Mortgage originators are the people who act between banks and repossessed property buyers who have carved out the role of shopping around for home loans. The banks in return have been giving these mortgage originators commissions of large percentages for sourcing a deal and processing loan applications for the repossessed property buyers. In some cases this percentage was 2.5% of the value of the home loan back in the property boom days. This produced a R25 000 commission on a R1mil bond.
As a result of far fewer mortgages being granted, banks have witnessed their returns reducing along with the reduction in private property and repossessed property sales in the passing year or so. Standard bank has now changed strategy so that they get originators to bid for the business and the three with the most competitive commission rates are awarded the business. The aim of this is to make sure that originators will be more aggressive in cutting their commission rates on the coming tenders that will be asked for. In this way the bank hopes to make this field more competitive while they are paying less commission. Actually, in this process the Standard bank customers are suppose to benefit from this because it is they who will have to pay for these commissions. Unfortunately this is rarely the case that the benefit is passed down to the end client when intermediate costs get cut. Even though this mortgage originator commissions have been slashed for the past six months, there might not be any clients who witnessed its effects.
An aspect which makes originators all the more attractive for buyers, is the extra administrative rigmarole associated with the National Credit Act regulations and the ever-changing nature of bank lending criteria. A competent originator is invaluable for many repossessed property buyers in this era in which even self-employed professionals like conveyance attorneys and doctors are easily avoided by banks – just ask many of the property investors who have found it incredibly hard to secure credit for obviously-good property deals. A good originator knows, after evaluating an individual’s financial position and the repossessed property under consideration, which bank is likely to agree to finance and, if there is more than one, which will give the best rate. When you consider to buy repossessed property, mortgage originators might be your best option for assistance on the financial department.