When shopping for a mortgage loan provider should I go the BIG BANKS or should I find a local branch of a mortgage banking company?

Since the financial meltdown a year ago the differences are becoming more evident.

Conventional wisdom says to some shoppers that the big strong brick and mortar of the giant financial institutions provides saftey and security. This the smoke screen that the huge institutions thrive on. While in some cases you are placing portions of your financial savings and this does offer the FDIC insured saftey net you desire, this is not the case with your mortgage loan.

In reality the bulk of first mortgage financing is being securitized by less than a dozen big banks. These banks have the financial werewithal to bundle these mortgage backed securities in sufficient quantity to sell them efficiently and effectively to FNMA, GNMA and FHLMC.

But how do these big banks get such large quantities of mortgage loans?

They do it by offering to purchase bulk quantites from smaller, local and regional mortgage lenders. In other words no matter where you secure your loan, chances are pretty good that it is going to end up in the same place.

So why not go to the source? Save time, money and uncertainty! Perhaps.

Or are you going to help the big banks control more of your life? Are you helping them control more of the US economy?

One of the main reasons big banks prefer to let the smaller companies take advantage of there size is to control their costs, limit their risks, and allows them to offer substandard service levels.

Call the local branch of any one of the big banks and ask about obtaining a mortgage loan. You will most likely be transferred to a call center. Once you complete your application your loan file will be sent to processing center.

Seldom are the two “centers” located in the same building nor the same city. The time it takes to close your loan will be anywhere between 30 and 60 days for a purchase. At times refinance time frames have extended to 120 days or more. The loan officer, loan process, loan underwriter, loan closer and loan funder most likely have never met face to face.

Compare this with your local mortgage company branch.

Most have the entire process located in one office. Many are a close knit group that spend a great deal of their work time together. Many socialize on a regular basis after work. Since they are in one office it is probably within your community. The loan officer and staff may have a personal relationship with your real estate agent. The company is probably very active within the local associations. Their employes, rent, and purchase of supplies are in your city. The price you pay will most likely be very similar since 95% of all mortgage loans go to GNMA, FNMA and FHLMC. What is the cost of poor, slow, and unresponsive service?

When a company has many thousands of loans in process in one of these centers how much can they really care about your loan?

Service levels are guaranteed to be much quicker, more personalized and more in tune with your needs as a mortgage customer. The loan officer is probably going to spend a great deal of time making sure you get the service you need so you will come back next time. Some even offer service guarantees like the 10 Day Close guarantee.

So go ahead — give it a try. Walk into the local branch or try to get the same person on the phone the next time you call Bank of Gigantis.