I'm in the process of refinancing the mortgage on my house, and in the process I learned something that should make the big bankers very, very worried.
For my new mortgage, I knew I would prefer to use a local credit union. But I also wanted to give the mortgage broker on my original loan a chance to get my business, since she was so helpful the first time around. So I got quotes from the credit union where I have my checking account, and also from the broker, who works with commercial lenders. Unsurprisingly, the quote I got from my credit union was much, much better than what I got from the broker. I told this to my broker, and also told her that because of the banks' recent behavior I preferred, morally, to go with a credit union. Therefore she wouldn't be getting my business.
But my mortgage broker isn't like the big banks. She didn't try to bluff, bribe, or threaten me to keep my business the way the likes of BofA and Wells Fargo are. Instead, she decided to make an effort to work with me. The happy (unless you're a big bank) conclusion over the jump.
My mortgage broker did some research and made some phone calls. And she discovered that she could originate loans for a credit union association. Lo and behold, the quote she gave me for a loan through that association was identical to the quote I'd gotten from my credit union. Far from being angry with me for ditching the commercial banks, she was grateful to me for pointing her in the direction of credit unions. She's now working with her boss to sign her agency up with the credit union association, and once that's done, she'll have much better loan products to offer all her customers. And I can get the best of all worlds: I can do business with a credit union, get the best rates available, and work with a broker I trust, all at the same time. I win, big banks lose.
Big banks should be very worried at the prospect of mortgage brokers working with credit unions. Brokers will almost certainly be able to get better rates through a credit union for most of their customers. And loans are how banks actually make money, through the fees and interest. So while folks moving checking and savings accounts out of commercial banks deprive them of capital, taking the loans away deprives them of profit. And that'll hit them where it hurts -- their bottom line.
If you're a mortgage broker, look into originating for credit unions. And if you're working with a broker to get a loan, ask them to look into it. They might not even know it's possible.
3:38 PM PT: Wow, rec list! First time, after being around (though mostly lurking) for 7+ years. Thanks all!