Jack M. Guttentag The Mortgage Professor

Yahoo! Finance User - Friday, April 4, 2008, 8:02PM ET  Report Abuse

• Overall: 1/5

For the record, I used to be a loan officer, but have since moved on... Some of the points/tips Jack give are great, and can be applied to any industry, but some are a little over the top. This is minor, but I can't help myself from pointing out that there is a difference between a Mortgage Broker and a Loan Originator...not all loan originators are mortgage brokers. I often wonder why folks complain about not getting full disclosure...every loan application I've ever seen (whether from broker, bank, or credit union) states very clearly the terms of the loan. In fact, in my experience, most Brokers over-disclose with pages that repeat themselves. I have almost always received lower rates from my Broker than my credit union or bank as well. I also wonder why everyone wants to know how much a loan originator marks a rate up...I never hear anyone complain about how much Starbuck's marks up a cup of coffee...or even how much a Lexus is marked of from it's costs. If you don't like the price of those things, you can shop around... By the way, I believe it is illegal for a loan originator to share a lender's rate sheets with the consumer...Countrywide doesn't want you to know that the mortgage broker down the street can give you a better rate on one of their loans than their own Countrywide loan officer can ;) ... Speaking of shopping around, be reasonable. You don't make your Starbucks barista make you a drink, only to go across the street to another coffee shop to make you a drink, then take a taste of both and then choose which one you'll buy. People don't realize that often times when they shop around, they are often making several legitimate loan originators do a lot of work that they'll never get paid for. So be careful before you waste everyone's time - you can get a really good idea of what rates are at online (www.bankrate.com). In all honesty, most loan originators are not going to gouge you...so if you feel comfortable with someone, or get a referral to someone - give them a try and work together. If a huge red flag goes up - then of course, go to someone else... Conclusively, Jack G. would help every consumer 100x more if he spent more time trying to influence lenders to set reasonable loan parameters for borrowers - rather than trying to teach them how to pick a good loan officer.

ClarkeG - Friday, April 4, 2008, 12:40PM ET  Report Abuse

• Overall: 1/5

I ahve found the secret to obtaining a competitive loan that closes ON TIME is to never use a broker. I always use mortgage BANKERS. A broker has absolutely no control over the loan after they have collected the papers from the buyer. Sometimes they have no access to the underwriters or other real decision makers on the loan they are trying to get approved. They also have no control over when the final documents are drawn. In other words they are a middle man that just collects initial documents and then passes the loan off to the real lender. No thank you. A mortgage banker has control of every aspect start to finish. I have had a loan turned down by a broker after them working on it for over 30 days. I think took it to my mortgage banker. Now we did have a survey, appraisal, and title work so it just had to go thru the approval process. How long did that take? Thirty minutes. We were closed and funded in less than 24 hours. A broker, if they could do it, would take a minimum of 10 days. When you look for a lender look for mortgage bankers not mortgage brokers. Try it and you will see what I mean.

bmo - Friday, April 4, 2008, 2:11AM ET  Report Abuse

• Overall: 5/5

Jack you have written alot of trash lately. This was a very good article though.

RomanS - Thursday, April 3, 2008, 9:00PM ET  Report Abuse

• Overall: 5/5

Very good continuation of the discussion, I believe the professor covered the most important topics at the basic (and perhaps not so basic) levels. Educated consumer is our best client.

Yahoo! Finance User - Thursday, April 3, 2008, 7:38PM ET  Report Abuse

• Overall: 5/5

Having originated loans for 16 years, the market has become completely different. Banks say one thing and the next day cancel the acceptions. Brokers work very hard to keep up with changing parameters no matter how experienced they are. Know that there is so much competition for business that they really are not making a lot of money any more and that is why I left the industry. I couldn't work that hard for $200 a loan. Trust your agent and make sure they have years of experience and even if they do, changes come when they least expect them, stated loans are almost unheard of and FHA is coming back strong. Ask questions and really listen for the answers and beware of too savvy brokers, they will swindle you and you will get swapped at the table. A great broker works with banks that allow renegotiations. Ask for that and you are golden. And take nothing but fixed in a market like this.

Lakshmi S - Thursday, April 3, 2008, 7:04PM ET  Report Abuse

• Overall: 5/5

I agree with the points made by the author. In addition, there are several other very important factors that might be difficult to list, a knowledgeable mortgage broker can alert a client before the loan process/home search begin. There are many ways a mortgage broker can help clients provided clients don't fall for the too good to be true rate quoted by some people in this cut throat industry. I am a mortgage broker and I want to help all the clients but, I am able to do that to only those who seek my advice. A lot of times, clients get carried away by hearing the lowerst number.

