Independent Broker 
vs. 
Employee Loan Rep

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Brokers offer what no employee of any lender can offer: independence. A broker in California for example, is legally an agent for his clients, a relationship that confers an obligation no employee of any company has to any customer. Note that not all brokers feel that way and various state allow different relationships between borrower and broker.
An agency relationship with a mortgage broker offers many advantages for borrowers.

Contrast brokers with loan reps, who are employees of banks, S&Ls or even large mortgage corporations. Loan reps are expected to pursue clients and get loan applications. If the underwriting department denies the application, the rep is not expected to go to bat for the client. In many large lenders the underwriting department reports through its own chain of command. The loan rep and his/her boss have no authority over the underwriting department. Your loan rep may be a nice person, but he or she has no power to help you if your file gets in trouble. On the contrary, the loan rep may get n trouble for bucking the system. Borrowers need an advocate, but in many organizations that’s not in the loan reps job description.

In many large banks, the system is wrapped in even more red tape. Many use a central processing facility where all loan applications are processed and underwritten. The loan officer you deal with in your branch may be a trainee earning $7 to $9 an hour. His or her job is to act as a conduit through whom information is sent. If the processor wants more info, he or she calls the loan officer who then calls you. If your loan is denied, that friendly loan officer may not be so friendly anymore. He or she may even get upset if you ask why your loan was denied. At many banks the loan officer is not even allowed to call the processor and ask status of your file.

There is a very credible reason for the hierarchical processing systems. Large institutions such as the big banks may have hundreds, perhaps over a thousand branches. They are not going to be able to find 1,000 competent loan officers. Any bank employee who likes the business and is competent can probably triple his or her income as an independent broker.

This is not to say that you should not do business with a bank or S&L, just understand what you can expect from these people, and be realistic about what they cannot and will not do for you. The kind of loan you want will determine which lender you should talk with first. You should certainly talk with the institution where you have an account relationship. If it does do mortgages ask someone in the commercial department for a referral. 

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