a mandatory 3 day rescission period after the legal paperwork has been signed, making a refinance transaction take even longer on owner occupied loans (Not Hot).

What’s Hot is Real Estate Sales in the Greater Sacramento Area (where I write this from) for homes that comes on the market $350,000 or less.  This seems to be the sweat spot for Real Estate sales in the area.  Hottest markets seem to be Roseville, Elk Grove, Rocklin, Folsom, Eldorado Hills, Loomis, Penryn, Antelope.  Average Prices are hot right around $314,000 for Sacramento County, $445,000 in Placer County, $435,000 for Eldorado County, and San Joaquin County comes in as the most affordable at $312,000.  I don’t have the data for other parts of California at my fingertips, but with the average income for the State of California hovering right around $65,000 per household that would indicate that if you have an average household income with average bills you could afford a mortgage of about $318,000 (hot for northern California areas except the SF Bay Area).  With California’s unemployment rate, as of April 2015, at 6.3% it is higher than the national average unemployment rate of 5.1% this could be an issue for housing in the future (Not Hot).  From an economic point of view California is becoming a State that only the very richest companies can exist in due to the high corporate taxes, personal property taxes, excise taxes, and general higher costs of living.  This could lead to a population of only highly skilled workers working for the high tech companies leaving manufacturing companies and labor intensive companies out of the loop in California thus leaving no room for the uneducated worker (Not Hot).  California has long been a State with laws and taxes that have favored the lower class workers, now those very laws are actually hurting those workers that are predominantly unskilled labor as the State has forced the manufacturing, and unskilled labor employers out of the State by higher taxation and unhealthy laws and regulations (not hot).   

Hot in lending and investing is private money notes.  Hot for investors in Real Estate in that their qualification requirements fall basically into the equity in their property being financed.  If you are an investor in Real Estate and buy and hold or buy and flip you can obtain money to leverage your activities fairly quickly and easily (Hot).  If you are an investor in notes and Deeds of Trusts the market is hot in that you can receive yields from 6% to upwards of 13% with no hassles of being a landlord (Hot).  Unfortunately, the laws have changed to be way to ominous for private investors to invest in Notes and Deed of Trusts on owner-occupied primary residences due to the Dodd-Frank act and California’s own set of laws  (not hot).  The stock market has been very volatile over the last several months so the increase in demand for investors to invest in these notes have increased significantly (Hot).  However, with the increase in Real Estate prices investors that buy hold or flip have slowed down, so there is more money out there than there are investors to lend it to (not hot). 

Finally, MAE Capital Real Estate and loan is hot as we follow the markets closely and we can offer all types of products for our clients.  We can finance all kinds of properties from single family owner occupied properties (California only) to Commercial projects all over the country.    MAE Capital Real Estate and Loan can list and sell your home in our local markets of Placer County, Sacramento County, Eldorado and Nevada Counties.  We value our customers and work deals with our clients when we represent them in multiple transactions such as listing and selling their home qualifying them for their next home and finding them their next home.  With our ability to represent clients from both the Real Estate and the Loan sides we can save our clients thousands of dollars in commissions that they would have otherwise had to pay (Hot).  We look forward to working with you now and in the future (Hot).

 

Posted by Gregg Mower on October 13th, 2015 5:20 PM

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MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677