Newly licensed real estate brokers, here are some questions you can ask loan originators before deciding on who you should refer your home buyer clients. I recommend interviewing at least 3 licensed loan originators and maybe 1 registered loan originator who works for a depository bank. I recommend avoiding Wells Fargo at this time, due to the continuous and numerous ethical and legal problems throughout their entire organization.
Here are the questions I would ask a loan originator, if I were a brand new Realtor.
- Do YOU have any personal or business relationship with any other part of the mortgage/real estate machine?
Title, escrow, appraisal, home inspector, etc.
Conflicts of interest in our industry are a real thing. Conflicts of interest can render us blind to the truth that’s right in front of us. All close, personal and/or business relationships should be disclosed to you and your clients openly and honestly. Take note of any defensiveness.
Related question: Does your mortgage company have any business relationships with any other companies? - Are you co-marketing with another lender?
Why would you want to work with a lender that is helping you competitor be successful with the lender’s dollars? The lender will never take kickback money out of the lender’s own profits. Instead, the rates and fees at this mortgage company will be slightly higher than another lender who does not violate RESPA.
And why would you want to work with a lender that violates RESPA? - Who are some of the other Realtors you work with?
Immediate follow up question: If I called these Realtors, what would they say about you and your company’s ability to get loans closed on time? - How does your company prioritize purchase money loans over refinances?
It’s common knowledge that some banks prioritize BANK CUSTOMER transactions (such as a refinance) over purchase money loans. In a falling rate environment, the bank’s mortgage division will bring in way too many refinance transactions. Subsequently, their processing and underwriting departments can’t handle the overload…..unless you’re a bank customer. So why should non-bank-customer home buyers be thrown into this chaos? - How long have you been originating loans?
It’s okay if the loan originator is brand new. Heck, you’re also brand new. Sometimes the most long lasting business relationships are those that begin when you’re BOTH new and can both help each other grow. Loan originators who are brand new do not have a massive pipeline of loans to manage and that means the LO can work super duper extra hard on your loans. That also means the LO will be practicing with your home buyers. As long as the LO has a good support system in place such as an onsite branch manager and someone willing to train the LO, (like a processor who loves training new LOs) you’ll both be learning as you go. If the loan originator is exceptionally seasoned, he/she will have all kinds of wonderful stories about originating loans for decades that will thrill and delight you. Some LOs absolutely love working with brand new Realtors. Other LOs hate it. You’ll find out who is who pretty quick when the haters don’t return your calls. - Can you tell me of a story about a time you faced an ethical dilemma as a loan originator, and how you solved the dilemma?
The story is irrelevant. Instead, you’re watching to see how this person decides to answer the question. You’re looking for people who are open and honest and mature and reflective. Nobody’s perfect…including you, brand new Realtor. - Who is your biggest competitor and how are you different?
All lenders have basically the same rates, fees, and programs. What makes this one company different from the rest? Also, listening to how a loan originator talks about his/her competitor will give you insight. - Have you or your current or former employer ever been subject to an enforcement action by a state or federal regulator?
If the loan originator says they don’t know what this means, they might be lying. Or brand new.
Do your own research first, so you’ll know if they’re telling the truth.
Here’s the WA State DFI search link.
Here’s the list of CFPB enforcement actions
Here’s how to tell if an individual LO is properly licensed or registered. Newer enforcement actions are posted here, too.
Most real estate broker have around 3 licensed loan originators that they work with, depending on the particular home buyer’s needs. Some home buyers prefer to communicate only via text, while other home buyers want and need lots of verbal and face to communication and reassurance. Some home buyers are very savvy and others are completely overwhelmed with all the paperwork, decisions and emotions. Some home buyers have special needs, such as the need for a bi-lingual loan originator or the need to take questions outside of business hours. All home buyers want the transaction to close on time or earlier. Select a few LOs give them a try. Then after the transaction is over, reflect back on what could have made the transaction smoother for the home buyer and share that info with the lender. Try them again and see if they listened to you and made your recommended changes. If not, try working with someone else. You WILL find your 3.
I don’t believe any licensed loan originator will be ready for your questions, especially coming out of the mouth of a brand new Realtor. But you’re different. Because you just read this article. If I were a loan originator being asked these questions, I’d totally want to work with you. But first I’d ask you a similar set of questions. Most loan originators are honorable, ethical, and are highly motivated to work hard for you and your clients. Welcome to the industry. May you have as much fun as I am still having, 34 years and counting.