The subject of my last article was a publication by Consumer Reports in which the editors recommend that borrowers shop around online and deal with large banks instead of mortgage brokers. After receiving numerous responses questioning that recommendation, I am pleased to report that Consumer Reports has updated the text of the original article.
In the revised version of the article, Consumer Reports now advocates that borrowers should include credit unions, mortgage brokers and mortgage companies when they begin the task of comparing rates, terms and programs.
One of the more notable voices in dissension to the original article was John Councilman, president of the National Association of Mortgage Brokers (NAMB). His rebuttal to the article was so impressive to Consumer Reports that he received a personal response, which he posted and wrote about on the NAMB website.
According to Councilman, it was positive news to learn that Consumer Reports had removed their guidance encouraging consumers to begin shopping for a loan at a specific website that only features large banks. He writes that, “Online shopping is often disadvantageous to consumers ... it is too easy to make a costly mistake. It makes little sense for consumers to apply online when online offers are seldom a better deal than those of in-person applications with a licensed loan originator.”
Councilman points out that it is easy to find a highly qualified loan originator, and that loan originators undergo background checks and rigorous educational requirements. In his view online applications can be risky for consumers because of the potential for identity theft.
One of the main points that Councilman makes on the NAMB website is that borrowers should go against the advice put forth by Consumer Reports and avoid using the Consumer Financial Protection Bureau’s online Rate Checker. “Nearly everyone in the industry agrees,” writes Councilman, “that the CFPB is doing a disservice to consumers. The Rate Checker is one of the worst places to shop [for] rates.”
Since the Rate Checker uses data from a marketing firm to figure out what rates are currently available on the open market, there is no real proof that the rates were actually received by consumers searching for a loan. Further, the Rate Checker’s failure to provide fees, APR, finance charges and other information represents a violation of the Truth-in-Lending Act.
The bottom line, in my mind anyway, is that it is always preferable to work with a real-life person who has local ties and a vested interest in the community rather than a large, faceless corporation. There is a misconception out there that the too-big-to-fail banks offer more competitive rates than the smaller entities such as mortgage brokers; however, I can confidently say that I prove that wrong on an almost daily basis.
Moreover, the service provided by a smaller company will always be superior. As I wrote last month, people who value price over service usually end up with lower customer satisfaction ratings and lower overall savings. For a free assessment about your buying power, contact me at the number below.
Patrick Stoy has 16 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit www.macmtg.com. Patrick can be reached at [email protected] or 910-509-7105.