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Irvine Mortgage - I just received this email from one of my lenders about Washington Mutual’s decision to start scrutinizing brokered loans a bit more.
WaMu announced yesterday that they have a new standard for brokered loans. Attached is the full article but below are the main points. No more hidden rebates/fees and they are going to contact every borrower by phone to verify they understand their loan and the fees associated with it. I think we should be able to sell this in the field.
As part of its new broker standard, WaMu will require evidence that the broker has made certain disclosures to the borrower early in the application process, including:
* key terms of the loan requested by the broker such as loan amount, loan term, whether the interest rate and mortgage payments may change, and whether the borrowers pricing package carries a prepayment fee, and
* the amount of all compensation the borrower will pay the broker for their services, including broker points, or administrative or processing fees, and whether the broker has requested a yield spread premium.
In addition, a WaMu representative will attempt to call every borrower who is represented by a broker prior to closing to review the key loan terms directly with the customer.
Who Cares, Right?
Well, as a broker, the last thing I want is for the bank to contact my client, especially in this market. The underwriter at the bank has one job, and that is to find a reason to decline your loan. That’s why the best mortgage broker’s review client’s situations from the perspective of an underwriter; when that file’s submitted, you want it to be air tight. The problem is if the bank is talking to my client it takes the entire loan approval process and turns it on it’s head; if the bank never speaks with the borrower, then that borrower’s nothing but a file on a desk to the bank. While that may not sound good, it helps to make the loan approval process less subjective. Think about this, what if you’re working with a broker and a representative from the lender calls you and ask some questions and the two of you don’t exactly hit it off? Are you going to be a bit worried that your loan could be turned down for that? Or what if you’re trying to purchase a home for the first time, you’ve had a bad credit history, but you should qualify; when the bank rep calls you sound a bit nervous and he thinks you’re hiding something? Are you going to be completely confident that the banks rep won’t play any role whatsoever in the underwriting decision?
WaMu is only doing this to combat shady broker practices, which is commendable, but loans are difficult enough to get approved as is in this market, do borrower’s really need one more hoop to jump through?
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