What, you are not on Twitter yet?
If you aren’t on Twitter, you are missing out on millions of conversations being had right now – and you might be surprised to find out how much you can learn just by listening to the conversations that you are interested in.
Say you were in the process of getting a mortgage. You might be surprised to learn that your loan officer is not your friend. Or agent.
Local loan officer Steve Lines announced:
And I find that many people are surprised to learn that a loan officer works for the bank, he does not work for you.
In Real Estate, the concept of agency and fiduciary responsibility are commonly used when speaking about clients – and because a Realtor has a fiduciary responsibility to their client to represent their best interests, I often see people assuming that the loan officer has some kind of fiduciary responsibility as well.
But they don’t.
I agree with Kristin LaVanway, it can be scary.
A loan officer is working directly for a bank or acting as a broker – and in either situation, they are trying to maximize profits. In simple terms, the way to maximize profits is to buy low and sell high – or in banking terms, borrow at a low cost and lend at the highest possible cost that you can still attract customers.
And like it or not, this is the way the mortgage business entire banking system works and has for decades.
What is the solution to this? Steve did a great job of articulating the three basic options:
And my answer to “what *should* happen to help the consumer?” is officially:
The first thing that is going into place effective January 1, 2010 is there is a new Good Faith Estimate that will be used. My personal opinion is that the new Good Faith Estimate is probably only a first step as to what new regulations will take effect – all in an effort to protect consumers, increase transparency and regulate financial institutions that are (or will be) deemed “too big to fail”.
Will the new regulations help protect consumers? I think they will help but in my experience, you can never fully protect ignorance. If you are in a situation where you are educated enough to become a homeowner, I highly recommend becoming at least slightly educated about the process of getting a mortgage.
As does Steve:
Steve went on to say that in the mortgage process, the borrower is asking for the bank to lend them money. The bank offers the borrower terms of a loan. The borrower can then choose to accept, decline, negotiate or continue shopping.
But perhaps the most important thing to keep in mind is that no matter how much you like him, no matter how good he looks in a blue shirt, no matter how much you just plain trust him…
Your loan officer is not your friend and not your agent.
So be sure to educate yourself, shop and always read the fine print.
About the Author: Justin McHood is a mortgage broker with VanDyk Mortgage Corporation. You can find him at Arizona Mortgage Team, on the Zillow’s Mortgages Unzipped Blog, and at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.