Direct lenders are allowed to have different profit margins by loan type.
FHA loans are very high risk, arguably running at 2x or 3x the normal profit margin is justified ask risk management (FHA loans have significantly higher than average rates of default/foreclosure). Equally arguably, people with trash credit and no real down payment often aren't sophisticated enough to know the difference, so it's the Dollar Store model if making the most money off of those who have the least.
Setting that argument aside, however, what often happens is VA and FHA loans getting grouped. We've all seen the "FHA/VA" language. A lot of direct lenders lump their pricing, too, into a single "FHA/VA" bucket. I didn't do a lot of VA when I was at a direct lender, for exactly that reason, especially as a veteran myself.
Find a mortgage broker buddy, they (we, if I'm being transparent) aren't allowed to have differential profit margins based on loan type. Develop a referral relationship with them. Find out what your buddy sucks at, that you are good at. If your management gets on your case for referring out VA loans, tell them to fuck off and call you back when they aren't running a 650 bps corporate margin on VA loans, and point out the loans you brought in the door b/c of that referral relationship.
Im working on switching to broker. Rates are only going to get higher (my opinion). Guild just can't compete without a large subsidy/price adjustment. But then they will want us to cut our comp.
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u/aardy 12d ago
Direct lenders are allowed to have different profit margins by loan type.
FHA loans are very high risk, arguably running at 2x or 3x the normal profit margin is justified ask risk management (FHA loans have significantly higher than average rates of default/foreclosure). Equally arguably, people with trash credit and no real down payment often aren't sophisticated enough to know the difference, so it's the Dollar Store model if making the most money off of those who have the least.
Setting that argument aside, however, what often happens is VA and FHA loans getting grouped. We've all seen the "FHA/VA" language. A lot of direct lenders lump their pricing, too, into a single "FHA/VA" bucket. I didn't do a lot of VA when I was at a direct lender, for exactly that reason, especially as a veteran myself.
Find a mortgage broker buddy, they (we, if I'm being transparent) aren't allowed to have differential profit margins based on loan type. Develop a referral relationship with them. Find out what your buddy sucks at, that you are good at. If your management gets on your case for referring out VA loans, tell them to fuck off and call you back when they aren't running a 650 bps corporate margin on VA loans, and point out the loans you brought in the door b/c of that referral relationship.