Love2Fly - Thursday, April 3, 2008, 3:18PM ET  Report Abuse

• Overall: 1/5

I'm finding more and more that Credit Unions are the way to go. I have never used a broker, I just can't trust them. I've used banks before but they are also driven by greed. Thus far, CU's have shown me the least greed and best services, specially if your have good membership status.

Llama - Thursday, April 3, 2008, 2:01PM ET  Report Abuse

• Overall: 4/5

For the consumer, the first article is better. If you select a bad broker there's very little you can do to protect yourself. Meaning if the broker is out to rip you off, you probably won't know it until you're already at the closing table. And at that point, with your spouse yelling at you, your kids running around the title company's conference room, and the moving truck idling outside you're just going to close and chalk it up to experience. My advice? Call everybody you know and get recommendations. Then go through the process in Jack's first article and weed out whoever you don't feel comfortable with. Then apply with TWO lenders. It might cost you a little more (two application fees), but it's cheap insurance if you ever need to walk away from one of them.

Michael - Thursday, April 3, 2008, 1:35PM ET  Report Abuse

• Overall: 4/5

Thank You. We have spoken in person before and being a mortgage broker myself I appreciate your comments and enjoy reading your postings.

Johannes H - Thursday, April 3, 2008, 12:14PM ET  Report Abuse

• Overall: 5/5

My parents guided me well, a long term loan must be cleary understood by the borrower, look at all the alternatives, have the lawyer check it out if you are not clear what you are signing. A private loan is also an alternative and cheaper, win win for both, the lender and the borrower. If you are taking a loan during the period of high interst, you may consider waiting for a while. Look at the long term picture, there are so many savings to realize but know what the savings are. Put the pencil to the papaer and calculate, this is not the time to be making quick and halve fast conclusion, it stays with you for a long time, the time of a loan.

Tom - Thursday, April 3, 2008, 11:50AM ET  Report Abuse

• Overall: 5/5

From the perspective of someone with 30 years industry experience, I'm impressed. The author seems to really understand the business, which is rare for most people who write about it. This is very good advice, I found nothing to disagree with.

WCS - Thursday, April 3, 2008, 11:10AM ET  Report Abuse

• Overall: 3/5

Thanks Mr. G. The last few times I refinanced I didn't feel I'd made the best deal however the money saved in interest covered it after a few years. In one case one case I paid a fee to opt out of the escrow account. at the closing I discovered not only the fee but over $1000 put into an escrow account anyway. The closer acted as if I were causing extra work as if it were not worth my 1000 to have her go to the computer to make the changes. I wonder who would have benefited by my 1000. I also wonder how many perhaps small details i missed correcting in my ignorance. Give me a regulated S&L and a regulatory commission which is fully staffed and has some teeth. I can't believe BS's could finance 32 times equity. Regulation is needed. Thanks again

M. T. - Thursday, April 3, 2008, 11:08AM ET  Report Abuse

• Overall: 5/5

I don't know what everyone is barking about below, but this article is mostly correct. I have been in this business for over 20 years and I can tell you it is not easy to care about people day in and day out. It takes compassion, humulity, patience, time, and effort. Just like any relationship... Thank you for the great article Jack.

Yahoo! Finance User - Wednesday, April 2, 2008, 10:51PM ET  Report Abuse

• Overall: 1/5

It's funny cuz I just realized something....While it's completely obvious that the consumer should be responsible for its own decisions (yes it's a thing), it is not beneficial to our starving economy for it to do so. If the consumer (18-35) keeps its money in its pockets and does what you're grandparents told you to do (save), this economy will fall flat on its face. Big (insert consumable) thrives on wreckless spending habits. Impulse buying... it's required to sustain our recession. I need someone to go over to OPEC and say "stop it". I need someone to go to Iraq and say "we're leaving" I need the government to not step in and bail out old money companies like BS (go figure). Let them die. No company is too big to fall and should be held accountable just as the consumer should be. I can't wait until we find a marketable alternative to gas, that oughtta be armagedon compared to this recession.

