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Thursday, December 1, 2011

Ask the Loan Man - December 2011

As the Occupy Wall Street movement continues to grow across this wonderful nation of ours, there are a lot of people changing the name and making it their own. Some are doing it to be funny (OccuPIE Thanksgiving) and others to get their own message out.

I am using it here because it is topical and I think it had an effect on my business just last week. I am not part of the elite, I am definitely part of the 99%. My office is in Sebastopol by choice and I am not a fan of  companies that are “too big to fail”.

This is what happened to me last week: I received a call from someone who wanted his mortgage to remain local and never be sold to a big bank. I wanted to assure this person that we were a local company employing 6 people in Sebastopol and our underwriting and funding happens in Santa Rosa where we employ over 30 more local people and even though these things are true, I could not promise that his loan would not be sold to a big bank because that is sort of what happens.

Basically, we sell our loans after we fund them so we do not run out of money. This is the same thing that happens with the majority of mortgages funded by big banks, local banks and credit unions as well. Mortgage companies sell our loans to agencies like Fannie Mae and Freddie Mac and FHA. These are the companies that were created after the great depression to keep liquidity in the market place and this is how the system works today
We underwrite our loans to the agency guidelines and they buy them and then they employ one of the big banks or mortgage servicing companies to service the loan which is a fancy way of saying that they collect the money. When this happens, the consumer does not know which agency owns their mortgage but they do know which bank is the servicer and it appears as if that bank has bought their loan (we even describe it this way because it is easier). The same thing happens if you go directly to a big bank and they fund your loan, in the background they are selling your loan to one of the agencies but they continue to collect the payments and service the loan so it appears they own your mortgage.

I did not want to say to this person that his conscious efforts to keep his business and his money away from big banks was futile but I also did not want to lose business and revenue that keeps myself and my employees working and shopping and thriving in his local community where we are raising our families. In the end I simply wished him luck and I meant it.

We need change and we need it in a big way. I applaud the people who are working towards this change and I try and do my part as well so please think it all the way through when hiring a local professional. Choose the person in your community who will serve your needs and keep the money local by doing so. That is what I mean by occupy your own street. We need to start in our own front yard and support our neighbors right here in Sonoma County and we need to be conscious of how we vote with our dollars and what impact that may have.

Have a thoughtful day and please email or call me with any real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

Hans Bruhner is a branch manager for First Priority Financial. Hans is licensed by the CA DRE # 01085398 and NMLS #243484 and First priority is licensed by the CA DRE # 00652852 and NMLS #3257.  If you have a question, please contact him at (707) 887-1275 or