When should you use a commercial loan broker? When you’re frustrated with dealing with the incompetency and lack of follow through with your local banks, for starters. Time is money, it’s an old and over used saying, but it is true.
How much does it cost a borrower in terms of money and time if they take their loan request to a bank and after 4 months the loan doesn’t close and they end up declining the file? Many borrowers are facing ballooning loans and will incur a technical default should they not refinance the debt in time. Having a default, even a technical one, is extremely damaging to financing the property in the future.
Borrowers want to avoid paying a commercial loan broker 1%, however they are used to paying commercial real estate brokers 5%… Many would argue that mortgage originators do much more work and have to have much more technical knowledge to get a commercial real estate loan closed.
Even if in less dramatic situation where the borrower is just considering saving time by working with a commercial loan broker, rather than going out and shopping banks and processing the loan on their own, it still makes a ton of sense to use a qualified commercial loan broker.
We see many borrowers make costly mistakes when they go out on their own. Hiring an appraisal company directly is a simple and all too often mistake we run into. Borrowers, after spending $3,000 on an appraisal are shock to learn that the bank/lender will not use it, as it is against the federal banking rules. Also, we see many borrowers that buy properties on a land contract, do so with getting any type of environmental studies done. They could be buying Chernobyl and not have a clue, because they want to save $2,000 on a property they dump $500,000 into.
Another component of this and a huge mistake borrowers make is that they send a loan request to a bank without knowing how healthy the bank truly is and what their specific appetite is for the type of loan submitted. This is difficult information to gather as the bank loan officer isn’t going to tell a borrower, “hey I think we have a 25% chance of getting this done.” The bank’s loan officer is most likely going to throw it against the wall and see if it sticks. Your chance of closing your loan will dramatically increase by hiring a commercial loan broker.
Tags: Broker, Commercial Loan, Secondary Markets
There are several small-time mortgage companies that are good, but do not have wide exposure due to their various constraints. Such companies take up offers from larger companies to become their net branches. Mortgage originator companies are on the lookout for potential net branches in order to expand their businesses. Consequently, there are several advertisements by large companies inviting small companies to become their net branches.
Mortgage originators set up some guidelines to select their net branches. The net branch must be licensed to perform mortgage business in their area. They must have two or three years of experience in the mortgage industry, and must be adept with procedures such as originating, processing, undertaking and risk analysis of mortgages. It is an added advantage if the prospective net branch has its own goodwill within the market. Besides these, it pays to have superior communication skills and desirable personalities. Originators perform background checks on their candidates, and also require one or two esteemed references. The entire selection process of a net branch is performed under the rules of the Housing and Urban Development (HUD) code, and candidates may also have to appear for a written examination on the subject of mortgages.
There is an overabundance of opportunities for companies wishing to jump into the mortgage net branching bandwagon today. Almost all top-notch mortgage companies are inviting net branches, even offering up to 90% of the commission on each loan they can close. Most of the advertising for net branches is done online, given its worldwide reach.
Notwithstanding the fact that they will lose their own identities and become part of a huge conglomerate, small companies are lapping up net branching offers. The reason for this is that they get nationwide exposure, and can conduct business without having to bother about state licenses.
Tags: Commercial Lenders, Mortgages Processing, Secondary Markets