GeorgeK - Wednesday, April 2, 2008, 9:54PM ET  Report Abuse

• Overall: 1/5

Brokers do not set the terms of loan products. They find products from many differ places mostly Banks and submit their borrower information to the LENDER to have the loan underwritten. IT IS FEDERAL LAW YOU MUST TAKE THE APPLICATION if the borrower wants to make application. The broker becomes the client's advocate to get the loan, just like a loan officer in a bank. If the BROKER OR THE BANK OFFICER knowningly lied an created docuements that is fraud. BUT THE BROKER DID NOT SET THE TERMS OF THE LOAN. THE BROKER WAS NOT RUNNING THE SECURITY POOLS.. that was the Investment Banks that are looking for the BAIL OUT. THE BROKER HAD NO MORE CONTROL OVER THE LOAN TERMS THAN THE LOAN OFFICER OF THE BANK. It is improper to blame Brokers and Bank Loan officers for selling these products and if you look at one of the BANKS, "Countrywide" was the biggest of the offenders in making these loans. DONT BLAME THE BROKERS. Blame the leverging WALL STREET INVESTMENT BANKS...

Basketball Fan #1 - Wednesday, April 2, 2008, 9:22PM ET  Report Abuse

• Overall: 3/5

Whoops! Looks like some people have seen some hurt from their last refinance or purchase. Big surprise right? One item that seems to be prominent over and over is the finger pointing contest on all ends not only in the Real Estate & Finance Industry, but just in our society in general. I don't know exactly when this transition occured, but no one wants to take resposibility for thier actions from the top, all the way to the bottom. One thing you can do is continue blaming everyone else for what you did or didn't get out of something, or you can look in the mirror and check your head. Either way, you'll head in that particular direction. So with that you can continue your whining about the past and change nothing, or you can help change the future by indivdually checking yourself daily to take the higher ground in anything you do. That's all you can do as opinion and differences will never be the same. Take a step back, take a nice deep breath and ask yourself, "Is this really benefiting me and the people I care about?" You'll be amazed at the changes you will see. Good luck to all in tomorrow's change for the better!

georgeg - Wednesday, April 2, 2008, 8:51PM ET  Report Abuse

• Overall: 1/5

I worked in the Federal Savings (THEFT) Bank System for 11 years and then went to Brokerage after they forced all the loan officers out of the bank because our retirement program was to good. I lived thur the early 1990s when the RTC came in and rescued our ecomony. I have done a few thousand mortgage over the years and have never been sued or had a complaint filed against me. In my opinion Mr. Guttentag is in a way right but he should expand his scope and also tell you how to select a good mortgage officer in a BANK. But then most of them only have a few years experience as the banks treat loan officers so poorly that they leave and go into other phases of the Real Estate Industry. Mr. Guttentag should be taking on more serious issues like why the banks are not lending and how the FHA and Fannie Mae loan increase have been worthless because of the price increases associated with them. If these issues are not addressed and soon there will not be Banks Let alone Brokers in business to make loans. Looking at the polish on the shoes is not where we are. We dont have any shoes to put on our clients feet. WAKE UP WE NEED SOME REFORMS AND THEY HAVE TO DO WITH MAKING SECURED LOANS, not comparing brokers to other brokers or broker to banks. Brokers are really no more than the employees of the bank, who do you think underwrites the loans. I assure you it is not the Mortgage Professional that took the application. Put our Nation Back on Track just like we did with the RTC. The fix is to secure loans with or without equity by the FHA and get the GSE's Fannie and Freddie to losen up. Soon even Senators and Congressmen will not be able to get a loan. I think some months ago it was mentioned that Obama got a Stated Income loan that today he could not get. my two cents worth

Yahoo! Finance User - Wednesday, April 2, 2008, 8:50PM ET  Report Abuse

• Overall: 4/5

Mortgage brokers provide a valuable service much like lawyers and accountants and much like them, there are good ones and bad ones. I believe though one broker on here commented about the banks creating the loans so the brokers were just doing their job selling them. Well, the banks do bear some fault, but that the broker isn't at fault is bull. A broker should realistically look at a a customer's ability to pay and what loan would best fit their needs (in some cases ARMs work)...that's like saying, "well the guy offered to make me a crack dealer, so only the guy who sells me the drugs and the guy who buys them from me are at fault". Try that defense in a court of law. That being said there are thousands and thousands and probably I would say 80% of mortgage brokers who are honest, hard working individuals who strive to always do right. I also agree that the customer bears a lot of fault as well, some for getting greedy without think out the consequences of signing for some of these loans--but the broker does as well if they didn't fully make them aware of the loan products. In a court of law, accountant AND the customer are both responsible for a faulty tax return. Personal responsibility is important...and it applies to everyone in the chain, customer, broker and bank. They should all strive to do the right thing in these situations.

