Posts Tagged ‘mortgage companies’

Who’s Wachovia Looking Out For?

According to a front page story in the Charlotte Observer (Sunday March 30th, 2008), Wachovia is putting pressure on it’s loan officers to push it’s “Pick-A-Payment” option ARM mortgage program. The story highlights a borrower that approached Wachovia to refinance her home’s mortgage only to be “sold” on the “Pick-A-Payment” mortgage program. After everything finally was disclosed, the homeowner realized that this mortgage program’s interest rate was higher than the mortgage she currently had! So why did the loan officer advise this program over the traditional Charlotte 30 year fixed rate mortgage program with a rate over 1 point lower?

Maybe because Wachovia is putting pressure on their loan officers to sell it!

According to the Charlotte Observer, Wachovia has placed minimum requirements on their loan officers to sell a certain number of each type of mortgage loans they offer. Failure to reach the minimums in each category can result in discipline, including termination! So instead of offering the best mortgage program to fit the borrower’s needs, Wachovia’s loan officers are under pressure to steer borrowers to the mortgage programs that fits Wachovia’s needs! If a Wachovia loan officer has sold enough traditional mortgages for the month, there may be more pressure to steer a borrower to a different product even if it is not in the client’s best interests. And with Wachovia currently being number 2 in these types of option ARM programs, obviously the sales pressure is great!

If I were to offer or advise the wrong mortgage program to a borrower, my ability to close a loan is severely limited. My focus when working with any borrower is to find the best mortgage loan in Charlotte to fit their needs and close it in a timely fashion. In my humble opinion, looking out for the borrower’s best interests is not “sales”, but is instead a valuable “service.” I don’t need to sell anyone on my services when I offer them the best mortgage program for their unique needs.

So when you are shopping for a mortgage loan in Charlotte, look for a loan officer who’s focus is on YOUR needs, not the company’s. I am here to find you the best mortgage loan in Charlotte, period.

What is a “Net Branch” mortgage company?

“Net branch” mortgage companies are mini franchises. The idea is that instead of actually opening your own mortgage shop, you join a company that allows you to open a “branch” in their name. The attraction for the owner, called a “branch manager” is the ability to operate under a “known name”, the ability to have a corporate shield to cover the manager’s liability, and the possibilty of circumventing state licensing laws.

Basically anyone that wants to open a mortgage company (with minimal experience) can give it the ole “college try.” If it doesn’t work out, they have not totally invested themselves and can walk away at any time. The corporation is ok with that because they get set up fees and monthly fees regardless of how much the branch does. And since the corporation is not repsonsible for the leasing of space, equipment, ect.. there is no real investment on the corporation’s part either.

These “net branch” mortgage companies are also not looked at favorably by most state banking commissioners. The North Carolina Commissioner of Banks does not like these types of setups at all. There are only a couple that the NCCOB are “ok” with in NC, and that’s only because they are based in North Carolina, therefore satisfy the licensing requirements often avoided under this setup.

My suggestion is to make sure the mortgage lender you are working with is a solid company. With so much on the line, you do not want to trust your most important financial decision to a “net branch” operator seeing if “this is for him.” That could leave you with a “Net Loss.”

Residential Mortgage Center is a full service, FHA approved mortgage company in Charlotte NC operating under a North Carolina mortgage lender’s license. And while we actually have four offices across NC, they are fully owned, operated and managed by Residential Mortgage Center, and are not “net branches”.

Charlotte New Home Buyers get Better Deal!

Most large home builders today also own mortgage companies. This is an additional profit center and until recently, they have forced their home buying customers to provide the additional mortgage profits. These builders will typically offer tremendous “savings and discounts” when buying one of the builder’s homes, but ONLY if you use their mortgage company. And that is when the mortgage company will hit them with more fees and higher rates, all as an attempt to get back what they “gave away” with the home’s “discount.”

This is one of the down sides to “affiliated arrangements.” When your real estate company or builder owns your mortgage company, title company, insurance company, and attorney’s office, one must proceed with caution. All of these areas are potential profit centers, and while I have nothing against profit (profit allows a business to stay alive and help others) I do have a problem with the extra profit being “sold” as a way to “save” you money!

Recently, Ryland Homes / Ryland Mortgage agreed to make changes in how they conducted these “discounts.” In an settlement with the North Carolina Commissioner of Banks, Ryland Mortgage has agreed to not inflate mortgage rates and fees to cover the “discounts” of buying a Ryland Home. Ryland also agreed that “discounts” would be true discounts and that if any discount requires use of their mortgage company, it would be fully disclosed to the buyer.

The NCCOB believed that Ryland had over charged homebuyers beyond the legal limits in North Carolina. While not willing to admit “wrong doing”, Ryland Mortgage did agree to refund approximately 850 home buyers to settle the allegations. On average, these home buyers should see about $250.00. (Don’t spend it all in one place!)

The good news this brings to Charlotte home buyers is the knowledge that the North Carolina Commissioner of Banks is aware of the problem and is going after these types of arrangements. And with the pressure the NCCOB can bring, we may begin to see changes in the practice of “fake discounts” and required services!

This also means that buying a New home in Charlotte does not mean you have to use the higher cost builder’s mortgage company (at least with Ryland Homes)! You are free to work with the mortgage lender you feel most comfortable with, and that can mean a world of difference in your experience!