Learning The Lenders

An excerpt from Chapter 77 of Be the Better Broker, Volume 3.

Lenders vary.

You don’t need to know every single lender’s products and guidelines to be successful. You need somewhere between three and seven lenders or lender connections. Ninety percent of your business will likely be placed with three or four lenders consistently.

Although you may not be the solution for every applicant, you should strive to be the referral source to lending options beyond what you can offer. When you know you cannot get a file done on the Broker side, it is nice to have some connections on the branch side that can complete the file efficiently and with good service. This helps keep you positioned as the starting point for solutions with both the new client and the original referral source.

The core list of lenders will include but not be limited to the following:

  • Chartered bank
  • Credit union
  • Mortgage finance company (a.k.a., Monoline)
  • HomEquity Bank
  • B lender
  • Private lender
  • Commercial lender
  • Lease specialist
  • Outside (the Broker channel) options

(Be the Better Broker, Volume 3 has separate chapters detailing each of the above.)

Learn what the lenders you do have access to can and cannot do. Also be aware of what the lenders you cannot access directly can do. Know the competition.

There are solutions outside the Broker channel that may be superior for clients. In instances where we either have no solution or a cumbersome and expensive solution, the root of the problem often includes the following:

  • Remediated grow-ops
  • Co-ops
  • Lease land
  • Fractional ownership
  • Properties held in a holding corporation
  • Properties held in an operating corporation
  • Properties held in a family trust
  • Clients with more than 20 properties
  • Live ∕ work lofts
  • Float homes
  • Boat access-only properties
  • Land only
  • Post & tension buildings

Knowing where such files can potentially be approved—and better still, knowing a competent individual who can get approval for the client—is an important part of relationship-building. Lending guidelines change, and your contacts at lenders outside the Broker channel will inevitably have files of their own that they cannot complete and for which they will be looking for an expert to refer their clients to.

Brokering is as much about knowing when you are not the solution as knowing when you are.

As I typed these words, I had a $1.15M file approved with a B lender, ready to close in ten days, but I knew I might lose it to a credit union—a credit union that offered a program I did not have access to, a credit union that I brought to the attention of the client.

The credit union came through with a miracle approval for these clients at savings close to $30,000. So, yes, I lost, but I also won. And I won because the clients won.

Within a few weeks, the clients in turn sent me two referrals, which was pretty remarkable.

The credit union sent me a referral a few weeks later as well. Later I got a new file from these same clients which the CU could not fund for them. In addition, the clients referred two other files to me a few months later.

Always do the right thing by the client.

Yes, I watched a $5,750.00 fee evaporate. But more importantly, I am still the face of the solution to the clients, and I will be the one to whom they refer friends and family, and I will be the one they return to. I expect a future referral back from the credit union as well. This is not a guess on my part; it is my experience. Yes, this is painful in the early days when you have no other files completing. And I will tell you that it is still painful 1,400 files later, even with 21 other files completing this month. The root of the pain is not the lost revenue; it is purely the losing. I really hate losing.

Not being the one truly making it happen is something that is difficult to get past for all of us. It is painful partly due to the many hours invested as well as the human tendency to want to have a knee-jerk (emphasis on “jerk”) reaction and call those hours “wasted.” Those hours were not wasted; they were invested. And yes, 1,400 files later, I still have to remind myself of this from time to time.