small banks vs big banks

anyone?

My first mortgage was with Dime, and they sold it to somebody else for servicing (pardon my not remembering who); I had later mortgages with both Chase and Citi.

From the consumer side, I didn't notice much of a difference (Citi made one stupid mistake that irritated me greatly and screwed up my credit, but to be fair, my history with them was the longest, nearly ten years).

There's a theoretical advantage to taking a loan with a bank that won't sell it to a servicer, because if rates drop then you can ask them to modify the terms, which is fairly cheap -- but you can't predict at the outset who won't resell, and for conforming loans, I believe it's almost guaranteed that they're going to be packaged up and resold at some point.

So my vote is, money is a commodity and you want the best rates -- anybody else?

ali r.
{downtown broker}

I have had two conforming loans with Citi, they kept both loans (including one originated in 2004). They have been fairly bad to deal with.

I had a non-conforming with North Fork, who I liked and who also kept the loan.

I agree though, get the best rate. Who knows where your mortgage will be in a few years, big bank or small.

Thanks! I guess I wasn't worried about smaller banks (astoria savings, apple) that we have all sort of heard of, I was weary of the "preferred lenders" that buildings (particularly new construction buildings) have you get prequalified with. I have never heard of these guys before and with mortgages I guess it's not as simple as making sure they are FDIC insured like a bank account. I mean is there something I can ask to know if its a risky bank or not? A telltale sign that something is wrong?

Call the AG's office?

As long as they fund your loan at closing you shouldn't care what size institution holds your mortgage. If something happened to the bank they would simply sell your loan to another servicer which, as stated above doesn't affect you whatsoever.

Those small mortgage banks that work with the developers sell your loan at closing anyways so most likely you would be transferred to a larger institution.

Go with the best "real" rate. Always remember, if it's too good to be true...

This is all interesting because I had Citibank for my last mortgage (conforming) and the four years they serviced my loan I never even knew they could sell it to be honest (obviously they didn't). I always thought of that as the world of sub-prime lenders.

I had a lousy experience with a jumbo with HSBC, who were truly a pain - spent months sorting out a minor insurance matter, during which time they upped my escrow payment by about $800/mo. They refunded it all in the end, but sheesh. As a broker, I have seen HSBC pull out of loans less than a week before a scheduled closing (once in 2007, once in 2008). I don't mind a bank having stringent lending guidelines, but I don't appreciate the way they can string people along.

I have a great loan currently, but it came through Washington Mutual, so that's no help. Oddly, the loan specifically states that it won't be resold or repackaged.

The knock on the smaller banks has always been their strict guidelines and long timelines - not risk. Since these rules apply to all mortgage lenders currently in business, you should feel free to shop for the best rate.

tina24hour-I guess now it sort of will be sold to Chase though. Banks are SO much fun right now.

I think your better off going with a small local lender who wants your business. The only issue you may run itno with a developer/new construction is the building approval. Wells Fargo Retail is locked into many new projects and they can lend as they have pre approved the building. If thats thats the case you will not have much of an option.

This was actually the answer I got from one of the big boys when I asked about loans being sold just now:

"(big bank) sells all of it's loans to investors but rarely if ever sells the servicing rights so the transaction is basically invisible to our customers. Basically all large banks sell their loans (and some the servicing rights) because it is the only way to keep the required capital on hand to make the volume of loans that we make."

So there it is.

Once you get your mortgage, it makes basically no difference who your bank is. Kimerama is right that the actual underlying mortgage may be sold back and forth between banks or investors, etc but the servicer you face (sends your bill, takes your monthly payments, etc) will rarely change hands. Even if it does, as long as you pay your bill, doesn't matter regardless. The only reason i can think of to think about large vs. small banks is to the extent that one bank has a higher degree of funding or giving a commitment before you actually get the mortgage and going down the path with the higher probability bank (if you can even know that).