Updated: Nov 16
America is a Broker in one way or another. If a lender gets a deal but it’s not in their wheelhouse, he breaks it out to help his client or just to prove he can get the deal done. Calling all Loan Officer everybody is a broker in one form or another. The 64 thousand question people ask are you a broker the answer is yes always Brokering. LOL
People think that dealing with brokers is more expensive than going directly with the lender. Like the person working the loan at the lender is not getting paid LOL
I've worked both sides of this fence, I can say from my experience with brokering versus working on the banking side that I have much better control of the loan file on the banking side, most especially with time frames and setting expectations because I have control of the people working the file. When I was brokering, I was at the mercy of the investor's teams that I submitted the loan to and spent a lot of time begging account executives of those companies to keep my file moving. Constantly asking them to poke the underwriter or other setup teams to get their jobs done. I also rarely have to deal with AMCs (appraisal management companies) being on the banker side which helps better reduce cost to the borrower, so they are paying just the appraiser's fee and not also the third-party company who clicks a button just to order an appraisal.
I still could broker a loan when I need to, if it's a product my bank won't touch, but rarely do I need to.
I have a few clients that will only talk to the check writer. They miss out on funding opportunities. I have a couple projects that need JV partners.
This question has been bothering me for some time, and I think it all comes down to control. According to a former Chase employee, bankers cannot accept any referral fee or gift over $20. The banking industry is strict about this, so if a banker refers a client to an alternative capital lender, the relationship cannot be casual. The banker must trust the alternative lender completely to ensure that any private deal between them remains confidential. It doesn't matter how much the banker is assured that the funds will only go into their customer's business checking account and that a check will never be issued. The banker will politely agree to refer and ask for a stack of business cards.
As for alternative lenders, they may have higher lending qualifications than you, but they prioritize control of their clients over a generous referral fee. Control and insecurity prevent referrals to fellow lenders.
I appreciate all the feedback. I understand all firms are different to who they find money for. We're strict with credit scores. Most of our quotes do not qualify. Too many brokers out there with the "good credit, bad credit, no credit - We'll fund you" slogan.
A lot of people just aren't aware that alternative funding is a viable space because there is virtually no advertising. Outside of a few companies, our industry is still in its infancy.