Where Do These Sharks Come From?

There is a code of ethics among mortgage brokers/intermediaries that seems to be violated more and more every day. I don't know if I would call it disgusting, discouraging our just plain sad.

Walker Commercial Funding sees hundreds of transactions every month and inevitably we run into a few "joker brokers" that think the world revolves around them and their commissions. Obviously, we distance ourselves from these characters as soon as possible.

A few months ago, I was published in Scotsman Guide, a magazine that has a target audience of mortgage brokers. Evidently, some of the people we have been dealing with haven't read the article. To read it, please click here.

The acts of weaslery are too many to mention, but here's an example of what we deal with:
A broker gives a client an approval letter and collects a $5,000 due diligence fees. He even listed his own company as the funder and that his company would be in a first lien position, just to make the approval look legitimate. The truth is that he didn't even have a funding source. So he gave the file to another broker that submitted it to us.

Who do we pay? The broker that submitted it, of course. Just because the previous broker had a fraudulent approval letter with terms and the "appearance" of an approval and the client's signature doesn't entitle him to anything other than a deceitful practices law suit. Had he submitted the deal to us, we would pay him. But we pay the broker that submitted the transaction to us. That broker then shares his success fee with the broker that gave him the file to fund.

Remember: once you pass your client to another broker, you become a referring broker and the broker you passed it to determines how much you make on it, if it hasn't already been determined. Your agreement with the client for closing the loan and your fees are null and void because you aren't the PROCURING BROKER. Period.

What makes this broker even more laughable is that when it came time to pay the funder a measley $3,000 in due diligence fees (which he had already collected). He refused to pay it. My own company had to pay it.

Once this broker learned who was funding the deal, he immediately began claiming "his deal" and even had us fooled for a while, but when we asked him to document how and when he submitted the file to us, he could not. He did not submit the deal...that's why he called to check on it 15 times a day.

Lesson Learned: If you do not submit the file to us, you will not be paid when it closes. Whatever agreement you have with the client becomes null and void because you are not the procuring broker. Have we circumvented you? No, we have no business with you. Our business is with the broker that submitted it to us. And if you send us an NCND after the deal has been submitted, that won't fly either.

I'll save another act of weaslery with you later...until then. Good selling. Always tell the truth: good or bad and you'll have no worries.