Breaking through the Barrier between Borrower and Banker

The Barrier of mistrust between a borrower and a banker is a natural result of the mortgage process itself thanks to the deregulation that has given the consumer many more choices. Along with choices and options come good choices and bad choices.

If there was one thing I could accomplish it would be to break down this wall and put back the trust and respected relationship between these two parties that I can remember growing up.

First, let me give you a little history as to where I believe this barrier has come from and then I will give you an idea of how I hope to break it down.

The mortgage industry itself is still young.

It was only about 20 years ago that this industry became deregulated. Before that, you had only one choice for a mortgage. The Bank.

You would head on down to the corner savings and loan, sit at the big desk and put your trust in the hands of your banker to take care of your mortgage.

Interest rates seldom changed more than a couple of times a year and you and your banker both knew that the mortgage you took out when you bought the home was very likely the only one you would have.

The bank loaned you their money, you made the payments to them and that would stay the same the entire length of the loan. Since all your accounts were right there, if you needed that extra money for a car or college or a home improvement, you just headed down to the bank.

I can remember my dad dealing with the same bank and banker for most of my younger years. Life was simple, you didn't need to provide all these documents and they didn't ask you all these questions because they already had all the information.

I guess this is what some would call "the good old days."

How things have Changed!

Today, you easily have a hundred choices between the web and your local companies. The deregulation gave the consumer competition, better choices and, in the long run, for most consumers, better pricing on their mortgages.

However, just like every other time we have tried to make things better for the consumer in this country, this bag is full of mixed blessings.

The goal was to have mortgage rates tied more closely to the cost of the money that actually funded these mortgages. This would allow the consumer to truly pay the "going rate" for their mortgage on the day they secured their loan.

I can hear what the consumer advocates were saying back then.
"How great this will be for borrowers, the banks will now compete between each other and we all know that competition is the heart of the American way!"

Looking from only one side, they were saying, "Now consumers will have a choice and be able to have more control over the transaction. The banks will have to ask us for our business and this competition will cause the banks to have to make less in order to stay competitive. The result will be lower mortgage rates for each and every borrower!"

Growing Pains
Twenty years later, both the consumer and the mortgage companies themselves are working through growing pains as to how to deal with each other and not get taken advantage of.

Many borrowers don't realize this, but this fear works both ways.

The consumer
Thanks to some of the people who have become loan officers or mortgage brokers, some consumers think that the person they are calling is either some $7 per hour doofus reading off a sheet what the rate is or else they are some used car salesman ready to trick them into paying too much as soon as they catch them off guard.

The sad part is that many of the people answering the phone are exactly what the borrower is afraid they will find. Instead of being able to call for advice they find people on the other end of the phone that know less than they do. Even worse, borrowers will find salespeople who want to steer them towards products that just give the salesperson a larger paycheck instead of giving The borrower the best deal or product for their situation.

So, figuring that the person on the phone really isn't out in their best interest, the consumer tries to find information on their own. Reading the Sunday paper or columnists on the web, the consumer tries to come to a conclusion about which product they really need.

What do you really find as a consumer? Conflicting answers to your questions, advice that doesn't quite fit your circumstances and outdated information that doesn't really apply to you. Most consumers get the feeling that there is so much information that they will never understand it all and end up more confused than when they started the process.

The banks themselves have analyzed the mortgages that their borrowers have taken out and have discovered that only 31% of borrowers are in the best program for them!

31%!! I believe that is because after taking in all that information, many borrowers insist on a 30 year fixed mortgage because if they insist on a program the person they called won't have a chance to take advantage of them.

Have you had that feeling? Here you are, looking for advice and the people you are supposed to call to help point you in the right direction are the ones you have to watch out for. Wouldn't it be nice to find someone who has your best interests at heart?

Well, I think when you speak with me you will know you have found just that and I am determined to change the feeling of confusion and distrust in each and every one of my clients.

The Mortgage Banker
Just so that you can get a feel for what it is like on the other side of the fence, many of the good mortgage bankers in the business will simply refuse to get into the practice of quoting rates for shoppers.

Why is that? Simple, some quick talker will convince the shopper that they have a better deal and then change the numbers at the closing table on the assumption that very few people will walk away after getting to that point in the process.

The view of consumers from the Banker's point of view is also going through a process of growing pains. In the same way that the salesmen types have caused the borrowers to feel insecure, the mortgage bankers have developed a mistrust in the borrowers.

The mortgage banker sees shoppers as mistreating and not trusting them. Putting in applications with more than one lender and making a banker work for free is one of the most common tricks borrowers play.

I can't tell you how awful it feels to get the title work be done, forward the application to be underwritten, have the processing done and then just get a message on your phone saying "I'm going with someone else." I used to just bite my tongue, because I know that person has been taken in by some fast talker.

I have not ever been involved with another business where a consumer asks a company to perform services and then expects to just walk away without paying for the time they have asked someone to invest in a project.

Can you imagine hiring someone to design a kitchen for you and draw all the plans, take bids and even apply for permits only to then take those same plans to another Kitchen Company to use? In today's society, that would surely lead you to court and you not getting a kitchen at all until the courts had straightened it all out.

Thanks to tricks borrowers have played before, the banks themselves now require you to sign a 3 inch thick stack of documents to ensure that the borrower will live up to the terms of the contract. I hear clients comment all the time about how many documents they have to sign at a closing and each and every time my response is the same. "This is because of the unscrupulous borrowers that have come before you."

Breaking Down the Barrier
So how are we going to get back to the good old days?

You want to feel secure in knowing you got the best deal. Your mortgage professional wants to be assured that they will be paid for any work that has been done.

I am not sure that those days will return, but thanks to the internet you can become educated on the process, learn to locate a mortgage professional who will treat you fairly and learn to compare the options that have been placed on the table for you.

Thanks for reading.

Harry Smith email Harry@dailyinterest.com or reach me by phone Office 1-248-548-7655 Cell    1-248-514-9000

Drew Smith email drew@dailyinterest.com or reach me by phone Office 1-248-548-7655 Cell    1-248-703-7770

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