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Brokers May Try to Keep Who the Lender Is a Secret Until the End.

Often your mortgage broker will keep quiet about who your lender is going to be, especially if the broker thinks you might skip her altogether and go directly to the lender itself. Makes sense, right?

I'll give you an example. A few years ago, a well-known lender had a program that was unlike any other in the market. It was designed for doctors who were fresh out of medical school and fresh out of money after paying for medical school. This loan program allowed the newly christened doctor to buy a home with no money down under a preferred loan program. This program was not only available in the retail sector (bank direct), but also made available to the bank's legion of mortgage brokers.

One particular mortgage broker got a list of recent medical graduates from the local medical school and sent those doctors a letter explaining this program. He got lots of responses and took lots of loan applications, but he never told his borrowers who the lender was until the very last minute.

He was afraid that the doctors would go directly to the bank and bypass him altogether. After all, he had done the hard work of finding the mailing list, putting together a marketing campaign, and taking all those new loan applications.

Fair enough. But there are two problems when this happens. First, mortgage brokers get their loan programs on a wholesale basis, so the doctor wouldn't be saving any money by going directly to the lender, and second, suppose the doctor hated that bank's guts and would never do business with that bank for the rest of her life, regardless of any loan program.

Does that sound silly? Not if you've had to go round and round with your bank, with funds not being properly applied to your account, or your mortgage payments being counted as late and reported to the credit bureau when in fact they were on time.

Some lenders have run afoul of the law or have been penalized by the federal government for unfair lending practices or discrimination. Consumers read this stuff and can have as many reasons not to use a particular bank or lender as there are stars in the sky.

This happened to me several years ago when a particular lender made the papers for totally messing up its servicing portfolio. A borrower told me that she didn't care where her loan went as long as it wasn't to that lender.

Still, mortgage brokers can keep this information secret. Many don't, but some do. If the broker doesn't tell you, it's because he doesn't trust you. Don't work with a broker who doesn't trust you. Trust works both ways, right?

 
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