Minnesota attorney Aaron Hall speaks with Brian Call, president of Rubicon Mortgage Advisors, about Rubicon Mortgage Advisors and the mortgage industry as a whole.
Brian Call, CRMS, MMS
President, Mortgage Loan Originator
Office: (952) 921-3336
Cell: (612) 242-0460
Fax: (952) 230-7814
7101 York Avenue South, Suite 385, Edina, MN 55435
Aaron Hall: I’m Aaron Hall, attorney at Minneapolis, talking with Brian Call, president of Rubicon Mortgage Advisors, taking an inside look at the mortgage industry and what realtors should know and what consumers should know about the industry. Brian, first off, you’ve been in the industry for many years. What is it that sets a good mortgage agent apart from a mediocre or a bad one?
Brian Call: I think it begins with their commitment to their profession, experience. They’re committed full time. They study the craft much like an accountant studies the IRS code. I think a professional in our industry has to study the ever-changing industry from consumer protection laws, federal regulations, state regulations, the moving of lenders in and out of the industry. An overall commitment as a profession, not just a job.
Aaron Hall: Those who are looking at getting a mortgage often look just at the surface just at a rate and say, “Who has the best rate?” They might even price around. Is that wrong?
Brian Call: I don’t think it’s wrong. I think it’s part of the process. I think it’s the obvious barometer that many consumers will look at. The rate is important but not only interest rate. Closing fees, the experience of actually getting to the closing table. With the advent of online shopping and the TV ads, the radio ads, not that there are not quality companies out in space but to work with somebody locally in your community who has relationships with professionals in your market who can offer a competitive interest rate, mindful of closing fees, and providing a quality experience to get to the closing table is important. I think you have to factor all of those items not only interest rates.
Aaron Hall: You mention that quality experience and that might be something that a lot of people might say. We have quality experience but we’ve seen firsthand when a deal goes bad because somebody didn’t do what they were supposed to, it’s not even the mortgage agent. Somebody didn’t do what they were supposed to. Then we as attorneys get called in and having an experienced mortgage agent involved in the process can be a night and day difference. It can be the difference between actually being able to close on time and having to push things way out and have a lot of expense. When people, say realtors out there, meet mortgage agents, what are some red flags that are signals that a mortgage agent doesn’t know what they’re talking about, or they’re not the highest caliber in your industry?
Brian Call: I would start with overall lack of transparency. I think a professional has to be transparent whether with the borrower, whether with the real estate agent that they work with, honesty sometimes which does include telling individuals sometimes tough news. I think what we see with inexperience professionals many times is at times a false hope. Things might get better. It might turn a corner. Rather than identifying a tough experience and it’s getting to a closing table particularly a home purchase, a refinance. With the complexity of federal regulation, state regulation, and the investor community, scrutiny of our industry, it’s far more complex than it’s ever been. With that, somebody who has been through the process before, seen these transactions, kind of helps steer them. Keep all the parties calm and focused on facts rather than emotion is critical, and I think those that have experience and been in the business have that ability to keep everybody focused on everybody’s best interests whether it be the borrower, the agents. All best of parties.
Aaron Hall: How have changes in federal regulations changed the requirement for more experienced agent in the past few years?
Brian Call: Well with our organization, we’re an independent bank and broker so we have the ability to lend our own money to broker in the outside community. Federal regulation has now forced the industry or companies like ours to have licensed individuals. Anyone of our own employees who has contact with the borrower tends to discuss rate and term. Have to be licensed by the [4:39 inaudible]. It’s a fairly extensive process. It requires somebody to fully understand the industry. Pass a test, federal test, state test in which they want to operate. Many times what we find is the independent mortgage companies, banks, brokers, there’s a varied entry that wasn’t there a few years ago which has weeded out a couple of folks. Makes it more challenging for those getting into the industry but also ensures for the consumers, the real estate agents out there that those in our industry right now for the most part are very good in what they do. Our competitors, I think for the most part, good in what they do, good-hearted. Have the client’s best interests in mind. Part of that is because they increased pair of entry that the fed has put upon our industry.
Aaron Hall: I was once time told by a realtor that the realtor would get a kickback from her mortgage agent, and she would split that kickback with me as long as I use that mortgage agent. Illegal?
Brian Call: Yes. Section 8 of RESPA is very clear there is to be no financial compensation in direct or indirect, tangible or intangible. It can be something as simple as I might be a member at a country club and you make a referral to me and say, “Why don’t you come join me for a round of golf?” That is a clear violation as well. So something as direct as offering cash is not in the consumer’s best interest. Protection laws are there to ensure that consumers are offered the best service irrespective of the parties that they rely on whether it be their agent, their attorney, their mortgage professional.
Aaron Hall: Rubicon Mortgage Advisors has been involved in the Minneapolis and the Twin Cities metro area for a while. You have a lot of relationships with realtors. What do you feel is the value that you provide to realtors that realtors may not get from low-quality mortgage advisors?
