Do You Trust Me?

January 7, 2010 | By Kelley Koehler | Filed Under Home Buying, Loans and Financing

I was talking to a friend the other day – a former mortgage guy and a general disruptive force in the industry. He’s got a small obsession with bringing transparency and openness to the mortgage industry, especially as it relates to interest rates and the various ways mortgage brokers are paid: origination fees, other up front fees, yield spread premiums, etcetera.

Now, in both the real estate and mortgage industries, there’s a decent amount of distrust between consumers and lenders, between clients and real estate agents. Historically, there’s been some amazingly dishonest people who have generally brought down the overall reputation of agents and lenders. Also, agents and lenders have a reputation for the hard sell, for pestering and annoying and pushing a sales message beyond what is appropriate.

(We’re not all like that. I promise.)

Anyway. We were talking about people shopping for agents and lenders online. I’d say 90% of my home buyers contact me without having talked to a lender first, or even really thought much about talking to a lender and getting pre-approved for a home loan. In my experience, that’s because people don’t know they need a pre-approval that early on in the game. He contests that people don’t get the pre-approval because they don’t trust the lenders either.

I say people don’t get the pre-approval because of a lack of knowledge about this process that most only go through very few times in their lives. He says it’s a trust issue.

What say you?

Comments

5 Responses to “Do You Trust Me?”

Rail Life on January 7th, 2010 12:50 pm

“What say you?” – I say, Kelley is right wwaaayy more than she is wrong. That’s assuming she has been wrong in the past. That, I can not verify…
Most people have no clue that they should talk to a mortgage person before looking for a home. If more agents and lenders did it “right,” everyone would benefit. Yeah, good luck with that one.
Warner Onstine on January 7th, 2010 1:13 pm

When we came to you we did not know we needed to get pre-approved. A previous Real Estate agent nudged us in that direction but didn’t out and out say “You need to get pre-approved before looking at house. No really, you need to get pre-approved.”

I’m so glad we did, otherwise we wouldn’t have known how much of a house we could really afford, or be able to make an offer so quickly.
James K Barath on January 7th, 2010 3:10 pm

As a mortgage planner, I would have to concur with you in regards to the fact that many consumers do not know or understand the proper path to home ownership.

The trust issue that your friend references is due to the reality that many Realtors do not emphasize the pre-approval process to home buyers which leads consumers to question why the mortgage professional is telling them that it is imperative.

It really does surprise me the rift amongst Realtors and lenders. Can’t we all just get along for the sake of our mutual clients and the health of the industry?
Kathy T. on January 8th, 2010 1:20 pm

When I bought my first house, we spoke first to a Realtor who gave us the name of a lender. We just didn’t know. We saw HOUSE and thought WANT and called. We would’ve had no idea who to call if the agent hadn’t told us because – let’s face it – you see a lot more signs around with the names of agents than you do lenders.

I love people calling me first now! By the way… kudos for your friend who advocates transparency in the mortgage market. The new HUD statements kind of help with that, though I’m not sure all lenders love having to attach the “compare your lenders” page.
Scott Stephenson on January 9th, 2010 9:48 am

Commander Adama would have said, “trust but verify”.

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