I bought a home late last year, and my (reputable) mortgage broker was able to get me better terms than I could find anywhere else. She also required complete paperwork, which had to be in order for her to sell the mortgage to my servicer.

Unless I see some example of how keeping everything in-house is going to be significantly more by-the-book than auditing mortgages submitted by brokers, I'm filing this under "trying to reduce shopping around".

@chrylis:

I agree with you, I see this leading to higher interest rates...

The full article nails it right on the head. Eliminating competition is what this is about. Your local "bank" loan officer could care less whether your loan closes or not... they get paid either way.

Mortgage Brokers only get paid when the loan closes. Who is more likely to stick with you through the process or willing to jump thru hoops when a problem arises? Yeah. Call the bank. 9am to 4pm weekdays only, please.

Yes, Citibank and Chase are such paragons of financial responsibility, prudence, and wisdom that they only required tens of billions of TARP money.

Seems more of a case of some snake-oil salesmen shutting out other snake-oil salesmen.

HSBC did this months ago. They're protecting their own.

Alternate Headline:

"Chase and Citi secure barn door with shiny new padlock"

With the most generous interpretation, they are throwing out the baby with the bathwater. Maybe its true that problem loans were originated by dishonest brokers who encouraged borrowers to lie on their applications -- but this is going too far.

I have a really great local mortgage broker who I happily recommend to everybody who asks. The way his company works is that they originate the loan themselves and then sell it on. If he writes a bad loan he risks getting stuck with it.

And he won't give a damn about this move because the mortgages he's put me and my friends into are way better than those that Chase, Citibank, and the other big banks offer.

@LogicalOne: Chase did not need the money. Citi did. Everyone was forced to take the money because otherwise the system would provide transparency on which banks were weak.

@chrylis: I agree with you. I'm in the homebuying process right now and it kind of makes me mad that my broker, who has been nothing but diligent and responsible, has less options now.

@chrylis: Agreed. Reduction of commissions to pay out to independent brokers, and forcing the consumer to shop around on their own for the best deal among all the companies who no longer accept brokers.

My recent refinance experience indicated that there are now a LOT of controls in place. So I think this is a case of calling the fire department after the house has burnt down (that's the only allegory I can think of).

It seems to me that with companies able to advertise their rates and lend directly, the big banks have plenty of competition that they can't easily squash.

For instance, I was able to find rates under 5% for a mortgage in Downtown Chicago; lots of lenders and Chase only shows up once, at over 7% (Citibank isn't even on the list.)

[www.bankrate.com]

When we shopped for a mortgage, we got the very best terms from a broker. We then took that to Countrywide and said if they would match it we would go with them. They said no way could they match the rate so we closed through the broker. A month later they sold our loan to Countrywide. That made me chuckle.

I used to work as a broker, no loss because there are cheaper alternatives than Chase and Citi. It is true that often the mortgage broker was less expensive for the particular bank than the actual bank. The banks had higher markups. I thought that might have changed recently. Especially if you go to a credit union.

Often any shaddiess was encouraged by the rep from the bank whom "advised" on how to get it by his own underwriter. Stuff like, if they didn't have the income saying to go stated income, knowing that the "stated income" would need to be increased. The underwriters were actually very strict.

According to all these commenters and the staff, Citi et al. are damned if they do and damned if they don't. If they buy up third party mortgages, they are encouraging predatory lending, but if they don't buy third party mortgages they are being anti-competitive. Must be nice to have the luxury of speaking out of both sides of your mouth.

They don't need to cut of mortgage brokers. All they need to do is have bank loan underwriters do full documentation underwriting. You know, no liar loans, stated income baloney, verify employment, pay stubs, 2 years tax returns and, finally, only do fixed rated mortgages with at least 20% down payments. No adjustable rate loans --ever.

