More Reasons for Using A Commercial Mortgage Broker
This chapter and the previous one focus on the last option, and I believe the best option, for financing your property: employing the services of a commercial mortgage broker. And here’s why.
There are four distinct advantages of using a mortgage broker. We discussed the first two advantages in the previous chapter:
- He knows more lending sources than you do.
- The mortgage broker and the lender have already established a relationship based on trust. And trust in this business is everything.
There are two more reasons for using a mortgage broker:
Compared to shopping the market on your own, this option takes significantly less time and effort on the part of the owner. Recall all of the steps you have to go through when shopping the market on your own. There’s a lot of work to do! But if you use a mortgage broker much of the “heavy lifting” of finding the right lender and processing of the loan is performed by him, not by you.
The fourth and final reason for using a mortgage broker is: He can be your best advocate if things go wrong. There are times in the loan process where you need someone to be your advocate, someone who strenuously defends your best interests.
This can best be accomplished by a mortgage broker who has an established relationship with the lender. The lender wants to keep the mortgage broker happy because they don’t want to jeopardize their relationship. He brings them deals, which is in their best interest. They want him to continue bringing deals to them so they know they better be fair to his clients or next time he’ll go to one of their competitors. Now compare the mortgage
broker’s importance to the lender to your importance to the lender. In most instances they likely see you as a “one-off” transaction and don’t consider the loss of your loan as having anywhere near the impact of losing a valued mortgage broker relationship. Now let’s consider the loan officer. Can the lender’s loan officer adequately fill this role of advocate if something were to go wrong with the loan? He works for the lender. He is being paid by the lender. Whose best interest do you think he is looking after? Your’s, or the bank’s? So the mortgage broker is the best choice for being your advocate if things go wrong with your loan, not you and not the loan officer.
A good mortgage broker will “go nuclear” if the actions of the lender are so egregious that it requires drastic measures. Years ago, a lender approved a loan for one of my clients as proposed on the letter of interest. But prior to closing the loan they changed their minds without notifying the borrower or me that they had reduced the amortization from 25 years down to 15 years, effectively killing the property’s cash flow. The reduced amortization was only revealed at closing. I told my client to walk out of the closing without signing anything. Needless to say, the borrower was distraught.
I then wrote the loan officer’s superior a letter that included a copy of an e-mail from the loan officer stating the loan was approved with a 25 year amortization. I went on to say in my letter that if the borrower decides to litigate this matter, I would be more than willing to testify on his behalf. Bottom line: the lender decided to honor the original 25 year amortization and because I chose to go to bat for my client, I lost what had been a good lending relationship. But a good mortgage broker does what he has to do to protect his client.
These are the four reasons why I believe you should use a mortgage broker. I rest my case. You decide. But if you choose to employ the services of a mortgage broker the next chapter tells you the three things you need to do in order to choose the right one.