The differences in dealing with the Big Bank (as in too big to fail) mortgage operations, Mortgage Bankers and Mortgage Brokers each have their own advantages and disadvantages. While the Big Bank mortgage operations enjoy the economies of scale in boosting their output, their bigness creates their biggest obstacle to delivering product in a timely manner.
As a result it is not uncommon for them to be slowest, because their methods are not unlike Henry Ford when he was pioneering mass production. If I were to choose an animal to describe their nimbleness, I think an elephant would be the correct choice. While they have an almost infinite source of funding capacity, any economies of scale are lost to their inability to detail the individuality of the files they process which increases cost and time loss.
Like Henry Ford, they believe that they can originate loans more cheaply by having unskilled or semi-skilled workers doing repetitious duties in promoting a file from step “A” to step “B” and so on. Henry Ford proved that he could produce more cars at less cost by using unskilled and semi-skilled workers than other manufacturers employing expensive, highly skilled workers. Originating loans is nothing like building a car. Continue reading