Yahoo! Finance User - Wednesday, April 2, 2008, 8:18PM ET  Report Abuse

• Overall: 4/5

Dear Broker, Money is tight, and quite frankly we can't afford to keep paying you when we can get our friends at the Fed and Congress to eliminate you. This will enable us to raise rates and fees and control the loan quality better. You understand us maxing out our fees and profits, don't you? We kept you around while things were good because, quite frankly, everyone else was doing it and we wanted market share. Now, things are different. We can't loan out Scandanavian village pension fund money any more (its all gone) so we have to really pick and choose the loans we do. Good luck in your next endeavor as an insurance salesman, stock broker trainee or waiter at TGI Fridays. As soon as we can restore confidence with the rest of the world in our dollar, our housing market and Wall Street, we will find a way to bring you back into the feeding frenzy. Until then, good luck. Sincerely, The Banks

Julian H - Wednesday, April 2, 2008, 7:50PM ET  Report Abuse

• Overall: 2/5

I agree somewhat but one thing to note: I am always there after the 2 years to refinance my client. Secondly, sometimes the lender is paying my fee like a no closing cost HELOC. At the end of the day, it is about foresight. Talk is cheap, the proof is in the pudding. Btw, I don't like writing articles, I'd rather be making money than commenting. Just had to give my 2 cents.

dennis - Wednesday, April 2, 2008, 6:55PM ET  Report Abuse

• Overall: 1/5

I agree with ohh yeah. Nobody is holding the investors acccountable for these loans. It was them, not the broker who made these loans available. What about the profits they made on these loans from the people that are making the payments? All we do is point the finger at everyone else. In Illinois where I am a licensed loan officer, they have a 3 day recission period so they can read the documents and if there is something they don't like, they can cancel the loan. These people were fully aware in some shape or form of the terms of their loan. Does anyone hold them accountable for maybe the blemished credit they might have and never worked on to re-establish? That is probably our fault as well because we were the ones that ran up the credit card debt or bought the new car and now can't afford everything that we have taken on. It is a frustrating time for everyone, but the consumer needs to take responsibilty for their actions.....

Yahoo! Finance User - Wednesday, April 2, 2008, 6:55PM ET  Report Abuse

• Overall: 4/5

Richard G points out the real problem with listening to "the expert brother in law". Richard, as many consumers are very poorly informed. -------------There are a ton of licensing requirements in California for working with mortgages. Only a third of people who take 8 college level courses and work in the field for two years with a clean record pass the darn thing!. ------------The problem is nobody looks in the mirror for the culprit. Consumers think they can buy money like pants at a discount store. ------------MONEY IS A COMMODITY! Try getting gasoline at a 80% discount. Commerce is ultimately based on trust and we have used up a bunch of that in the US.

Yahoo! Finance User - Wednesday, April 2, 2008, 5:59PM ET  Report Abuse

• Overall: 5/5

This is a good topic for the expert to stick to and expand on. For many, any heartfelt advise on this would be useful.

