Brokers, what do you do if a borrower goes retail with the same lender you quoted?

[Erik Estrada]

I think this has happened to a lot of us.. I am curious to know how most Brokers handle this? Is it a total loss? Do you create a broker-agreement before you work with a client? 

[Patrick Roberts]

Quote from @Erik Estrada:

Quote from @Patrick Roberts:

Not much you can do other than never work with that lender again. If you have a contractual agreement with the lender that covers this scenario, you can try to enforce any violations of it with a suit, but good luck with that. Probably not worth the time or headache. 

 I think that is a huge flaw in this industry. You spend several hours of your time working a deal, structuring it and then the borrower goes around you with no consequences.. 

You basically worked for free and the lender still gets the loan, just without you in it. At this point, I strictly work with wholesale lenders that only work with brokers. I find the ones that do both retail and brokered deals are the ones you find yourself in this situation... 

 A lot of this is the outcome of the regulation related to Dodd Frank. That legislation package is specifically designed to benefit the consumer at the expense of the finance industry. Just think about the view of "wall street" and the finance industry at the time that it was passed. 

It's not just related to this aspect. Think about how the government dictates margins for licensed lenders and brokers. In what other industry does the government dictate what are allowable profits or charges? Why not just have the government legislate the margins for car dealers and homebuilders and cellphone providers? It's ridiculous.