Where I live was filthy with scammy mortgage brokers. There were quite a few real estate agents more than willing to recommend these guys or even have one in house. If there were honest brokers in town I never ran into one. Over two rounds of looking for a house I wanted to beat the next person who tried to convince me that I just didn't understand the financial savvy of a no doc interest only ARM for twice the house I could really afford.

There were also plenty of options to go seek a mortgage that didn't involve brokers or the huge national banks.

@chrylis: I think it's a Your Mileage May Vary situation. A friend went thru a broker who swapped important term information (tried switching from a fixed to ARM; changed the APR...) on her.
Outright, criminal fraud, in other words.

Her second one - not a "friend of the family" was all peaches, however. So, some good, some bad.

My husband and I have a Chase mortgage that was sold by our mortgage broker. I can understand Chase not wanting some of the drivel brokers through their way. The particular broker we used had an office in the showroom of a large developer who cranks out cheaply built butt-ugly tract houses on less than a quarter acre. When my husband and I went to office after being pre-approved we overheard another broker talking to a woman about her 550 credit score and how they could "work some magic" to get her into the house.

Here we were, a couple in our early 20's with a 700 credit score trying to secure a federally backed USDA Rural Development loan (like FHA only with 0 down and no PMI for people buying homes in rural areas)for a home we could easily afford. We figured we were shoe-ins for a full approval after hearing that. It took a stack of paperwork on our part including months of bank statements, a copy of my husband's college diploma and 4 years of transcripts to explain why he hadn't worked full time from 9/04 to 6/08; multiple pay stubs and an official salary statement from his employer.

We bought a pretty nice 20 year old rancher on an acre out in the country. 1600 well built, recently updated square feet for $105,000 is a bargain even in the Huntsville, AL area where we live. The sellers were going though a divorce and had to sell QUICK so they let the house go for well under the appraised value. My husband has a secure job and we bought the house using his starting salary as the affordability guideline. He's since received a good size raise so the portion of his take home pay going to mortgage, taxes and insurance is around 25% and will go lower as the years go on. We're VERY handy people (electrical, plumbing, carpentry and basic HVAC)so our repair budget is significantly lower than the norm due to the lack of labor costs. We make a hobby out of learning how to fix things; my husband is also a former mechanic so we can get away with driving 15+ year old cars, which means no car payments to suck up our budget thus more money for housing.

Basically, Chase doesn't have much to worry about with us. I wish I could say the same for the rest of American borrowers.

@Megan Squier: By the way, its a fixed, 30 year conventional mortgage. We didn't fall for the old variable rate garbage.

I worked for a mortgage broker (in the ID dept.) and got my first house with their help. Not all of them are crooks. I recommended them to everyone I know.

@kwsventures: "with at least 20% down payments"

Which would essentially freeze the market in huge swaths of the country and turn us into a nation of renters.

I closed a home purchase in February. Chase owns my mortgage, but I did very well going through a broker (and having another one and got them going back and forth to beat each others deal).

@Megan Squier:

A woman after my own heart! If ARM's had never been invented, our banking/mortgage industry wouldn't be in the mess they're in now. Brokers can go away for all I care - are they really necessary anyway? Eliminate the middle man, that's what I did! Buying my first house last year, I "interviewed" 4 different lenders, 3 of them were REAL lenders (i.e. banks) and 1 was a mortgage broker. His rates were higher, fees were more money, and he couldn't get access to the MSHDA loan program (for first-time home-buyers, kinda like FHA loan) like the real lenders could. I can't see why they're still in business, besides the fact that some people actually don't know the difference between a mortage lender and a mortgage broker (and really, if you're that stupid, you probably shouldn't be buying a house). Got me a 5.25% interest rate for 30-year fixed-rate mortgage with a local bank here in the West Michigan area. When you're making a huge purchase like a house, it obviously pays to shop around YOURSELF not leave it up to some broker who gets paid by the banks he recommends to you.

