As an independent Mortgage Broker, I clearly have decided that for my clients and my desired business and lifestyle, being a Mortgage Broker is a clear winner all around in delivering superior mortgage products and service, rather than being a bank employee. The general public and mortgage consumer frequently doesn’t understand or recognize the difference between a mortgage broker and a bank mortgage specialist, frequently using the terms interchangeably. Semantics aside, it is time to shed some light as to the key differences for the benefit of the public, so that the pros and cons of each are more clearly understood.
First off, a Bank Mortgage Specialist, Representative, Consultant etc. is first and foremost an employee of that bank. They work for that bank and can generally only recommend and advance mortgage products provided by their employer, hence, any recommendations are simply providing the advice, product, and rate more or less scripted to them by the culture of the institution for which they work. Yes, they are usually commissioned employees, so they do in fact have a vested interest in closing the deal and providing the bank’s client good service so that they can get paid. Bank Mortgage Rep’s also benefit in other ways by working for one of the big financial institutions, they generally get both health and retirement benefits, some support, low overhead…not to mentioned getting fed a steady stream of clientele through the branch networks they both support and are accountable to. It is also relatively easy to get a job and start as a Bank Mortgage Rep, you don’t need a lot of industry experience, there is little if any cost or educational requirements. Many Bank Mortgage Reps simply evolved out of previously being a retail bank employee, working their way up the ladder so to speak.
Mortgage Brokers on the other hand are independent contractors, usually part of a larger brokerage house, and broker network. They originate and source mortgages for a variety of lenders including “Mono-line” lenders (financial institutions that solely lend discounted mortgages through broker channels), some banks, credit unions, and a variety of alternative and private lenders. A comprehensive course must be completed and a rigorous licensing exam passed, continuing education requirements must be met and maintained, and a whole host of set-up costs including insurance, marketing, industry association fees, and all of the technology utilized needs to be sourced and paid for by the mortgage broker, who is essentially running a business. This is all undertaken to have access to all of the best products, rates, and alternatives available for their clients. A broker’s clients are their lifeblood, and I would make the argument that they are much more loyal and driven to ensure that the client is well served. Every relationship and client must be sourced on their own, and most brokers will go to the end of the earth in ensuring their client’s deal effectively closes under the best terms and circumstances possible. The benefits of dealing with a Mortgage Broker are of course only present if the broker is competent and has high integrity…so you must also choose your broker wisely!
I have personally been in the financial industry for over 20 years, and have worked for a major bank, a large credit union, as well as in mortgage brokerage. I have seen it from both sides, and although I may be a little biased, because I enjoy my independence from the restraints of a Big Brother Bank breathing down my neck, I truly feel and believe however that having to become an industry expert, constantly staying up to speed on the best products and rates for my clients, and having to continuously refine my processes, technology, and systems forces me to become better for those that I serve. Yes, there are some days where I would love to perhaps sit back a bit and let the business come through the door of a big bank, but I do not feel that would make me a better person or advisor. I have to know that the realtors, lawyers, financial planners…and of course clients that I serve (which are also my friends and family in many cases), get the absolute best products and rates available in the country. Conversely, as a Bank Mortgage Rep, you are simply going to deliver whatever product or rate you have at your disposal, because you have to support the “hand that feeds you” (ie. your bank employer) which may or may not be the best for the client at that point in time. But yes, it is easier and cheaper to get started as a Bank Mortgage Rep., and some may like to have their hand held because it can be scary to “leave the nest” so to speak.
Alan Fetterly is a Certified Financial Planner and licensed Mortgage Broker with over 20 years experience in banking, investments, real estate, and mortgage brokerage. He has worked within major banks and credit unions in both an advisory and management capacity.
For more information: Alan Fetterly, Mortgage Broker