Here's What Happens When Joe Borrower Calls His Local Talk Show Looking for Mortgage Advice
Subject Property: Home on 15 Acres. Bought in the early 80’s. Rural.
Loan Info: 30-Year Fixed, 6.5%
Borrower Information: Never missed a payment. Presumably credit-worthy.
The caller had been asking his bank for a loan modification, but had been rejected at every turn because he admittedly was not experiencing financial hardship and had no problem paying the mortgage each month. The talk show host correctly pointed out that there’s no law mandating banks entertain loan mods.
Next, the talk show host, again correctly, suggested the caller consider refinancing his property. The caller explained that he’d already looked at refinancing but the banks were only offering rates of 5.25% (1.25% below where he’s currently) – and they actually wanted to charge him almost $2,000 in fees for the transaction.
Here’s where I felt things got interesting. The talk show host then told the caller to make several phone calls:
1) To his local Credit Union and
2) To the “big box” banks
The talk show host never broached the concept of a break even point on the refinance. She never explained that, yes, there are typically fees associated with refinancing a mortgage transaction and what they cover. Never did the talk show host recommend shopping his loan with local mortgage brokers, even though it’s possible that’s where he’d find his best deal. The safe route was her to send her caller to a “big box”.
This is the mainstream media’s take on the mortgage industry, and it’s happening like this all over the country. I just happened to catch this 5-minute conversation during my 10-minute commute to work. I’m on the record as an ardent supporter of the ethical third party originator (brokers, regional mortgage bankers). I think it’s a critical channel, and when it’s working properly banks and consumers both win. But we must begin re-educating consumers about the value proposition mortgage brokers provide. It’s not up to the mainstream media. It’s up to all of us.
I hope to see you at Mortgage Revolution. We’re going to take our industry back.