Mat Ishbia

Mortgage brokers took a hit following the 2008 financial crisis.

Point-counterpoint:

Mortgage brokers vs. bankers

Brokers

Mat Ishbia

President and CEO of United Wholesale Mortgage

Bankers

Tom Gamache

Tom Gamache

Northeast Division Manager, Home Lending Solutions, Citizens Bank

They came under greater regulation by the Consumer Financial Protection Bureau, some major bankers stopped working with them and their ranks dwindled, according to Mortgage Professional America.

But banks have suffered their own troubles with regulators and the public.

In June, 6 banks were cited for ignoring requests for loan modifications or failing to make good-faith efforts to prevent foreclosures, while regional banks continue to be hit with investigations by the Justice Department for bad underwriting of Federal Housing Administration loans, according to National Mortgage News.

Whom would you approach for your next mortgage? Who would find the right mortgage and the best rate for you? And, whom would minimize the hassle of the mortgage approval process?

Experts representing mortgage brokers and mortgage bankers make their claims as to why they deserve your trust — and business.

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Mat Ishbia

Mortgage brokers

By Mat Ishbia

Mortgage brokers are licensed residential mortgage professionals with access to hundreds of loan options for consumers looking to buy or refinance a home. They support borrowers by leveraging relationships and securing the most favorable loan options available. Brokers can help homeowners save thousands of dollars on what is likely the most important financial undertaking of their lives.

Brokers streamline the loan-shopping process by promptly lining up multiple options that borrowers would likely qualify for to allow borrowers to choose the best option for themselves.

While larger lending institutions serve customers, they are not focused specifically on residential mortgage lending. They focus on auto, boat and personal loans, just to name a few. They are not focused on 1 area of expertise: mortgages. Large retail lending institutions can only offer the loan products they have in house, and most often pricing is higher because of the overhead associated with larger institutions and banks.

Brokers, including local banks and credit unions, are typically smaller and more nimble; they adapt to change quickly and have less overhead to be more competitive in the mortgage market. Furthermore, the commission structure for a broker is highly regulated and broker originators have the same pay structure on all loans, no matter what type of loan or loan size.



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Brokers streamline the loan-shopping process by promptly lining up multiple options that borrowers would likely qualify for to allow borrowers to choose the best option. Further, they are able to get loans closed at a faster rate than large lending institutions. Brokers partner with high-quality lending partners nationwide to ensure their referral and new business opportunities continue to flourish by utilizing the tools, products and overall support that lenders offer to their broker network.

Additionally, many consumers wrongly assume that large retail lending institutions and banks offer the best mortgage deals. In fact, brokers are not beholden to a retail bank’s overhead costs and can often secure a lower interest rate through the same large lending institution’s wholesale division. Consumers who apply for a loan directly with a large retail lending institution or bank believe they are cutting out the middleman, but in fact, may be putting themselves at a disadvantage by not using a broker.

A known shortfall of working directly with a bank is that its loan officers are not necessarily mortgage experts. In fact, federally insured lending institutions do not require their loan officers to be licensed. While they must be registered with the Nationwide Mortgage Licensing System database and hold an NMLS number, loan officers are not held to the same standards and regulations in terms of extensive testing and ongoing training on mortgage guidelines and changes that brokers are required to adhere to.

On the other hand, brokers must undergo continuous training, submit to background checks and pass rigorous exams to hold their professional certifications.

Imagine for a moment that you are a professional tennis player and injure your knee. Your career depends on the right treatment, and your future ability to compete and earn money rides on the medical advice you get. Whom would you listen to? An orthopedic specialist who has dedicated his or her career to the study of knee mobility and performed hundreds of specialized surgeries, or a doctor who lacks a specialization but does a variety of procedures on everything including head, shoulders, knees and toes?

With their financial health at stake, consumers want and need an expert to guide them through the mortgage-shopping process. My suggestion is a licensed mortgage broker.

Mat Ishbia is president and CEO of United Wholesale Mortgage in Troy, Michigan. The company underwrites and provides closing documentation for residential mortgage loans originated by mortgage brokers, banks, credit unions and correspondents. Ishbia was appointed to lead United Wholesale in 2013 after first joining the company in 2003. He received a bachelor’s degree in business management from Michigan State University, where he played and coached basketball for coach Tom Izzo, reaching 3 straight Final Fours in the NCAA Basketball Tournament. He was part of the team that won a national championship in 2000.


Tom Gamache

Mortgage bankers

By Tom Gamache

Buying your own home is probably the largest and most important financial decision that any of us will ever make.

To help make that monumental decision, the vast majority of people turn to their bank for a loan rather than to a mortgage broker.

Securing a mortgage offer based on your existing banking relationship can result in a lower interest rate, not just an opportunity during a one-off transaction with an unfamiliar lender.

The reason is pretty simple: Most people already have a relationship with their bank, which has become a trusted partner after providing a range of services over the years, including a credit card, checking account and savings account.

By comparison, a mortgage broker is typically a 3rd-party organization with which you would have had no previous dealings.

You will be unfamiliar with your potential broker, but more importantly they will not know much about you. And that can really influence the kind of deals they offer. Citizens Bank in particular works hard to make banking relationships with customers personal.

On that same note, your bank already knows a great deal of information about you, such as the balances on your checking and savings accounts, and that can help make qualifying for a mortgage a lot easier.



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Securing a mortgage offer based on your existing banking relationship can result in a lower interest rate, not just an opportunity during a one-off transaction with an unfamiliar lender.

Taking out a mortgage via your bank also increases the amount of opportunities available. They can offer greater flexibility to a 1st-time homebuyer who is interested in a low- to moderate-income loan or a Community Reinvestment Act home loan, for example.

Banks also can offer greater security, as they typically have stronger capital and stronger portfolios of assets than mortgage brokers.

Prior to the Great Recession, 3 times as many people were using brokers as they do nowadays. However, tighter financial regulations have left many wary about using smaller, non-branded lenders.

By comparison, a mortgage is one of many “cradle-to-grave” services that your bank can offer as you move through life stages, along with investment advice, equity loans, college loans, 2nd-home loans and general retirement products.

Competitive rates, great products and great service are “tickets to the game,” regardless of whether you use a bank or a mortgage broker, but it’s the best practice and most prudent move to cut out the middleman and deal with someone you already know.

Tom Gamache is the northeast division sales manager and senior vice president of home lending solutions for Citizens Bank. He is responsible for leading sales, business growth and bank partner initiatives in New England, Eastern Pennsylvania, metro New York and Washington, D.C. Before joining Citizens in January 2015, Gamache served as national director of retail production for Guaranteed Rate Mortgage, the nation’s largest independent mortgage company. Prior to Guaranteed Rate, Gamache held executive sales leadership positions at Bank of America, Wells Fargo Home Mortgage and MetLife Home Loans. Gamache has a bachelor’s degree from the University of New Hampshire.


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