subject: Temecula, Murrieta, and San Diego Mortgage Brokers Improving Their Images [print this page] Temecula, Murrieta, and San Diego Mortgage Brokers Improving Their Images
Mortgage brokers have been the punching bag for the mortgage business for much of the past few years. Due to the high degree of forclosures in the Temecula and Murrieta areas of California, the pressure in and around this specific location and San Diego has been maybe even more intense. Some brokers created bad blood back in the subprime days of the early and mid-2000's. These risky loans were sold almost exclusively through brokers and it's well accepted how poorly subprime mortgages worked out a horrible failure. The good news for homeowners is that most of the Temecula, Murrieta, and San Diego mortgage brokers who were selling those loan products are no longer in the industry.
Skip forward to 2011 and the banking environment has changed dramatically- not just in Temecula, Murrieta, and San Diego, but across the US. Subprime mortgages are gone. Temecula, Murrieta, and San Diego mortgage brokers are making loans to only borrowers that can fully document income, prove they have a few bucks in the bank, and have decent credit.
Before we proceed let's take a second to describe what "brokering" a loan means. We all know that brokering any product or service means that one party will act as a conduit for another party for renumeration. In terms of brokering mortgages, it is very important to recognize there is a completely separate channel for brokers working with the banks that will ultimately lend the capital. This is called the wholesale channel. It is a division within most banks that is specifically set up to interact with mortgage brokers. As one would imagine from recent mortgage history, the wholesale channel within the banks is very concerned with originating and funding only good quality mortgages.
Now let's get to the "why" part of this topic. Without getting too technical, it's significant to understand the substantial majority of home loans today are either sold to or insured by Fannie Mae, Freddie Mac, FHA or VA. In simple terms, this means banks are underwriting nearly all loans to a set of guidelines set up by one of these entities. Each one has very detailed guidelines that must be met in order to lend money. Many banks take the guidelines as step further and add "lender overlays" which means they make the guidelines even more tough than the base guidelines from Fannie Mae, Freddie Mac, FHA or VA. This brings us to the most important edge brokers have in today's marketplace- the ability to work with many banks. If Bank X has a lender overlay that says they will only approve borrowers with a minimum credit score of 640 when the actual guideline allows for a minimum score of 620, and your score happens to be 635, Bank X will not approve your loan. However, if you are working with a broker, he/she will know which banks do not have that overlay. Keep in mind credit score is just one of countless rules where lenders could have an overlay.
Undeniably, there was a cross-section of Temecula, Murrieta, and San Diego mortgage brokers that gave the entire business a bad reputation. But now that cross section (the subprime broker) is completely out of business and we have returned to the days where mortgage brokers do serve a very important purpose assisting quality people through a very intricate lending environment.
