A Loan Officer is Licensed by the National Mortgage Licensing System (NMLS). This holds true across our great nation. A Loan Officer can do multiple things but our discussion today will be for first-time home buyers and move-up buyers looking for their primary residence to live in. This type of home loan is called a Qualified Mortgage and certain rules have to be followed by your loan officer to stay in compliance with the law. If you are looking for an investment property you are not a qualified mortgage home buyer as under the law and you are not protected under the same rules as a primary home buyer. When finding a Loan Officer you should know these basic facts of the law so it can benefit you. If your Loan Officer doesn’t even understand these basic rules of the industry then you might need to find one that does. Of course, there are many factors that we will be covering to pick the right Loan Officer for you.
So how do you know what Loan Officer or Company to pick when shopping for a new Mortgage? The first thing everyone should know is you have to feel comfortable with the loan officer. You have that little voice in the back of your head and if it is screaming at you to not trust the person on the other end of the phone that is your first sign. A little knowledge of what a Loan Officer actually does goes a long way. Trust your intuition with the person on the other end of the phone as we are in a mortgage market right now where every deal is important to have as it is so slow and interest rates are on the rise. Loan Officers are having to compete like no other time in the industry so some of the things that they will say are misleading or bait and switch.
I know this as I have clients telling me daily that they have been quoted interest rates far below where the actual market is. For example, you are shopping for interest rates for a home you will be living in, or as we stated above a Qualified Mortgage. You are getting quoted consistently in the low to mid 7’s for interest rates based on your credit qualifications. When you call and talk to a Loan Officer that tells you that the interest rates are in the mid to high 6s anybody’s first reaction would be to think they have found the perfect deal. The trap here is that you have been fooled but you don’t know it yet. So you gather all your documents, complete the loan application and deliver it to the loan officer you talked with earlier. Then you wait for all the inspections to be done on the house you are in contract on to see what might be wrong with the house and you become distracted with the house and not the financing. A loan officer understands how this process works so about this time when the inspections start to come in, the Loan Officer sends out the disclosures, required by law, and you realize that the terms are not what you were told on the phone. So you call the Loan Officer and he or she tells you that things have changed and that this is your interest rate which happens to be in the low to mid 7’s. So you think “Oh well I don’t want to have to go through delivering all that paperwork to another lender so I will just stay here.”
If this happens to you, you should run as fast as you can to one of the Loan Officers you talked to that you felt comfortable with as if they lied to you in the beginning to get your business what will stop them from lying more and possibly getting your loan declined because they were untruthful to the processor and the underwriter. Because the actual people who are working on your loan may not trust that loan officer because they know they are not a truthful person. This kind of deception is called the Bait-and-Switch sales technique which is highly unethical, but people will do it to get the business in the door.
When shopping for a Mortgage you should always go with the Loan Officer who you are comfortable with and although they can’t match that low rate that was told to you by the untruthful Loan Officer, you can trust that they will get the job done for you with an interest rate that is real. This brings me to the fact that if you are a home buyer, with good credit and you are looking for a home to live in you are not only protected by the law but you now know that all Lenders and Mortgage Brokers have to get the interest rates from all the same sources like the Federal National Mortgage Association (FNMA or Fannie Mae) or the Federal Home Loan Mortgage Corporation, FHLMC, or Freddie Mac. So if you are being told something different be very suspect as all Lenders that are dealing with FNMA and FHLMC will be in the same basic interest rate range. Some lenders or Mortgage Brokers can be slightly better in interest rates only because they may have less overhead but there should only be at the most a .5% difference in interest rates between all lenders and Brokers on any given day and that may be high.
The moral of the story here is that if it is too good to be true it usually is. Your Loan Officer should be your advocate through the process. Your Loan Officer will be integral in helping your loan get through the process as fast and efficiently as possible. You will be in contact with your loan officer once you have found a house almost every day so you should have a good working relationship with them. I also would be looking for energy in my Loan Officer as it takes a lot of energy to get your file through the system fast and efficiently. Your Loan officer should have a working knowledge of how your Realtor does his or her job, in fact, if your Loan Officer also holds a Real Estate License you will know that he or she has an advanced knowledge of how the Real Estate Process works. At MAE Capital Real Estate and Loan, all of our Loan Officers will have both a Real Estate License and an NMLS license. Be careful of Credit Unions and Banks as they are not under the same rules that we are so they generally have slower turn times and Loan Officers that do not hold Real Estate Licenses and in some cases, you may be talking with someone at a bank or credit union that doesn’t hold any license. We are here to help and we will not mislead you in the process of buying a home in fact we don’t even get paid until we close your transaction so it is in all our best interests to get your transaction closed as quickly and efficiently as possible.
A mortgage Broker in in today’s world has been dramatically redefined from just a decade ago. A decade ago there were no real rules for a Mortgage Broker. There was no licensing, no Consumer Finance Protection Bureau (CFPB), no Loan Estimate forms, no Closing Disclosures, no TRID (Truth in lending integrated RESPA disclosure) and no underwriting regulation, and no real accountability. All these additions to the Mortgage Brokering industry over a decade is a lot to swallow. What that means to a consumer is simple, more red tape to wade through when applying for a home loan. Is this regulation good for the industry, the consumer? In many ways it is but in many ways it is not. And what about loan programs that a Mortgage Broker has to offer in today’s world? Well those are limited as well.
