Transparency in my opinion is an abused word or misunderstood. I would have to assume that there are two different ways to define transparency when it comes to mortgages, may it be Conventional, VA, or FHA mortgages.
Here is one definition that I hear from some mortgage lenders in today's market.
- They would define transparency as : A lender that is able to share with the consumer exactly what they are making on a loan. Allowing the consumer to see the yield spread. And several will even go a step further to say that each lender should have a flat fee per mortgage. The scale would be dependent on the type of mortgage, from full doc to no doc. Some outline this in regards to how much work goes into that loan. Full doc would be the highest pay out because you need to document everything. A stated loan would be less expansive, followed by a no doc, which requires less documentation.
- The other definition of transparency as defined by wikipedia implies openness, communication, and accountability. I would add to this and state honesty, sincerity, and someone that is real, not a paper pusher.
The problem that I am seeing in today's market is that everyone wants the best deal. And no, I can't blame them. But when you have a sales person on the other end that is cutting their pricing to the bare minimal. so that the consumer chooses them because they had the best price, this can sometimes backfire. With the ever changing market, with conventional mortgages in many cases being more expensive than FHA mortgages, and just for the fact that you have many loan officers that only have experience with easy loans, this has created a disruption in genuine sales. The word sales person should not become an evil word. Nor should the word mortgage company or loan officer. But the mortgage industry has been labeled in many cases as not-so-trusting.
I hadn't really thought about transparency as a lesson until I finally got a loan to settlement last night. It had to be the easiest loan ever in my 15 year career, yet the hardest to close. Why was this? Because we had to act as a broker because of the type of program and rate. My company and I specialize in FHA mortgages and regular conventional, VA, and subprime loans. But this loan was a 5/1 arm and many of our in-house investors had good rates, but not the best rates. This client kept shopping on the internet and kept telling me what the rates were. Overall, I had one investor that had this great rate so we brokered through them. Big mistake because it took 3 weeks longer than it should have. My point? When you lose control to another company, you are at that companies mercy. The general public doesn't understand this. Hence why so many internet companies get a bad name.
Overall, in my opinion, it's better to admit the failure. And in the case of this particular loan, it proves that the internet can make transparency very false. The old saying would be, "it's not always worth the paper that it's written on". I even paid for the clients closing costs on my initial good faith estimate. The other so-called rates by large companies online showed great rates, but in small print, also showed fees. But the average consumer doesn't read the small print. And even though we delayed the closing because of the lender that we were selling the loan to, I never went back on my original good faith estimate. I extended the rate 3 times at my cost. I still paid for the closing costs as promised. The client was extremely upset with me, which I can't blame them. But I never changed the rate, even though rates went up. The ending result? Just a longer period of time for the refinance to take place. This is the message that people should hear. Because most lenders would have raised the rate or the fees. Or, if anything, denied the loan. Yes, I will never get any referrals from this couple. But I still have my dignity, professionalism, and can sleep at night.
By being transparent about decisions, mistakes, failures etc. we will earn more trust from the people who depend on us. And not broken promises because that mortgage lender or loan officer wanted to get them in the door, with the intentions of changing things later on. Get to know your loan officer, their personality, and to see if they sound honest and sincere. This is just my opinion, but in an ever changing market, could be the difference between what was a great rate and what turned out to either be an okay rate or a closing that will never happen.
My opinion on the real transparency issues? Get to know who you are dealing with. Not only someone that you can trust, but someone that you can relate to. : The Life of Jeff Belonger -- Who is the guy behind the numbers ????
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Copyright © 2008 by Jeff Belonger
Jeff, I know what you mean, we bank as well as broker. It is tougher to do the outside stuff than when we do it in-house.
Dave
Before I reply to everyone.... my main point behind this post was that even though this loan was delayed, not once was anything ever changed from the initial good faith estimate. Even when rates got worse from the initial application and loan lock. Hence the part of transparency that I am talking about. Someone that is honest with integrity. And someone that won't pass their mistake onto the consumer as in higher pricing or fees.
DAVE..... yes, it is tougher to broker. But my main part of this post was the quick summary that I wrote right above your name. thanks for stopping by.
JENNIFER...... I agree... so many fakes out there. This is who I am... things happen. It's those that can still make it work, even though it's delayed, and still not change anything. Thanks
LARRY...... I agree... but the ones screaming this are the brokers. And in Florida and California, so many of them are brokers because from a companies perspective, it's cheaper to be a broker. Many have no clue that it costs money to have an underwriter and closer in-house. And that we take more of a risk.... And there is so much more in regards to this. But my main point of this post was transparency of the loan officer. Not passing their mistake or delay onto the client.... which happens more than often.
KENT....... yes, this is true. This client several times kept telling me that rates were better than what I was offering. And they were going to one particular web site that has mulitple law suits against them, because of the misleading advertising by the lenders on this site. You need a full GFE before you can truly start to shop.
MONIKA..... I agree.... and I loved your post that I just read. But as I am telling so many here, this post was more about the transparency of the loan officer. If the lender delays something, not to change the initial rate and fees... most people a month later, with rates changing, would have run for the hills.
Babe RuthHank AaronBarry Bonds of this Industry. Fair pricing & Volume = Successful Business.Jeff - How very true!
A couple of things stood out...
That's horrible business sense. What were you thinking? Actually, I know exactly what you were thinking. Which is why I would never hesitate to send anyone your way.