Banks and mortgage lenders are being highly careful about which loans they accept in today’s market. Real estate prices are declining, foreclosure rates are increasing, and many banks are exiting the mortgage sector entirely. The days of banks selling their loans on Wall Street, reloading, and repeating the process are long gone. Banks are now faced with the reality of having to hang on to their loans in the same way that they did in the past. This means they want to be certain that the loans they make now are decent loans that can be repaid on time. Click here to find more about Wealthy You are here
Nowadays, it seems like what we hear about when it comes to mortgage brokers are the poor ones; the ones that make the headlines and are carted away in handcuffs on television. What these articles fail to note is that poor mortgage brokers account for less than 1% of all licenced mortgage brokers in the United States. In reality, it has always been the mortgage brokers, not the banks, who have pushed for stricter licencing requirements. They have often argued that by tightening licencing guidelines, they would be able to remove the “evil brokers” who tarnish the credibility of legitimate brokers.
What journalists and columnists neglect to note in their stories is the critical role that brokers play in the marketplace. When it comes to authorising loans, for example, each bank has its own distinct personality. Understanding these “personalities” is where brokers can really help their clients. Brokers deal with almost every form of lender imaginable and are familiar with each lender’s particular features, prices, and approval thresholds. This allows them to position the loan with the right lender the first time, saving time and money for their clients.
The majority of brokers have working relationships with the underwriters who work for these lenders. This does not imply that they can get bad loans into the system; however, it does imply that they can assist underwriters in seeing the glass as half-full rather than half-empty when underwriting the loan. With almost all mortgages deemed “marginal” and scrutinised by underwriters in today’s industry, getting someone on your side is a valuable advantage.
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Sydney, NSW, 2000
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