A Mortgage Broker a decade ago had no licensing requirements to go through to become a Mortgage Broker. One day you were a shoe salesman and the next a Mortgage Broker. That has all changed with licensing and the National Mortgage Licensing System (NMLS). You will notice that all Mortgage Brokers now will have to post their license number on all of their marketing material and advertisements. You will see MAE Capital’s at the bottom of this page and if you look up our staff you will see all Loan officers will have their NMLS number posted prominently so you can check them out, if you so desire. My opinion of licensing is a positive one as it makes the field I have chosen to be my career for the last 32 years more professional and accountable. This single one change has kept the riff raff out of the Mortgage Broker business for the last 7 years and I believe that to be positive.
An individual Loan Officer now has a choice where they wish to work or more specifically what regulator they would like to be under. What this means is that a Licensed Mortgage Originator may also possess a California Real Estate License and with both a NMLS and a Real Estate License they now have a choice of where they could to work. If a Loan Officer holds both licenses they can work for a Broker like MAE Capital Real Estate and Loan where we are regulated the California Bureau of Real Estate (BRE) allowing our firm to offer both Real Estate Services as well as Mortgage Brokering services. Having both licensing makes an individual Loan Officer more well-rounded in the information they have of the industry. I would argue that one could only be a Mortgage Broker if they were licensed under the BRE. The other licensing a Loan Officer could have would be one under the California Department of Business Oversight (DBO). Under this regulator, a Loan Officer can only originate loans even if they possess a BRE license they still could not act as a Real Estate Broker. An individual Loan Officer working for a company regulated by the DBO does not have the ability to “Broker” loans to other companies like a BRE regulated loan officer. Not having the ability to look at a multitude of companies to deliver loans to limits a Loan Officer to only offering products that their specific company can offer. A Loan Officer under the BRE with both licenses can look to hundreds of different sources of money across the nation to fulfill their customer’s needs. MAE Capital Real Estate and Loan is a true Mortgage Broker in that we offer products from different companies all across the nation and we can offer Real Estate services.
A Decade ago a client would go to a Mortgage Broker for a loan and they had no idea who they were talking with and if the person they were talking with could be trusted. A Mortgage Broker today has to account to the NMLS their activities every quarter. This means that a Mortgage Broker must know where their business is coming from and certain tracking items must be in every file. A decade ago a Mortgage Broker was not limited in the commissions they could make on a transaction. Today a BRE Mortgage Broker cannot make more than 3% total on an owner-occupied loan transaction and the commission cannot be tied to the interest rate at all. If you go to Loan officer that is licensed under the DBO you don’t know how much money that company is making off your transaction as they do not have to play by the same rules as those of us regulated by the BRE. The disclosures are different when you deal with a true Mortgage Broker like MAE Capital as we must show you, the consumer, more information than a DBO Loan Officer. We provide you with a Mortgage Loan Disclosure Statement form as well as the Loan Estimate, both show you what we make and what the costs of the transaction are to you so you know where every dollar is going.
As a Mortgage Broker for the last 7 years with these new regulations it has been tough to have to tell my clients that they will have to work harder to get a loan than ever before. This is where we all have hope in the industry that the new administration will fix those things that need fixing to help consumers be able to get financing easier. I am not talking about the recklessness that was the Mortgage Crisis but rather, I am talking about common sense things. Currently if you are self-employed it is nearly impossible for you to get a home loan the way things are today with having to verify every little bit of a person’s income before they will be granted a loan. It just makes sense to view individuals differently based on their jobs, their education, their credit and their ability to be able to deal with it all. I know some of you reading this think that we are all created equally and that is true on the rights we enjoy but it is not true in the way we chose to lead our lives. Those that are entrepreneurial should not be discriminated against because their tax returns don’t show enough income in the right areas to qualify for a home loan, these people should be looked at in different ways than someone who works a salary at a State job. As a Mortgage Broker we have found companies that can help these folks but these companies are under fire from the CFPB for not playing by the rules they created. So hopefully this new administration can bring back some make-sense underwriting criteria and loosen up the rules for people to be able to purchase Real Estate. As a Mortgage Broker in California we are here to find new and innovating ways to serve our customers.
As a Mortgage Broker licensed under the BRE a Mortgage Broker has more loan program options to offer clients. The loan products we have to offer as a Mortgage Broker ranges from conventional FNMA and FHLMC loans, FHA, VA, CalHFA, USDA, to Alternative loans like Bank statement only and W2 only programs for owner occupied loans. It becomes real interesting when we see start talking about the options we have for investors buying investment property. An investor can choose whether they need short term funds or long term funds, from a qualifying mortgage with low interest rates to no qualifying loans with higher interest rates. Private Money or Hard Money, as it is otherwise known as, is also an option we have for investors that want to take property under an LLC and may not have a track record a Bank will require or the credit score a bank will require. We can fund land, and commercial property as well as single and multifamily homes with private funds. A Loan Officer working for a company that is under the DBO as their regulator does not have this ability.
MAE Capital Real Estate and Loan is a Mortgage Broker and a Real Estate Brokerage firm allowing us to bundle our services and provide better deals for clients. With all the laws and regulations that we must comply with, we sincerely hope that you will use our Mortgage Brokerage services as well as our Real Estate services and for doing so we will work to lower your overall costs and we will purchase a home warranty for you, so when you move in to a house you know if there are any problems it will be covered by the warranty for the first year. We look forward to assisting you with your Mortgage and your Real Estate needs. We can lend all over the great state of California and our Real Estate area would be Sacramento and Placer counties. Call us today for information on Pre-Approval and free home searches or go directly to the site for more information at www.maecapital.com or call at 916-672-6130.