One of the things that is so frustrating about the mortgage market is that it is completely inefficient. When I worked in the industry for 10 years it was a daily frustration. It wasn’t only frustrating for me, but it led to frustration from everyone involved. Let me explain.
At any given time, the market changes hourly, there is a price that banks are willing to pay for your mortgage. Unfortunately there isn’t anywhere that anyone can go to view that price. Yes, I said it… Wall Street Experts, Bank Owners, Mortgage Backed Security Traders, Loan Officers, Realtors and definitely not the Consumers know what the price is for a loan at any given minute.
And in my humble opinion, this is the cause for most of the pain involved in the industry. Take for example your bank, they are constantly offering a price for different loans depending on different characteristics of the individual borrower and property. Then you have the source of that loan. They may be offering it to you directly or they may be offering it to a correspondent lender or they may be offering it to a wholesale lender. And they may even be offering a loan that they have on the books for sale to someone else.
But why does this cause so much grief? Try this mental exercise and let me know what you think. Save up enough money to go on a shopping spree at your favorite store for your favorite things. Now imagine showing up at the store and nothing is priced. Well there are prices, but it all depends on who is talking to you and who you are and what you are looking at buying. And as you look around you realize that there are thousands of people working with thousands of sales people and the price is never the same! So you think you find the best sales person, and you think you have found the perfect item. Now the sales person starts asking you all kinds of questions to find out what price to offer you. What? Is this really happening? Now you decide that you want to make the purchase, but they tell you that they have to verify everything that you told them! What!? It’s going to take 30 days for you to finalize your purchase? So you found your item, selected your favorite sales person, have given them all of your personal information and now you have to wait. So when you leave the store you bump into another person walking out and you compare notes and nothing adds up. What!? You are paying more for the same thing, and you have to wait twice as long to get yours!!
This is truly how the mortgage industry operates. And not just for the consumers, it’s exactly the same for the people inside of the industry!
And to add insult to injury, there seems to be a general thought that mortgage originators make more money than they deserve. I have watched thousands of originators struggle in this industry and can tell you that the average mortgage professional makes less than $50,000 per year and their job is not easy. Sure there are those originators that make that much per month, but they are few and far between. And if the regulators, and banks get their way, those guys and their money will be nothing but a memory.
So, if mortgages are so painful, why do originators keep coming back for more? Obviously the consumers need the loans and the banks want to collect the interest, but why do originators keep doing it? Actually, compared to recent history, there aren’t many originators left. I believe that those who are left are, for the most part, true professionals that love helping walk others through the mortgage minefield. Or maybe originators are simply coming back to the only thing they know how to do? And once the big banks and regulators get their way, they will be reduced to doing it for pennies.
So if you are lucky enough to still know someone left in the mortgage business, keep their business card handy and remember that they are just as frustrated as you. But unlike you, they get to deal with the chaos on a daily basis. And if for some reason you can’t qualify for the loan, don’t get too upset, they don’t qualify either.
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