During the refinance boom, the largest banks with the largest portfolios were simply overwhelmed. Simply put, they had more clients and business than they were able to process. To add to the burden, federal mortgage regulators stiffened the rules and targeted big banks for audits during the boom. All this combined to make the process of getting a loan less than efficient.
In today’s marketplace, refinancing has cooled down. Though still burdensome, the regulatory environment has become a constant. What this means to the consumer is that the large banks have the capacity to handle today’s level of business as efficiently as smaller institutions.
With the implementation of the Dodd-Frank rules on mortgage lending, which went into effect in January of this year, all mortgage companies, big and small, have to underwrite to the same rules. Gone are the days of the “nimble” underwriting standards of the smaller mortgage players.
If you have significant deposits in an institution, you may be entitled to meaningful discounts offered to good customers. These can range from discounts on the bank fees on closing costs to discounts on the rates and points.
Large institutions also have money to lend. They have billions of dollars in deposits that they can lend out as jumbo mortgages – generating excellent spreads for the banks and excellent rates for consumers. Some of the smaller banks cannot offer the same rates on jumbo money. Smaller intuitions may not even offer jumbo fixed-rate mortgages.
Another advantage of having a mortgage at the institution where one banks is the convenience of having all the information on the bank’s website. One can transfer money to pay a mortgage and keep track of escrows, balances and the like. The large institutions also tend to hang onto the servicing rights. Most people like the peace of mind that comes from knowing that their mortgage will not be sold and resold again.
The bottom line is that the environment has evolved and one should take a look at the larger institutions when shopping for a mortgage.?
Bill Starrels is a mortgage loan officer (NMLS#485021) and lives in Georgetown. He can be reached at 703-625-7355