Tuesday, September 30, 2014

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Big Banks No Longer Give Home Loans Through Brokers

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Many of the biggest banks in the country are getting out of the wholesale mortgage loan business, meaning that consumers need a new approach to getting a mortgage. NY1's Real Estate reporter Jill Urban filed the following report.

Getting a mortgage is a complicated and time-consuming process, but now a change in the lending landscape could make it even more difficult for some consumers.

"The climate's changing. Big banks are exiting the wholesale mortgage market, which essentially allows consumers to get their home loans via mortgage brokers instead of going directly to the retail banks," says Farnoosh Torabi, a financial expert for Yahoo! Finance.

As of now, the big four — Wells Fargo, Citibank, Chase and Bank of America — have stopped offering loans through brokers. Torabi says this means consumers who insist on working with a broker have fewer choices.

"Traditionally the mortgage broker would go out on your behalf as your advocate and shop around your loan and cast a really wide net which included big banks, small banks, medium size banks. Now, a lot of those bigger banks are gone," says Torabi.

Loan seekers who want to explore all options, including the big banks, will need to do it alone and will have to learn how to navigate this arduous process without the broker as an advocate.

"You can do a lot of your homework online. Sites like Bankrate.com, Lendingtree.com, even Google has a mortgage search engine. Do your homework and figure out what kind of rate you could presumably get and then call these retail banks," says Torabi.

Shop at as many banks as you can, big and small. If you end up with a big bank, since you will not have a broker in your corner, Torabi suggests hiring a real estate attorney as your advocate to help explain the fine print.

Don’t just shop for rates. Look for a bank that also has good customer service and can guide you.

If you don’t mind what bank you use and you want someone to hold your hand, remember that plenty of smaller banks still offer these types of loans.

"The small banks, the community banks, their credit unions are still in the wholesale game. So if you do work with a mortgage broker, and there's a lot of advantages to working with a mortgage broker, you will still benefit from getting access to these other banks, which offer very competitive rates," says Torabi.

With the household name banks out of the wholesale game, now consumers need new methods to get a mortgage.

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