Lately I have been wondering about the term “broker mentality”. Mainly because people give it a negative connotation and make it sound like a disease or mental illness. What exactly is this mentality? Compared to a “direct lender” what does a mortgage broker do that deserves a derogatory label? This is a puzzle I must solve.
 

As a broker I wake up in the morning, make my Espresso and drink it while watching Bloomberg News. I admit a lender may not drink Espresso or may watch Fox News instead. The rest of our days should be pretty similar though, except that unlike a direct lender, I don’t borrow money to fund my loans. That is the only difference between a broker and a lender. We both shop for the best rates to maximize our profits. We both have to adhere to our investors’ guidelines - wholesale lenders in my case and correspondent buyers in the lender’s case - and we both have to sell the top ten originators’ products (Wells Fargo, Countrywide, WAMU, etc.). How many true direct lenders are out there? Most of the loans are sold to the big originators who then securitize and sell the MBS on Wall Street. So how many direct lenders actually fund all the loans and keep them in their own portfolios? What am I missing here? Why brokers are considered an inferior species is a mystery for me.
 

I guess it is for the same reason that homeowners enjoy a higher social status than renters do and on the surface appear more stable or financially secure. We tend to respect those who purchase and own things and look down on people who rent or broker things; except when it comes to cars! For some strange reason people look up to those who lease expensive cars while looking down on people who own modest cars. Why is paying $800 per month to lease a $50,000 car cooler than owning a $15,000 car, free and clear? I drive an old Volvo that runs perfect and doesn’t miss a beat. Perhaps that is why some Realtors don’t return my calls. Or is it because I am a broker? Hell if I know.
 

I am beginning to regret trying to solve this puzzle. The more I think about it the more confused I get. Can anyone point me in the right direction?