Real estate agents, who influence a substantial amount of purchase-mortgage business, generally favored working with nonbank lenders over the megabanks, according to exclusive survey findings compiled by Campbell Surveys and Inside Mortgage Finance.
Close to three-quarters of real estate agent respondents in the study reported that referring homebuyers to specific lenders was a “key success factor” in their business. And the importance of lender referrals increased significantly for higher volume agents compared to lower volume agents.
The report, Building Mortgage Business with Real Estate Agents, is based on a national survey of more than 2,700 real estate agent respondents conducted earlier this year. This is an annual study that also tracks year-over-year changes.
The top four lenders receiving the highest rate of “likes” and lowest rate of “dislikes” from real estate agents were all nonbanks: Fairway Independent, Movement Mortgage, Guild Mortgage and Guaranteed Rate. Bank subsidiary PrimeLending and Caliber Home Loans rated closely behind the top four. Fairway Independent received top scores in accessibility (such as responsiveness, status updates) and execution (closing performance), while Movement Mortgage scored the best in services (preapprovals, leads, marketing materials).
Meanwhile, the largest banks in the country – Wells Fargo, Chase and Bank of America – didn’t fare nearly as well and generally received the lowest ratings by real estate agents. The big banks were mostly criticized or “disliked” for their perceived lack of accessibility and poorer closing performance.
One possible explanation for the lower ratings for the largest mortgage lenders is just the sheer number of real estate agents that are exposed to the big firms. Nearly twice the number of agents rated firms like Wells Fargo, Bank of America and Quicken Loans than agents who rated Fairway Independent, Movement Mortgage or Guild Mortgage. While nonbank giant Quicken stayed above its top volume competitors, it was in a tier below smaller nonbank counterparts.
Another factor is the rapid growth of some nonbank mortgage lenders over the past year. The two highest-rated firms were Fairway and Movement, two lenders that managed to grow their originations in 2017 even though the overall lending market fell by double digits last year. Fairway posted a 21 percent increase in originations in 2017.
The number one reason for disliking a mortgage lender was failing to meet closing deadlines. This was particularly true for higher volume real estate agent respondents in the study.
Interestingly, services and loan programs/pricing were much smaller drivers of most lenders’ ratings. On a year-over-year basis, the lenders showing the most improvement in real estate agent ratings included Movement, Guaranteed Rate, PrimeLending and loanDepot. Among the bank lenders, Flagstar and Bank of America saw the most improvement.
Firm Preapprovals Count
When asked about the most important factors in determining lender referrals, agents put preapprovals (with a firm commitment based on underwriting) and performance on meeting closing dates near the top of the list. Advertising by lenders to either agents or homebuyers ranked among the least important factors.
The report concluded that real estate agents control or influence a homebuyer’s choice of a mortgage lender in about half the transactions they handle.
The comprehensive report features seven sections that closely analyze the relationship between real estate agents and mortgage lenders, including how agents get business, what lender services they value, and what motivates them to recommend specific lenders to homebuyers. One of the sections is devoted to lender ratings and the reasons agents like or dislike specific lenders.