Choosing Vendors and Lenders

REALTORs® provide many services. Recommending competent vendors, such as home inspectors, contractors, and insurance agents is part of what we do. No recommendation is more important than a good loan officer. Trust me, not all are created equally.

While it was never our local lenders who created the “mortgage meltdown,” a couple of post-2008 regulations have severely impacted (especially) local mortgage brokers. Remember, there are mortgage brokers and banks.

National Standards

The “Safe Act of 2008” created the National Mortgage Licensing System (NMLS). Licensing attempted to create uniformity in lending nationwide. For some reason, banks and credit unions are not required to employ licensed loan officers. They only need to register. While their loan officers are not required to have formal training, most do.

Another regulation, HRS 454 requires mortgage solicitors to have a physical presence (office, car, house) in the State of Hawaii. Even so, buyers sometimes opt to use mainland lenders. Unfortunately, these lenders don’t always understand Hawaii issues.

Think Local

In two recent sales, the buyers wanted to use their mainland credit union. As mentioned, banks and credit unions are exempt from HRS 454. Watch this. They didn’t understand cesspools, lava zones, catchment water, water testing, zoning, or survey encroachment tolerances, and they didn’t get that there’s no way for catchment water to touch a cesspool. They didn’t understand that Photo Voltaic is not the same as Solar Hot Water. They were unaware (or even believe) that some loan standards contained in underwriting guidelines have specific waivers at the local level. Get the drift? Using a mainland lender can create unnecessary challenges.

Ask Around

Think local, but even then, get a strong recommendation from a trusted REALTOR®. Keep in mind that not every lender has the same menu of loan products. Most banks and all credit unions only have access to their loan products. Local mortgage originators know how to address issues in advance. Be sure to ask. Layer the “Safe Act of 2008” and HRS 454 with the mountain of regulations created by Dodd-Frank, and lending has become extremely challenging.

Prior to Dodd-Frank, appraisals were fairly transportable, making it relatively easy to transfer an appraisal from one lender to the next. By creating a third-party appraisal management vendor (AMC), transportability has all but disappeared. And of course, banks and credit unions are not required to use AMCs. The discussion about AMCs is complicated, but post-2008 regulations seem to favor banks and credit unions.

Again, in my experience, it was never our local mortgage brokers who created the mortgage meltdown. Today those who have survived are among the cream of the crop. I’d trust any of them over an out-of-area lender any day!