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Is your real estate agent pushing you to use a specific lender? Maybe they even make it convenient by having an application all ready to go for you.

You might just want to cut to the chase and ask them point blank whether or not they are getting paid any money for originating your loan.

There’s a lender who is famous for his very blunt, in your face radio commercials about no closing costs loans. He acts like he’s the only one who can do such loans. It’s just a big gimmick to make the phones ring.

He had a few commercials where he was warning people that they shouldn’t rely on their real estate agent for a lender recommendation. He said that you probably wouldn’t use a lender recommended by a taxi driver. Would you? He made it sound like real estate agents were getting paid for recommending their preferred lenders, especially those who charge those evil and “unnecessary” closing costs.

I got word that he is now getting ready to try to make it worthwhile for real estate agents to send him referrals. He’s actually setting up a system that will do exactly what he was warning everyone about in his commercials.

He’s staying within the legal limits of RESPA by allowing agents to be “loan originators” by doing 6 basic minimal services in the origination of a loan. It’s very simple stuff that will take an agent a few minutes to complete. Then the agent just passes the file on to the real originator or processor and the process continues as normal. Hopefully the real originator will have the experience in the mortgage market and be able to counsel the client on the best program for their individual case.

I really don’t think many real estate agents can stay on top of both the real estate market and the mortgage market. Fortunately, I don’t think their intention is to have “double agents”. But their intention seems to be to set up a system to entice agents to steer business their way. Pretty much what the RESPA laws were meant to inhibit.

There’s nothing really wrong with it but you have to wonder about what will be sacrificed in order to have enough money to pay another person in the loop. Will they have to have higher rates? Maybe less service? I’m sure they’ll be able to make it all up on volume. Yea, that’s the ticket. Volume.

So just be aware of this. It’s always good to know everyone’s motivations.

This entry was posted on Tuesday, February 10th, 2009 at 3:43 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.