Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
Nope, we are not #1 in the mortgage industry by any stretch of the imagination, yet. According to the last published report by the Nationwide Multistate Licensing System (NMLS), there are well over five hundred thousand registered and licensed Mortgage Loan Officers in the United States. These Loan Officers are employed by almost 30,000 mortgage banks or companies throughout the U.S. Needless to say, it is a very competitive and spirited industry. I believe competition is a good thing – it helps consumers with a myriad of options; it helps keep organizations competitively priced. It also helps motivate employees and employers to do the best they can.
The above “win-win for all” philosophy works when the companies’ tactics are all equal, using fair and reputable advertising and promotional campaigns. That said, even when these companies use ethical marketing tactics, when the consumer doesn’t comprehend the “fine print,” or they don’t recognize certain restrictions or limitations, that makes the field very uneven and threatens the outcome to the consumer. Most rate-shoppers don’t realize that a majority of the loan officers working in the mortgage industry are employed by depository banks and do not need the same licensing and training as non-bank companies.
I recently reached out to a past client of mine to let him know that his mortgage was identified for a refinance consideration. He told me he was aware of the opportunity, and that he “already moved forward and closed with the company that was previously servicing his loan.” Knowing that I had given him a mortgage last year, which got transferred to this servicing company, he assumed he was “in good hands” working with them. He was told that because they serviced his mortgage, they already had all his information, which would be a more straightforward process. That is, unfortunately, not the case. Furthermore, he said that the representative told him that they were “The #1 mortgage servicing company in America,” so he assumed it was the best option available for him.
I was actually shocked that he had already closed, because when I ran numbers, it didn’t make sense to refinance until this point, now that rates had recently fallen. I asked what kind of rates he got, and he sent me his closing statement. When I saw the closing statement, I was very disappointed. I was not upset because I lost a potential client; I was upset that the client was deceived into a refinance, which didn’t make sense for them based on the terms they received. To get to a rate that made the refinance worthwhile, they suggested that he pay close to $7000 in additional origination fees, which he did. My offer to him was a lower rate without the $7000 buy down charges.
For context, the company that refinanced his loan was, in fact, the largest mortgage servicer, but their primary business is servicing mortgage loans, not originating them. They are great at servicing mortgage loans, which is why we transfer our loans to top-tier mortgage servicers, like them. Separately, they have a “retention department” to try to keep mortgages from being paid-off. For that, they have loan officers who work to structure new mortgages to retain the loans in their portfolios before the borrower goes elsewhere. Their primary business for which they have top acclaim – is to service loans, but when it comes to arranging new applications, for the benefit of the client, they are far from #1.
Similarly, I received a referral from a financial professional who told his friend to call me before he pays a lock-in fee to the current lender he was dealing with. His friend, my now client, didn’t see the benefit of calling me because he was dealing with “the #1 mortgage lender” in America. This lender, soon to be going public, is all over the news, all over the internet, and does a remarkable job advertising and promoting their online mortgage services. What they fail to do an excellent job at is offering competitive rates. I quickly provided this applicant a rate that was a quarter-of-a-percent lower than what he got quoted online. Granted, this company is the top lender in America, but they are not tops in rates, and it is a shame that so many mortgage applicants don’t do enough research to explore all available options.
The lesson here is that companies promote their “top” ranking for many reasons. Top accomplishments should be recognized and ascribed; however, you need to do the proper due diligence and research to ensure that their highest-and-best offering aligns with your highest and best needs.
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