I would like to find someone who is

  • knowledgeable about the mortgage industry and regulations
  • has no incentive to try to sell me a mortgage

Most mortgage brokers are ruled out by the second point and many financial advisors are ruled out by the first.

I want to hire a consultant who is an expert and works exclusively in an advisory role on my behalf.

Explicitly this person should not be working on a commission basis, I would pay them an hourly fee and ideally this person would act as a fiduciary.

Is there a job title, industry group, or other designation that can help me find this kind of person?

  • Note that what you are asking for isn't much different than a mortgage broker that you can trust. You can always take a possible deal to another broker or bank and ask them their opinion. They'll tell you if they can beat it or not. The cost of the consultant might actually be more than the savings you would get from having one shop for you. (Though maybe the peace of mind is worth the cost to you.) – TTT Nov 20 '20 at 20:50
  • What advice do you want the consultant to provide? – mhoran_psprep Nov 21 '20 at 0:09
  • @ttt Perhaps but the presence or absence of financial incentive is very important to me and I am willing to pay for that independence. – Ian Danforth Nov 21 '20 at 2:12
  • You don't need someone who "has no incentive to try to sell me a mortgage". You need someone who has no incentive to sell you a particular mortgage, i.e. someone who will give you facts about mortgages rather than try to persuade you to pick one specific one. There are a few of those people. Also it's actually pretty easy for you to evaluate which one is best between a few different mortgage offerings. So just visit some mortgage brokers and pick whichever one offers you the best one. – DJClayworth Nov 21 '20 at 20:50
  • 1
    Is this applicable to the US specifically? The regulation of financial advisors is different internationally. Please comment or edit /tag. – Vicky Nov 21 '20 at 20:57

I am a financial and monetary economist and there really isn't anything quite exactly what you are describing. Let me describe what is missing from your post.

Let me first begin by mentioning two different types of deeds. One is a fee simple deed. The other is a grant deed. Three states use grant deeds. The mortgage laws around grant deeds, of necessity, are quite different from the mortgage laws around traditional fee simple deeds. If your issue is technical and legal, then you need a law practice that is multi-state and quite experienced.

Now let me describe two different types of foreclosure laws, judicial foreclosure, and self-help states. In judicial foreclosure, a judge has to transfer terminate the ownership rights of the property owner. As attorneys in those states will tell you, there can be nightmare scenarios around that. In self-help states, the party doing the foreclosure does everything up to and possibly including the kicking out. Of course, without a judge to protect them, mistakes are their liability in a different way than in judicial foreclosure. There are nightmares there too. You need someone very experienced in local collection rules, not necessarily an attorney, but a debt collector.

Each state has its own consumer finance laws and business finance laws. In West Virginia, if you handle a delinquent account wrong, the judge will just toss your case and you have to start over. West Virginia was spared the 2008 financial crisis because if you made loans below a certain quality, then you didn't make a loan, you gave them the gift of a house. On the opposite side, some states still allow confession of judgment clauses in business loans.

A confession of judgment is a clause where the borrower appoints the bank their attorney in any lawsuits by the bank against the debtor and authorizes them to confess in court against the debtor. Again, you need a local lawyer.

If your goal, however, is to package mortgages together, then you need the skills of an investment banker. There are no hourly fee-based investment bankers. There is no margin in it for them. They make a lot of money for one of the most challenging jobs there is. They are not interested in your hourly money. If you will give them the business, they will advise you for free. Their fee comes from making a market for your mortgages.

If your goal is valuation, then there are myriad issues. On the surface, you want a real estate appraiser, but that is only a surface solution. Appraisers base the valuations of the underlying property on the current conditions. They cannot and must not assess the sustainability or stability of those conditions. For that, you probably need an economist. For a valuation of a particular mortgage, you would also need an underwriter.

If you are trying to build a business with mortgages, then you will likely need an enrolled agent, CPA, or tax attorney. What you are doing and how you are doing it will have different implications on cash flows. For example, if your borrower or lender pays one point to buy down a rate, what is the tax implication for you?

Now let us consider pricing. Again, you likely need an economist, but also someone that knows how to process local tax law. I know of one small, local jurisdiction that claims worldwide taxing power of any business that even trivially does any business in its jurisdiction. Yes, you sold $1 worth of stuff, but your entire $7 billion in income is now inside their jurisdiction. Local ad valorem taxes can include taxes on debt instruments. You could make a mortgage and find you have to pay taxes on it based on its face value, not on your income. You need to factor those taxes in.

Now consider interest rate methods. There are about a dozen ways to calculate interest in the U.S. For a variety of reasons, only a handful are used, but do you need to understand their implications for you? Some come with sometimes surprising legal issues.

Of course, we have not touched on the fact that Lousiana is not a common-law state but a civil law state. If you are used to working in a common-law state, you won't be prepared for Louisiana. Civil law jurisdictions do not, for example, need consideration to create a contract. That has economic and legal considerations to it. Contract law in Louisiana is similar to Quebecois, French, or German law.

If you need to do payment processing, then there are a variety of state and federal laws surrounding that. You will need accounting systems, control systems, safety systems, disaster policies, and so forth.

I could probably triple the size of this list and nothing I touched on was in-depth.

Nobody does all of that because regulation is local in the United States. While there are national regulations, federal law generally conforms to the rules of state law. For example, if somewhere in a federal mortgage regulation the word marriage is used, then that means something different in a community property state than one that is not. It, in practice, implies something else in states that allow tenancy-by-the-entireties and those that do not.

There are 3200 legal jurisdictions in the United States, plus or minus a bit and depending on how you are counting the administrative subdivisions of territories. Each one can vary just enough to impact your profit function.

If all you need is regulatory help. First, zoom in on the very specific local markets you would like to work in. Get a regulatory law attorney in that state and a real estate law in those local jurisdictions. Then ask them, "what questions am I not asking?" Let me give you one of my favorites. West Virginia used to and may still have what is known as the secret lien laws. Public utilities do not have to file liens to foreclose and take precedence over a future mortgage holder. There is no searchable record. You have to call them directly and make sure the bills are already paid.


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