Brian Call: I think first and foremost that our professionals are in the communities which they serve. They’re involved in their communities. They understand their markets much like real estate agents. Real estate agents, top professionals in that industry are in the markets that they serve much like our mortgage professionals. In addition to that, the experience that our people have. We have two of the eight individuals that are nationally credited in our industry in our organization. Really an overall commitment to the customer’s best interest and ultimately as a real estate agent that’s out there, making referral to a professional. We want to ensure that we’re a reflection of their service quality. A mortgage in some cases can be viewed as a commodity. You can go anywhere to get a mortgage. The experience, the treatment, the professionalism, that is the intangible quality that we would add compared to some of our larger bank pairs.
Aaron Hall: A lot of people, you said, look at mortgages as a commodity. I’ve seen that. They also think their transaction is so easy. Everybody thinks their own sale is simple because their situation to them seems average. What are some problems you’ve seen come up in a deal trying to get closing done on time, and how you’ve gotten that deal done?
Brian Call: I think it starts as a challenge or problem is that assumption that everything is easy. I think when a consumer works with proven professionals, real estate agents, attorneys, mortgage professionals that have been through the changes in our industry through the last three or four years, we can better steer, better guide them, better advise them to the closing table. That being said, no one transaction is the same. No one transaction is easy, and I think that simple assumption…addressing that assumption early in the process and working with those professionals to help support that is critically important.
Aaron Hall: People may have a hard time believing that the sale of property is that complicated. I know, as an attorney, how many problems can come up. I’m curious. Do you have any examples of real-life horror stories or problems that have come up in what seemed to be a fairly straightforward deal at the beginning?
Brian Call: Yes, I would use home purchase example. For examples, two agents that independently represent their seller and buyer. You have willing parties that want to buy and sell a transaction. You’ve already entered into a legal agreement to do so but many times, it’s contingent on financing in borrowing money to purchase that property. One area is the area of appraisals and not only just the appraised value but the quality of the appraisal, and that appraisal being acceptable to the investor community whereas in years past, it was simply a matter of, “Let’s validate the number. Sell a property for $250,000. We have a number of $250,000. We go to the closing table.” Today, we’re looking at quality of the comparables. Are we looking at a declining market? Understanding the quality of an appraisal and working with proven professionals in that arena is critical. It’s not as simple as just throwing an appraiser out at a project, closing, and moving on. That’s an area we see with purchase transactions being critical to the process the quality of that appraisal.
Aaron Hall: What are the options to consumers? They have mortgage brokers. They can go to the bank. Others? What’s the difference between those?
Brian Call: Generally, there are originators. There are aggregators. Those are the secondary market buying loans from originators. There are servicers. Generally speaking, the large five banks Wells, BVA, Chase are the servicing business although they offer retail origination predominantly in the servicing arena.
Aaron Hall: Just to clarify, origination is what you provide?
Brian Call: We provide. Our organization is both a mortgage lender and a mortgage broker which offers our borrowers the real estate agents flexibility. For example, being a lender provides us more control borrowing our own funds. For example, in a purchase transaction, that might be critical where you have a defined date, a defined closing. That being said, having the ability to broker a transaction to the outside community might be important for the Home Affordable Refinance Program. Many of the borrowers are underwater right now and our ability to find more option for them to get the lowest competitive rate we can provide in the industry. For our organization, we’re really structured in the middle as a lender and a broker, and we do that for customer option and to ensure that we give as much option to the borrowers as we possibly can.
Aaron Hall: Do mortgage brokers have different pools of loans available to them? For example, if you go to agent A, he has certain rates and a portfolio of loans available versus agent B. In other words, is it in the consumer’s best interest to check in with a few different mortgage brokers?
Brian Call: Absolutely. We would encourage any borrower to shop. How to do that is a broker may have limited option and although may shop to multiple lenders loses some control in the process. Conversely, as an exclusive lender, they may have more control in the transaction but may have limited option. Working with a broker or a banker, there’s validity to try to gain a quote from both two, if not, three sources. One thing that we do see and we’d recommend to anybody is to obtain a second or third quote is to conduct an apples to apples comparison. Same day, same price, same product. To encourage borrowers to say, “I’m buying a property. I’m closing on November 1st. I would like a quote on a 30 year fixed mortgage with 20% down based on your rates as of 1:00 tomorrow” and to share that with two or three lenders and you’ll then be provided a good faith estimate of settlement costs, interest rate that you can compare. Many times, if there is an error by a consumer although well intended, is to gain a quote from a banker on a Tuesday, a broker on a Thursday, and maybe a third party next Tuesday. The market is fluid and moves an inch a day. We have same day, same price, same comparison is critical and with that to use their trusted sources whether an attorney, a financial planner, family to help them walk through who to select and why to select that advisor.
Aaron Hall: For home buyers, realtors, and others in the industry who are looking for a partner as a mortgage company, would they contact you or somebody else at Rubicon Mortgage Advisors?
Brian Call: I think it’s best to contact me directly. We have eight offices throughout Minnesota and North Dakota. We would then look to pair any professional that has an interest to engage us in an initial conversation with a professional in their market. I think it’s very important to work with people in their market that know their market, and I can definitely set that up for them.
Aaron Hall: Sounds good. Thank you.