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Tuesday, June 24, 2008

Daily Observations - Will The Real Direct Lender Please Stand Up

I may be dating myself but if you remember the show to Tell The Truth with Bill Cullen, Betty White and a host of other great actors and actresses, would the real Direct Lender stand Up is quite an appropriate caption.

On the show there are two imposters as well as the real individual. The panel then asks questions to decipher which one of the contestants are telling the truth, and which has swayed the panel into believing they were telling the truth. This is what is exactly happening in our lending community. Brokers, Mortgage Bankers, Private Lenders are all telling the same story, Yes we are a Direct Lender.

Why is it important to only deal with a direct lender? The answer is quite simple. By dealing only with a direct lender there are no other brokers or middlemen in the transactions which causes a more expensive deal for your client. Why is this a problem? The reason it is a problem is everyone wants to be a direct so that they have the opportunity to broker those loans they do not want to portfolio.

So even if you talk to a broker and they tell you they are a direct lender, you MUST ask more questions regarding the percentage of deals they close direct versus the percentage of the deals they broker out. If you find they broker out more than 50% of their deals, in my mind they are not a direct they are only using that small percentage of loans to misrepresent their real status of a broker.

We are the first to tell anyone who calls us that we are a broker and not a Direct Lender, everyone else should do the same as well. For more on the Role of the Financial Broker read on.

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