Mortgage companies that gather loans through armies of brokers and other lenders need to emphasize competitive pricing to keep the business rolling in, a survey has concluded.

The survey of 60 brokers and correspondent lenders found that two-thirds rate the payments they receive as more important than service in determining who they'll do business with.

Mortgage brokers "want to shop for where they'll get the most money when they close their loans," said Jon Holm, publisher of Holm Mortgage Finance Report, which conducted the survey.

Mortgage companies typically pay brokers and other correspondent lenders about 100 basis points - 1% of the loan amount - in the form of a "servicing release fee." In exchange, mortgage companies receive the right to oversee administration of the loans, including the collection and processing of payments - and receive fees for the effort.

Survey respondents also said service was important, though it's expected as part of the overall loan package. As one respondent put it: "No service, no loan."

In fact, service has become so standardized that no single company stands out, Mr. Holm said. "Wholesalers now have people on staff to answer questions" and respond to problems.

The survey provides a glimpse into the current concerns of mortgage brokers and other downstream lenders, who have increasingly become crucial partners to large, growth-minded mortgage companies.

These mortgage companies act as wholesalers, providing loans and marketing support for brokers and correspondents, who in turn locate borrowers and close loans. The brokers collect fees in exchange for bringing in borrowers.

One industry expert estimated that as much as half of the big mortgage companies' loan volume is generated through such wholesaling efforts. "It's a form of outsourcing," said David A. Olson, a mortgage consultant in Columbia, Md. "You escape a huge battery of costs."

Lenders who choose their wholesaler based on price are sometimes able to save money for their customers and possibly gain a competitive edge in the marketplace, industry observers said.

"You can have someone who's just awful on service, but you stay with them because the price is right," said one mortgage banker who did not want to be identified.

While competitive pricing can make or break a wholesaler's relationship with a broker, the survey found that services such as broad product selection, ample supplies of marketing materials, and access to information and advice remain extremely important.

Lenders want someone who shows support through measures like fast turnaround on loan applications, said Walter W. Vail, executive vice president of Graystone Mortgage Corp., Boston. "Service is what it's all about."

For their part, wholesalers want "more of a 'we' approach, not an 'us- them' relationship," said Jerry Baker, chairman of Fleet Mortgage Group, Columbia, S.C.

"We want good relations in the sense that we understand one another and provide good service," Mr. Baker said.

Some of the key findings of the survey include:

*Three-quarters of brokers and correspondents rated their wholesalers' services excellent, very good, or average; the rest said there was room for improvement.

*Asked to rate the keys to their relationships with wholesalers, 43% of brokers and correspondents cited "sensible" underwriting standards; 39% mentioned communication; and 4% picked knowledgeable personnel. The rest, 14%, cited measures like quick funding, consistency in their dealings, and being able to rush a loan through.

*Of the survey participants, 60% said they were adequately paid by their wholesalers; the rest said compensation could be higher.

*Similarly, 60% said they would not want to do business with a wholesaler that had a retail presence in their community.

*Brokers and other correspondents do business with an average of seven wholesalers, with the number of relationships ranging from two to 23. But they prefer to use few wholesalers - between one and 10, with an average of four.

*More than half of the survey participants said they are looking for new relationships with wholesalers. Two-thirds wanted niche products, while one-third wanted a full array.

*Nearly two-thirds of brokers and correspondents said they expect the paperwork involved in making loans to ease in the near future.

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