I would like to talk about the differences that a person might experience when looking for a mortgage with a bank versus working with a Colorado Licensed Mortgage Broker.
I would first like to examine what it means to be a Colorado Licensed Mortgage Broker or CLMB. The State of Colorado now has some of the strictest requirement of any state to originate a mortgage in this state. Those requirements are as follows:
- 40 hours of education on topics from the mortgage process to mortgage and real estate law.
- Passing a state licensing exam
- Carrying Errors and Omissions Insurance with up to $100K/occurance
- Carrying a Surety Bond of at least $25K
- In addition to the 40 hours of prerequisite education that must be completed prior to originating any mortgages, Mortgage Brokers are required to take continuing education to keep up to date on important issues.
- All mortgage brokers are finger printed and must pass a criminal back ground check too.
- Also, if a mortgage broker has had a mortgage broker license revoked in another state in the last five years, they will not be able to get a Colorado license.
What this means for you the consumer is that you can be pretty confident that if you are working with a Colorado Licensed Mortgage Broker, you are working with a professional.
Loan officers that work for a bank on the other hand don’t have these requirements because the institutions that they work for are chartered either federally or with the state. This means that there is a good chance that the loan officer across the desk from you may not have the level of experience that you need.
Another big difference with mortgage brokers and banks is that mortgage brokers tend to be a little more hands on with their clients and the loans they are working on. This tends to be true for two reasons. One, many banks are set up (for security reasons) that the loan officer will have limited access to your information. While this can be good if you are working with someone you don’t trust, this can also lead to many problems because they might not have all the details to clarify any confusions that could happen during the loan process. An experienced mortgage broker will get to see all the pieces to the puzzle to make sure that there is no confusion and your loan is not incorrectly denied.
The second reason that mortgage brokers tend to be more hands on with your file is because their paycheck is much more determined on whether or not your loan closes. Some people will tell you that you should never work with commissioned people, but I believe the opposite. In a mortgage market that is becoming increasingly harder and harder to qualify for a mortgage, I want the brightest and the most motivated person working on my loan. A side note to the commission is that your HUD-1 Statement will show every penny being made by a broker on a mortgage both front end and back end, while a bank does not have to disclose what they are making on the back end.
If you would like to learn more about the differences about working with a mortgage broker vs. a bank loan officer, let’s get together and I’ll buy you a cup of coffee.
