Released: September 17, 2006

How mortgage lenders compare

Source: By Jack Guttentag, Inman News [LA Times] (Free Registration)

Q. I am choosing between a loan from an Internet lender and one from a well-known bank. The loan officer at the bank made the following claims regarding online lenders: First, their loan officers are not commissioned, and therefore their service is generally poor. Second, Internet lenders sell all their loans, so borrowers don’t know what lender will service their loans. Third, Internet lenders don’t stand by their rate locks. What do you think?

A. Let’s take the issues one at a time. Does the compensation system used by major lenders result in better service to borrowers? Loan officers working for name lenders such as Washington Mutual, Citibank and GMAC are commissioned, and successful ones make a lot of money. They are highly paid because they bring in the borrowers. Commissioned loan officers constitute the marketing muscle of the major retail lenders.

Loan officers working for Internet lenders, such as E-Loan and Amerisave, don’t bring borrowers to the firm. 

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