I've had my mortgage with Chase ever since they acquired it from another bank 10 years ago. In 2003, I refinanced with Chase to lower the rate. Not only is my account up-todate, I have paid it off quicker and am currently 5 months AHEAD in my payments. (I also pay extra each month to reduce the principal in an effort to reduce the overall interest amount.) And I checked recently and my 3 credit scores are excellent.

So I contacted Chase in January 2009 to refinance to get the rate even lower. You would think that since I am an existing customer and have gone through the refi process previously, this would be very easy.

Far from it. It is going on 4 months since I applied and Chase is still "processing" the refi. Since I have heard 4 different stories from 4 different account representatives as to why this has not been completed yet, Chase appears to be very uncoordinated.

Yes, I expected itr would take longer with more people refinancing, but Chase has not demonstrated any competence in handling a refinance of a loan they already have. I am very disappointed with them.

@Trai_Dep: My first broker tried to pull this crap on me.

They were a freaking assembly line. It was disgusting, I would come in one day and a week later they'd barely remember who I was. I insisted on a full doc but they were too lazy to get it together on their end so they forced me to get a stated (probably gives them more commission because of a higher interest rate and worse terms). They gave me 5 different loan terms...as in I would go in and they would say: this is your loan. I'd go in a week later and they'd say, as we discussed, this is your loan and the interest rate would be higher, I'd show them what they gave me before and they'd back track. I can't believe I gave them as many chances as I did.

I ended up ditching them and going to my bank and they hooked me up with a much better loan and customer service. I think they did it both ways, he seemed like a contractor for the bank, so he got paid on commission at closing.

I have my mortgage with Citimortgage, and I'm currently refinancing with a broker. Considering that I got horrible service when I tried to contact Citibank directly, I won't be sorry that they won't be in the running for my new mortgage.

I love my Mortgage Broker.

My wife and I have refinanced both our rental property (6.0%), and our residence (4.875%) in the last 6 months. our experience with our Broker was that he was responsive, contienscous, and very competent.

@kwsventures:

"No adjustable rate loans --ever."

I don't know, all those people who got ARMs three years ago and now have their rates adjusting down several percent aren't complaining too much.

I'm with you on teaser rates that jump up, but ARMs can be a good choice, particularly if you don't plan to be in the home for more than 3-5 years.

While I credit my mortgage broker with getting me a great mortgage at the terms I wanted, he did make some mistakes (namely not adding the substantial closing costs to the mortgage amount, leaving me out of pocket compared to my budget) which basically means even though you've "got someone working in your corner" you've still got to keep on top of them.

Good for Citibank? Most likely.

Good for consumers? Not so much.

That video makes me feel like my right ear's stopped up...whoever copied that from the original film should have at least copied the left channel into the right. ;-)

Oh, good. Just what I need. Because, you know, the big banks already provide such GREAT service in the area of mortgage servicing, right?

Yeah, like how Wachovia wouldn't tell me what the status of my loan was, because only the servicer (who had left the company a month ago) was allowed to tell me that. Or how they sat on their decision for a month, before sending me a form letter saying due to my non-reply, they had closed my file.

Now no one from Wachovia will return my email - oh, and don't bother calling. Their voice greeting says they don't reply to voice mail.

I never had these problems with my mortgage broker.

@djmichaelangelo:

Had the exact opposite experience - the mortgage broker we used (who was recommended by a friend) found us a rate that was about 0.75% below the best rate we found contacting banks on our own, through a lender I'd never heard of (small local Savings and Loan). Agreed, you should shop around, and not just take the broker's word for it, but ours is saving us several thousand dollars a year.

This is my new favorite movie.

@OrlandoDude: Not really. The problem was brokers and underwriters that were getting loans closed no matter how questionable the application was. Your local bank loan officer has a loan budget they need to maintain to keep their job; they are going to make sure the loan closes and is up to lending standards. Brokers need to go, they add a layer that is not needed in the age of technology and readily available information.

When Countrywide/BOA does the same, which they will if Citi and Chase are, the broker industry will get very small.