Why Recommending A DIRECT LENDER Could Make You Choke on Your Coffee

This is an excellent point of view regarding the differences in the types of mortgage shops you have available to them.  I work for a mortgage banker that also brokers loans. You will get the BEST rates by working with someone who can shop for you!

Why do Realtors like to recommend DIRECT LENDERS?

Could it be that somehow the lenders who are dumping foreclosures have brainwashed Realtors by insisting that anyone making an offer must be approved with a DIRECT LENDER?

Or is it because you believe that an approval from one of those BIG BOX banks is somehow safer, better, more familiar? 

Now, please don't get me wrong. I work for a company that is a bank, and a bank is a direct lender. I can also BROKER a loan out to one of the BIG BOX banks.

But every time I do that, I regret it. I will tell you that the BIG BOX bank that is our biggest broker has gone from have 120 active mortgages with our company to less than 20 in the last six months.

I will leave it at that because it speaks volumes.

Lots of loans this year have come from people who took the advice of their Realtor and went to the BIG BOX bank. Typically they become so frustrated that someone finally says to them "Go find a broker".

Ironic, isn't it? I will then broker the loan to the same BIG BOX bank.

Or, I will do it "DIRECTLY" through my own bank, a smoother faster and more DIRECT way of closing a loan, where I retain far more control of the transaction.

Maybe, just maybe, some of the BIG BOX banks have spread themselves TOO THIN?

Imagine that we mortgage people sell coffee instead of money. You are just an average guy who wants some great coffee.

Everyone is different after all, that's why you have choices like this:



1.    Go to the supermarket and pick up coffee, stand in line to buy it, take it home.

You don't expect the store to answer questions, to recommend the newest brand, or to provide information, or to have any sort of communication with you.

It is laughable to believe they would answer a phone call at all. But the supermarket is familiar, you know where it is, and you are there anyway, once or twice a week.

2.    Go to the chain brand coffee shop next door that carries only their brand of coffee.

There, you have someone who will discuss every little detail of the coffee, and will let you sip samples.

But there is just that one brand. What if there is something better out there?

3.    You go to a locally owned gourmet coffee shop right in your neighborhood.

Someone actually smiles at you when you walk in. The name brand is there, at the same price as the supermarket.

But there is a much bigger selection than you have ever seen, and a person there to answer questions, and recommend the best new blends.

The owner of the shop lives right there in your neighborhood. It is clear he really wants to keep you as a repeat client, because his success depends on repeat business.

He answers his phone. He publishes a coffee newsletter. He sends you free samples, discount coupons, and is even interested in what you do (in case he can send you a referral).

Shall we ignore this guy because he is not direct? Or should we celebrate this guy for giving the customer a choice about how he wants to buy his coffee?


It makes me wonder if there will ever come a day when we mortgage people will recommend to our own clients, "Go find a direct real estate agent".

What would that mean?

That buyers would go to a BIG BOX bank that also has a real estate department.

I remain hopeful that buyers will recognize the value of working with a local professional, who can show them all of their options, and who will answer the phone, even on weekends.

Because sometimes, you really, really NEED your caffine FIX.


Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area.



Comment balloon 2 commentsEleanor Thorne • August 21 2009 06:17PM


Very true.  I would much rather work with someone who provides the personal touch and can shop the loan around, and I tend to gravitate to people who return my calls in a timely manner.

That given, I have a post describing a great mortgage experience (not sure how to take you directly to the post yet - this is the blog page, but it isn't long) which has an example of how I had to apprach a big box bank as the broker could not get the deal done.  Unfortunately, trying to get hold of the broker at the bank on an ongoing basis was a nightmare - that I didn't mention.  He did a stellar job but I don't have the patience to wait days for an answer and, if I can avoid it, I will always go back to a broker.

Posted by Jane Peters, Connecting you to the L.A. real estate market (Home Jane Realty) almost 8 years ago

We need help in the market place there is no lender on this earth that can offer the best loan every time. Having the option to shop around has to be best for the buyer.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) almost 8 years ago