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How "local" is mortgage lending?

An acquaintance is excited because they now work with a major bank's mortgage section. And the best news is...they can now lend pretty much "across the nation".

Is this really "good". Is the mortgage industry sufficiently detached from locale that a lender really can effectively conduct business this way? Without knowing any better, it seems that things like local market prices, rules, etc. would be best served by a lender that is familiar with the area - not one a few thousand miles distant.
  • October 03 2010 - Black Mountain Ranch
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Answers (9)

In short, It is a s local as you want it to be. All these responses have  valid points . I do appreciate the local "touch". With that said, there are some progams that outside lenders to have or work harder to get. As usual do some diligence when seeking a loan.

  • October 05 2010
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I think "effective" lending is more about the individual loan originator than it is the company they work for or how far away they are from the property.

I agree that local idiosyncrasies could be an issue...but I've never stumbled across one during my multi-state originations so I think that's more of a scare tactic than a reality. Yes, I'm sure someone will come up with an example. Again, a good originator will uncover these problems early on and take care of them.

Funny thing was that HVCC made remote lending even easier. Truly appraisals were the one hurdle we had to clear when lending in a "new" location. We always worked it out by networking with other professionals in the area but now it's not an issue - we all have to order via an AMC anyway so knowledge of local appraisers is not even a roadblock anymore.

Is local better? Sure, if the local originator is great at what he or she does. If they stink you'll never close and wish you'd been working with that big national lender.  The same could be said in reverse.

It's not the company or the location - it's the individual originator that will make or break your deal.
  • October 04 2010
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Good job Ed on your Blog regarding MLS property descriptions.
  • October 03 2010
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From an industry perspective it is a double edged sword. Locality can lead to increased opportunity for manipulation of certain elements of the file, and then lead to weaker paper portfolios. But, non-locality can lead to weaker paper due to unfamiliarity issues. I would guess the scales balance out overall. That said, I am still a proponent of using a local LO, rather than a distant one. Of course I still think lending is a people, rather than a paper, business.
  • October 03 2010
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SoCal you hit the nail on the head re: "Without knowing any better, it seems that things like local market prices, rules, etc. would be best served by a lender that is familiar with the area - not one a few thousand miles distant."

Here in Palm Springs & throughout the Coachella Valley we have a great deal of leased land which poses its own unique set of problems.  Who's holding the lease, the Indians, a corporation, a family, etc. Who's managing the lease, the leaseholder or a management company?

For instance the community I live in we have fee & leased land.  Among the lease land properties there are 17 different lease holders with leases expiring at different times and managed by different entities.   A national lender is at an immediate disadvantage here. One lease needs the approval of the 25 different people who own that particular land.

Not to mention the fact that the Indians have started to take away their leases from the management company & are now managing them at the Bureau of Indian Affairs, another nightmare altogether.  For instance on a foreclosure they want to see proof of signing authority for everyone who has signed off during the foreclosure process.  Hmm, Sally signed off in 2008, wonder if she still works for the company or worse yet try locating someone from MERS.

When doing a loan on a property on leased land not only do you need approval of the client and the loan from the leaseholder, but also from the management company if there's one associated with the lease.  This adds anywhere from 2-15 days on top of the typical 5-7 day approval from the leaseholder.

Also there's an area in Huntington Beach with homes that sit on lease land, again a national lender will be at a disadvantage as most local Realtors & lenders don't know that one little section of HB is on leased land. 

Don't get me started on county transfer taxes and the fact that some cities also have a transfer tax, or they require an inspection of the property by the local fire department and the list goes on.

Not to mention a local lender is better equipped to deal with appraised value problems.  Don't get me started on the the puffery used by Realtors in the listing detail. 

When it comes down to brass tacks mortgage lending truly is local!
  • October 03 2010
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While I have had little to no problems with the couple of out state loan transactions I've done, I find it incredibly helpful to use the 'in house' mortgage officer.

When I have a question, or want to make sure the client is delivering documents to the loan officer on time (so we can close on time), it's great to just poke my head in the door and get updated on our progress.

Another huge advantage is the advice an on site loan officer can give you, even if they're not funding the transaction.
  • October 03 2010
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Texas has some interesting rules that are state specific, and I am sure most other states have similar disparities. For that reason plus appraisal and title co. selection, local and state fees, and not being able to attend closings, is why I typically restrict my business to Texas. I only quote on Zillow in the Dallas area.
 Though I have the capability of doing loans nationwide, I would only consider venturing out of TX. for a long time customer. Even then I would have to work closely with their Realtor in the new area, and feel comfortable that the customer was getting the best service with me being long distance.
My personal opinion is that all things being equal (i.e. rate, experience, reputation, programs, etc) a local loan officer has advantages over an internet lender.
  • October 03 2010
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I used to work for a national lender and did 99% of my business within 30 miles of my office.

My opinion about the need to lend nationally in a besuness that is based on referrals should say all you need to know about the level of service they provide.
  • October 03 2010
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When I first started in this business the firm I was with not only financed residential & commercial properties throughout the US, but also in Mexico & Costa Rica.

Stewart Title is the firm we used in Mexico & Costa Rica. American Title was used for the remainder. Costa Rican & Mexican Attorneys (Assessors) were a pleasure to work with, compared to most that I worked with in the states.

We didn't have Goggle then. So, it must be a little easier now. The worst part for me was working in the different time-zones.

Now, I'm very content by just working in California.

Good question SoCal. It will be interesting to see all your responses.
  • October 03 2010
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