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Commit To Us

status-mortgage-broker-commitments Lots of lenders are saying that these days.  They want brokers to commit as much volume to them as possible.

You certainly can’t blame the lenders. Volume is the gas that keeps their engine running. The tough part, for most brokers, is that there’s only so much volume to go around.

As a broker, do you commit $10-15 million of volume to a lender with great rates today?  How do you know they’ll keep their rates highly competitive?

Do you commit to lenders with promises of prompt turnaround times?  How do you know they’ll maintain their service level agreements?  (This past spring, some lenders’ SLAs weren’t worth the breath used to speak them.)

Promising a lender you’ll give them X amount of deals per month, quarter, or year, is sometimes at odds with our fiduciary responsibility to clients. We’ve touched on this before in stories like “Preferred Broker Status.” With a few exceptions, volume commitments usually benefit the lender more than the broker (and client).

All that said, if the right value were clearly defined ahead of time, it would be easy to commit millions of dollars in business to a given lender.

Suppose, for example, that you’re a broker and the following came through your inbox.

XYZ Lender Launches The “True” Status Program

Commit to funding $10 million in six months and receive:

* Yield spread adjusted for market liquidity constraints, if applicable. For a full-featured mortgage. 680 minimum Beacon. Fully income-qualifying (no stated income). 50% minimum funding ratio. Other terms apply. Call for details.

If we saw a lender commit to something tangible like this, we wouldn’t be able to dial that lender’s business development manager fast enough. Assuming the lender had client- and broker-friendly policies, we’d happily commit significant volume to this sort of arrangement.

But lenders haven’t done this (yet). Instead, brokers are asked to commit to volume targets in advance, without knowing what rates and service the lender will continue to offer. Brokers are asked to assume that lenders will deliver what’s needed to be competitive in the marketplace.

A whole lot of brokers find this extremely frustrating.