These days, many real estate brokerages have a lender in their office to supposedly make the process easier for the buyer to get a loan, helping to create the “one-stop shop,” which usually includes a settlement company, as well. Even though buyers can choose whichever lender they would like to use, they are actively encouraged to use the in-house lender.
This type of setup often sells the “smoother process” and indicates that the loan is more likely to close on time if they use the in-house service.
I think the whole setup is flawed, and I will tell you why.
The issue with the in-house lenders is that they can become complacent and satisfied because they know that they are going to receive referrals regardless of their performance. The lenders are usually paying a desk rental fee or are owned by the real estate brokerage, so there is usually some financial benefit for them to work together.
This relationship leads to the lender being overwhelmed with loans to process and ultimately a slower turnaround time for the loan. The lender is also so busy working on loans, which causes them not to be as responsive as real estate agents would like.
Ultimately, agents look for another lender who can help better help them. Then the lender doesn’t get the loan volume that he or she should be receiving, and he or she becomes dissatisfied with the arrangement.
I have seen this process happen over and over again, and, unfortunately, it will probably continue. In the interest of full disclosure, I do not have any arrangement with a real estate brokerage so I might be a little biased, but I’m just calling it as I see it.
All lenders have different strengths and weaknesses, and they are not one-size-fits-all. Having a preferred lender is great, and I recommend having a go-to person — I just disagree with having one in-house.
Have you had good or bad experiences with in-house lenders? Please continue the conversation in the comments section below.
Jason Turner is a loan officer with Caliber Home Loans serving Maryland, D.C. and Virginia. You can learn more at his blog. Feel free to contact him anytime.