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Partnering With An FDIC Bank by Gus Dahleh Partnering With An FDIC Bank by Gus Dahleh(1)

Why is partnering with an FDIC Bank a wise decision?

First of all, Partnering with an FDIC bank will essentially allow access to funds with very low interest rates.  The banks can borrow money from each other at the interest rate at which FDIC Banks lend money to each other.  FDIC banks are not subject to state mortgage lender laws. FDIC banks are characteristically overseen by the Office of the Comptroller of the Currency, which is an agency within the U.S. Treasury Department, pursuant to the National Bank Act.

FDIC banks can service their own products. Mortgage banks, in most cases, are contractually barred by covenants in their warehouse line agreements from servicing loans closed with warehouse funds. Also, the interest rate on funds borrowed from the warehouse facility is high enough that they quickly make a loan unprofitable.

Partnering with an FDIC Bank to manage turbulence

Because mortgage banks are mostly in the business of originating residential home loans (purchase and refinance loans), the residential housing crash, with the resulting economic problems, has caused many issues for businesses that are completely tied in with the market. In response to our economic issues, mortgage banks have gone out of business or sought to affiliate or partner with FDIC banks because they are better able to manage changes in the home loan market for the following reasons.

While the level of inspection aimed by the OCC is noticeably more intense, FDIC banks that partner with clients are usually relieved from state-imposed mortgage-loan originator licensing requirements. This permits FDIC banks to hire loan originators who might not otherwise be able to obtain state licensing because of bankruptcy filings or other non-financially related criminal histories.

For the past year, the Fed Fund Rate has been 0.25 percent (one-quarter of 1 percent). FDIC banks borrow money directly from a Federal Reserve Bank (at the Federal Discount Rate). For the past year, the Federal Discount Rate has been 0.75 percent (three-quarters of 1 percent).

Pit falls of partnering with an FDIC Bank

Joining forces with an FDIC bank doesn’t come without problems/limitations.  For example, careful thought should be given to the transition in order to compartmentalize liabilities in each respective entity and to avoid successor liability concerns.

Mortgage bankers moving to an FDIC bank platform should be informed that financial regulations on the FDIC side are increasingly more complicated and closely scrutinized by regulators. Care must be taken to avoid any fast and loose work when the OCC is evaluating  a company partnering with an FDIC bank.

Author “Gus Dahleh” is a sales leader who is owner of and is rather dedicated to providing readers with important as well as useful information and facts. Take a look at the following website link for more info on why its beneficial partnering with an FDIC bank.

Chicago Tribune:  30-year Mortgage Rates Dip to 3.62% Chicago Tribune: 30-year Mortgage Rates Dip to 3.62%(1)

Chicago Tribune:
30-year Mortgage Rates Dip to 3.62%

According to Tribune reporter, Mary Ellen Podmolik, 30 year fixed mortgage rates have dipped to new all-time lows at 3.62% on average. It is believed that this additional dip in rates is unfortunately a signal of our further slowing economy. For existing home owners and home buyers, however, this rate drop is great news. In fact, rates have inched downward in 10 of the past 11 weeks (this article was written on 7/10/12). Similarly, the average 15 year fixed rate has fallen to just 2.89% down from 3.75% one year ago.

If you are a Chicago Tribune reader like I am, always scanning ads from lenders claiming to have the absolute lowest rates, here are a few factors to consider when searching for the best mortgage lender:

Broker Vs. Banker:
At this time there are 2 major varieties of lenders to take into consideration. The first are mortgage brokers which from a technical perspective will not fund the transactions with their funds, however they typically provide the widest assortment of bank investors to put the loans with (these big investors being Wells Fargo, Citibank, Chase, and GMAC just to name a few). The side effects of a broker not utilizing their own funds to actually fund your deal is their outsourcing of underwriting. This may occasionally bring about additional issues for borrowers hoping for the smoothest deal possible. As opposed to brokers, mortgage bankers offer a similar experience but in most cases have in-house underwriters whom approve the mortgage to fund and so they ultimately close the mortgages by themselves giving them the last say in accepting closing conditions.

Understanding Price Structures and How These Types of Banks’s Advertising “zero cost” loans in the Chicago Tribune Bring In Revenue is Crucial to Obtaining The Best Rate.

It is important you fully grasp that Broker firms usually have the cheapest cost of doing business that may result in the absolute lowest rates. Even so, quite a few shoppers still frown upon brokers because they also typically use outside agencies for many of the important aspects that go into getting your loan to the closing table and that can result in a few of the head aches pointed out above in Tip Number 1. Conversely, the “Big Investors” including Wells Fargo, Chase, and Citi provide the absolute greatest overhead costs which commonly trickles down to the buyer in the form of unfavorable interest rates. The “Big Banks” have considerable ongoing costs which includes billboards, tv and radio commercials, web banner advertisements, numerous levels of administration, loss mitigation departments, legal departments, and on and on. For this reason, you can usually find the best Chicago mortgage rates within the Chicago Tribune’s Real Estate section by selecting a lender who’s characteristics rest in the middle of the spectrum:  a “mortgage banker”. Mortgage bankers traditionally possess remarkably low overhead costs yet nevertheless have the control of important services in house, specifically their underwriting and closing departments.

Author “Joe Mortgage” is a marketing and advertising innovator who is owner of and is committed to bringing readers relevant and important information. Find out more at the following link for a free information on how to obtain the lowest mortgage rates like the ones you see every week in the Chicago Tribune.

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