Posted by brandoncbsre on July 12, 2008 at 17:15:25:
In Reply to: Re: Investor re-finance loans posted by Ben Carmona on July 12, 2008 at 09:27:17:
Ben,
Thanks for allowing me the opportunity to clarify my opinions on brokers. I first would like to say that I am fairly certain we never spoke on the phone. I am a real estate agent (and I’m pretty quick to slam them as well) and have access to many brokers that have worked with my clients. I would most likely call them prior to talking to some one that I only know through the ‘net, nothing personal. If we spoke, I don’t remember it.
That said, I value your opinions. You are one of the few brokers here that contribute in a positive and meaningful way. There are too many that just fire off a reply that reads something along the way of, “sent you email…..I can do this.” This does nothing to help others when reading the posts. Nor do you spam the boards with finance offers.
I believe there are many good reasons to use a broker. Therefore I am not completely anti-broker. For instance, if I were an investor like Rich from CA that invests solely out-of-state then a good broker is paramount. I also wouldn’t call my bank if were I trying to put together a $5,000,000 deal. If I was doing deals so thin that they only flowed with 30 year loans then I would have to call a broker. There are many other scenarios as well.
I do believe however that for most small investors, a local bank is the most cost effective source of capital. I don’t need to go into reasons here due to the fact that I “have been preaching on banks for quite some time now.”
As far as “trying to tear down an industry” goes, that is not my intention. Nor does that industry need my help in doing so. With all the short sales I have been working on with Citi and WAMU it is quite evident that this business is quite flawed. I have not seen the number of broker generated loans in default vs. direct loan officer originated loans from small banks, but I bet the small bank loan officers are kicking arse and taking names.
There are many brokers out there who just want to close the loan and could care less whether the borrower makes 1 payment or 360. Compensation needs to be changed in this business. The compensation should be based on the performance of the paper over the life of the loan. I understand that if a broker keeps sending deals through that go bad then the funding source starts to constrict the flow of capital. Then they have to find a new source. While the L.O. at the local bank loses his credibility with the loan committee and more than likely loses his job or gets demoted. As a broker your job is to allocate capital for the investors as much as it is to give the borrowers a loan. If brokers were paid in way that made them work harder for the investor than we would likely all be a little happier with out retirement accounts right now. Defaults would certainly be lower.
Now I am not saying that brokers are any more at fault than other groups in today’s mortgage implosion. I know I sold a couple of houses to people that shouldn’t been able to finance a pack of bubble gum. I definitely NEEDED a broker to get those deals closed. I played my part in those foreclosures just as much as the broker did. Wall Street from top to bottom just allowed too much money to slosh around in the hands of people that had no business buying homes that they couldn’t afford.
My posts may be nerving to some, but they are my opinions. I welcome the opinions of others and I believe that most members of this board do as well. I will continue to speak highly of the benefits of working with small banks. When Wall Street forgets why they stopped throwing money at anyone with 500 score and a pulse, I will start praising my brokers.
Good luck to you Ben. Like I said I respect you and believe that in today’s environment where many agents and brokers are giving it up, you will continue to succeed. The mortgage and real estate sales industry needed this Darwinesque shake-up.
Brandoncbsre