The Denver/Boulder Better Business Bureau reports that the mortgage industry ranks near the top of its list for both inquiries and complaints.  The Mortgage Bankers Association wants to institute national licensing of mortgage brokers.  Though they don’t want to license bank lenders.  The State of Colorado is also kicking this football around.  Without commenting on the merits of these efforts there is a way consumers can avoid the worst practices of mortgage rip-off artists.

The way to avoid paying too much is to shop.  Specifically to shop based not upon rate or fees, but to shop based solely on the lender’s revenue.  The facts are mortgage rates are a commodity, and mortgage products are widely available.  No one has a corner on either.  What separates one lender from another is not rate or product, but how much each lender intends to make off you.  Talk to each lender in those terms, and you will get current market rates.

Some people will this say, “no one will disclose that.”  This isn’t true.  There is another industry that has already changed from a “do not discuss income,” method to a structure where fees are the only point that matters.   That is the stock brokerage.  No one has a better price for Microsoft than anyone else.  What separates Charles Schwab from anyone else is the fee charged per trade.  The same approach is true for mortgage lenders.  An interest rate is the same no matter where you get it.  What matters is how much the lender makes.

As a starting point, there are mortgage brokers whose business models comply with the approach I describe.  They are the Upfront Mortgage Brokers, and they can all be found on a website run by Jack Guttentag (www.mtgprofessor.com).

There is still a great need for reform, but consumers have more power than they usually employ.  Make this simple step part of mortgage shopping.  And, remember no one has an advantage over anyone else on rates or products.  Therefore if something looks to good to be true...

Deron White - www.littletownresidential.com.