Opting for In-House Loan Service

Posted: April 8, 2013 in National Real Estate News
By: Lisa Prevost

These days every major real estate company seems to have its own mortgage affiliate. Although buyers may see advantages to using in-house loan services, they should not feel pressured to do so.

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These ventures are not new, but they have gained importance since the market crash. A capable on-site loan officer became a valuable commodity for real estate agents in the tough lending climate, said Don Cummins, the director of legal services and professional standards for the Hudson Gateway Association of Realtors.

“The need to have a broker who gave a preapproval that actually worked became so important to real estate brokers that those relationships became golden,” Mr. Cummins said.

These relationships can benefit buyers by providing easier access to the loan officer or mortgage broker, which may reduce processing time, he noted. And some in-house companies will waive certain fees.

At Weichert Realtors, which offers both mortgages and insurance as part of its “gold service,” the goal is to give the buyer “a coordinated experience,” said Stephen Adamo, the president of Weichert Financial Services. The Weichert affiliate “is on-site in our real estate offices, and they coordinate all of the efforts for the home-buying experience,” he said. “Many companies are going to a one-stop shopping experience because it is something that the consumer wants.”

Mr. Adamo noted, however, that while the mortgage services are a benefit of working with Weichert, buyers have the right to choose whatever lender they want. Federal law prohibits agents from steering clients to a particular mortgage company or lender, and from accepting payment for referrals.

Even so, some independent mortgage companies cite tactics used by real estate agencies to discourage buyers from looking elsewhere. They may, for example, be strongly urged to get a preapproval from the company mortgage affiliate, which will then court them for a loan, said Mark Yecies, an owner of SunQuest Funding in Cranford, N.J.

“They may say, we have multiple bids on this property but if you were to talk to our in-house mortgage company and he was to preapprove you, you’d probably have a much better chance of getting this house,” Mr. Yecies said.

Matt Hackett, the underwriting manager at Equity Now, a direct mortgage lender based in Manhattan, says that he has heard of agents telling buyers that their loan is more likely to close on time if they use the in-house service.

Faster service is not the rule, however. Jacob Okun, a lawyer in Manhattan who recently bought a house, says he decided to use the mortgage broker affiliated with his real estate agent’s company after being promised that he would pay no fees. But using the in-house broker did not smooth the way to closing. Instead the process dragged on for so long, with the bank demanding repeat documents, that Mr. Okun withdrew his application and took his business to Equity Now.

Certainly, outside mortgage companies want the same thing the in-house companies want: more purchase business. And real estate agents, who make their money off getting deals closed, are not in the habit of recommending mortgage brokers or loan officers who can’t deliver, whether in-house or not, Mr. Cummins said.

Still, Ira Rheingold, the executive director of the National Association of Consumer Advocates, urges buyers to be cautious. “Those in-house relationships are the chance to really take advantage of the consumer, push them into a mortgage that’s in the best interest of that real estate agent,” he said. “Consumers should be shopping around.”

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