Sean E Cash - Wednesday, April 2, 2008, 5:38PM ET  Report Abuse

• Overall: 3/5

You guys who are beating up on brokers really need to get a life. To answer you correctly YES a broker will get you a better rate than if you just walked into a bank on your own, no one will dispute that, becuae i can shop 75 lenders right now and i'll bet my closing costs will be cheaper, guaranteed. If not we wouldn't be in business. It really bothers me when people say were snakes and all of this other crap i'm seeing you people have written. One thing your not understanding about the mortgage mess is this; Had the lenders not had the products available to sell we could not have sold these paticular loans in the first place. But beat up on the borker, why not, huh? I'm sure the line of work that your in doesn't require you to make a profit. I'll bet they give things away free at you job, right. Do you cut your hair yourself, or fix your own car, or teeth, etc. NO, you don't. You go to someone that you trust will do a good job for the service you're requesting. Why would applying for a mortgage be any different. If you don't like the broker you're working wiht find another one. Of course there are bad brokers out there. Just like there are bad mechanics, hair dressers and dentists. What are you really mad about? Were you taken advantage of by a broker? It's funny how you may answer this by saying, They didn't tell me at closing what i was getting into. Well smarty pants, i can guarantee you that the broker didn't do the closing, it was a representative from the title company. And you can bet your sweet tail that everything was explained to you in that closing. But did you say anything at the time? No you sat there drooling all over yourself saying give me the keys so we can move in. You figured you would take care of the adjustable part later when you hit the lottery. You said we'll figure it out later and in your timy little brain it never occured to you that the day might actually come that the loan would adjust. You sat there with a rep from the TITLE company ,not the broker, and signed your name 100 x's and didn't even look at what you were signing. I've seen you people do it time after time. You even had 3 full days to look over evrything and back out if you really had a problem(right to recision period). DID YOU REALLY THINK YOU WERE GOING TO BE LOCKED IN AT 3.75% FOR 30 YEARS. If so, a mortgage broker is the least of your problems. Just admit it, there is nothing anyone could have said to stop you from taking this loan that got you into your house. Time to start taking responsibility for your own actions and stop blaming everyone else for your stupid mistakes. I got into an adjustable rate mortgage when i 1st started out too. But yeah know what? When it started adjusting, i didn't blame anyone but me. Sorry folks your not going to get any pitty here. I helped you get into your house and YES i amde a profit doing it. I bust my tail doing this night and day so my wife can stay home with my kids and i'll be darned if i am going to sit back and let you people walk all over us for fighting like crazy to get you into the home in the first place. We couldn't possibly make enough on your loan to justify the amount of work we did for you. Stand up Brokers, don't let these people treat you like this. I know how hard you all work. These people writting these things are the exact ones that got themselves into this mess. Maybe you should have said NOPE I'M NOT DOING THIS LOAN. BUT GUESS WHAT? YOU DIDN'T. You call me anytime and i will take care of you and do the very best job that i can. But don't you dare come crying to me because of YOUR bad decissions.....

richard - Wednesday, April 2, 2008, 5:06PM ET  Report Abuse

• Overall: 1/5

Unfortunately Mr. Guttantag is correct. Also, unfortunately he is not describing any of the features of mortgage brokers. Most states do not license mortgage brokers. For example, in California anyone can hang their sign out and declare themselves a mortgage broker - there is no license for mortgage brokers in California. Many persons calling themselves mortgage brokers have real estate agent licenses (sales licenses not broker licenses). This would generally put those real estate agents in a direct conflict of interest with the borrower by representing a lender, but we (the state of California and the federal government) did away with those regulations. Even though we are still in the throws of the latest real estate debacle, we are already seeing adds from mortgage brokers, like Countrywide, for " Low rates on loans up to $729k in select areas - Act fast". Check the front page of Yahoo. The mortgage brokers are hot to go again, and the only thing that is going to prevent a further disaster is regulations that prevent the wholesale resale of mortgages. Regulations that limit the sale of a mortgage to the direct agents of those making the loan. Anything else is just childish wishing and hoping.

Got it in L. A. - Wednesday, April 2, 2008, 4:51PM ET  Report Abuse

• Overall: 1/5

I've never understood the need for mortgage brokers. I'd like to read a column that explains why they are better than doing your own research about which banks offer what rates and then applying at the bank of choice directly. Would a mortgage broker get me a better interest rate at a bank than I could by applying directly?

CTmortgageman - Wednesday, April 2, 2008, 4:50PM ET  Report Abuse

• Overall: 4/5

As you can tell by my name, I am a mortgage broker. I am very impressed with this article, so much so that I have printed it for display in my office. Honesty, integrity and disclosure are three critical components that are very much lacking in this industry. For that, I am very glad to see a "cleansing" of our industry as it is having a sort of Noah's Arc effect cleaning out the losers who can't swim. Getting the closing documents 2 days in advance can sometimes pose a challenge but borrowers should never feel pressured to sign if the documents don't say what was disclosed. I got some more good ideas in these two articles on providing even better customer service. Thank you.

Yahoo! Finance User - Wednesday, April 2, 2008, 4:47PM ET  Report Abuse

• Overall: 2/5

Good broker, an oxymoron.

Yahoo! Finance User - Wednesday, April 2, 2008, 4:31PM ET  Report Abuse

• Overall: 5/5

As I read through the comments it was obvious who the bad brokers are. The reason it is important that the borrower know what you are yielding,(beenthere), is one of the major problems that has caused this subprime mess because what you abused the customer with making a high yield hurt them in the long run when thier mortgages adjusted. Full disclosure I always say if you are doing an honest job.

Yahoo! Finance User - Wednesday, April 2, 2008, 4:30PM ET  Report Abuse

• Overall: 1/5

Mortgage brokers and stock brokers as a whole group are a bunch of bookies - a middle man to cut a small fee for service - covering big Wall Street criminals from the Main Street fools.