Mortgage Brokers Making a Comeback

By
Mortgage and Lending with Mortgage Magic

This article appeared in National Mortgage News. What is impressive is that today there are a lot fewer mortgage brokers than there were in 2007.

Brokers captured 11.4% of the origination market in the fourth quarter, the highest market share reading since the third quarter of 2010, according to exclusive survey figures compiled by National Mortgage News and the Quarterly Data Report.

NMN/QDR found that these third-party salesmen facilitated the production of $51.3 billion of home mortgages in 4Q compared to $29 billion in the prior quarter.

The improvement comes despite the fact that many megabanks such as Bank of America and JPMorgan Chase have exited the sector with others (Wells Fargo & Co.) cutting back. But although large banks are leery of brokers, smaller nonbanks appear to be entering the channel or at least expanding their presence, NMN found. For example, Cole Taylor Bank, Ann Arbor, Mich., increased wholesale production by 74% in 4Q.

“This appears to be a clear indication consumers are returning to the personalized service and competitive pricing offered by mortgage brokers,” said Marc Savitt, a past president of the National Association of Mortgage Brokers.

Savitt, who manages a small shop in West Virginia and also heads a broker/appraiser trade group, believes mortgage brokers are recapturing market share they lost after being made scapegoats for the housing crisis.

“Being the most highly regulated segment of the origination process, brokers give consumers a high comfort level,” he said.  (Brokers and nonbank loan officers face state testing and licensing requirements that bank LOs avoid.)

Trailing the past six quarters brokers have posted market shares of 11.4%, 8.2%, 7.9%, 6.8%, 10.7%, and 11.8%, respectively.

The sector's market share peaked at almost 30% in 2007. (For a larger analysis see the upcoming weekly edition of NMN.)

Doug Jones
Mortgage Magic NMLS 286668
doug@mortgagemagic.com

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Rainmaker
244,274
Bonnie Vaughan
Re/Max Home Team - Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

I've been using a Mortgage Broker for the last two years and really happy.  Before I stuck with one person who moved from institution to institution.  Eventually the service fell flat and she was unreliable.

March 14, 2012 06:19 PM #2
Rainmaker
1,049,597
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is very intersting. Glad to see the return of the mortgage brokers.  I think the public will be well served.

March 14, 2012 06:29 PM #3
Rainer
233,886
Donald Reich
Prudential Centennial - New Rochelle, NY

Relatively speaking, this is not a dramatic increase. It's too soon to tell if this trend will continue.

That said, mortgage brokers are good to use when you have a buyer who may be difficult to qualify. Some brokers are great, others, well ......

March 14, 2012 06:44 PM #4
Rainer
111,353
John Saari
Worcester, MA
"The Mortgage Buddy"

Broker fees should be less Joy. Be law a loan officer acting as a broker cannot add their own fees to a loans as compared to a lender, or bank which can make their own fees. 

March 14, 2012 06:57 PM #5
Ambassador
1,231,651
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Mortgage brokers in our area have really dwindled away. 

March 14, 2012 07:31 PM #6
Rainmaker
536,368
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Doug,

I'd completely agree with you when it comes to service, and also products alike with mortgage brokers. Most, (yet not all) have been great to work with and the same can be said for my side (as a REALTOR)  too.

And yes, I'm sure the numbers decreased, but so did the number of REALTORS out there since 2007.

 

 

March 14, 2012 08:06 PM #7
Rainmaker
992,484
Michael J. Perry
RE/MAX Associates of Lancaster, PA. - Lancaster, PA
Lancaster Relo Specialist

Most of the pre-2008 Mortgage Brokers in our area have closed their shops.

March 14, 2012 08:10 PM #8
Rainmaker
826,135
Marc Swartz
Toronto, ON
CPA, CA - Toronto, Durham & York Regions, Ontario

HI Doug - In Ontario, there has been speculation in the industry that the number of mortgage brokers and agents will drop by 15% in the current renewal cycle due to new mandatory education requirements. 

March 14, 2012 08:32 PM #9
Ambassador
1,554,208
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Doug - It's good to see these numbers going up though perhaps I'm biased having been the daughter of a broker lo these past several decades.

March 14, 2012 11:01 PM #10
Rainmaker
892,536
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Doug, there is a place for mortgage brokers. In my opinion, mortgage brokers have the resources to get the job done.

March 15, 2012 04:41 AM #11
Ambassador
1,642,790
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Competition is what will create the products for many people now sitting on the sidelines

March 15, 2012 05:11 AM #12
Rainmaker
1,236,402
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

Lets see if they can do a decent job with all these new regulations heaped upon them. Lets also see how many find creative ways to get around them too...

March 15, 2012 05:39 AM #13
Rainmaker
1,071,439
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

I have to say I have mortgage Brokers i used "back then" that I still use now, and they are the ones that did not forget about me through each of the refinance booms through 2002-2006 that doomed most home owners that took out their equity and then lost their homes when the payments went up. The key for a MB is service, if you provide it, business will come. If you do not, you will soon be out of business when no one refers any applicants to you

March 15, 2012 05:54 AM #14
Rainmaker
570,044
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Doug,  The increased activity for brokers is parallel to the overall increased market activity.  Mortgage brokers are great when you have a special set of circumstances, etc.

March 15, 2012 07:01 AM #15
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Joni Staples
Berkshire Hathaway Home Services - Anderson Properties - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTOR®

One of my FAVORITE people to send my buyers to is a mortgage broker. Her fees may be a little higher but  she is worth EVERY penny. Her word is gold and it is always a stress free process. 99% of her closings close on time OR EARLY. Her buyers LOVE her!

March 15, 2012 08:57 AM #16
Rainer
19,647
Tina Willoughby
Sentrix Financial - Saint Cloud, FL

Being the most highly regulated segment of the origination process, brokers give consumers a high comfort level,” he said. (Brokers and nonbank loan officers face state testing and licensing requirements that bank LOs avoid.)   -  

I've worked both as a Retail Originator and with a Mortgage Brokerage company.  There are advantages to both.  As a broker, I can view an individual's whole picture and search multiple lenders with one credit report to find the best deal for the customer.  Each bank has different guidelines, rates and overlays and just because they didn't fit into one box, another bank may not have that requirement.    It has allowed me to service a larger base by being able to choose where I submit the loan.  I also don't work the restricted schedule of M-F 9-5.  I'm available based on my customer's needs and I'm willing to work months helping a client get things cleared up so they can make a purchase.  Most retail banks just send the basic "no" without bothering with "what can they do to improve".  I work for long term referrals from my customers and Realtor partners, so I strive to give the best service possible.  I get paid when the loan closes, whether it's a quickie 3 week loan or working with a client for months clearing issues prior to purchase.  My fees are disclosed on the GFE, where a bank doesn't need to disclose what they give their originators.  Do you really think they are doing it for free?  No - they add it to the rate.

I'm glad to see that consumers and banks are now starting realize our value again.  People need choices and they love the service we offer.  The new regulations were meant to send people directly into their banks and limit choices.   I always felt that everyone, including the banks should have to abide by the same federal and state licensing requirements and full disclosures (such as what they pay the originator).  Then it would even the playing field. 

Richie - I'm sure there were plenty of bad mortgage brokers skirting the system, just like there were bad Realtors.  The majority of the newbies who jumped into both worlds for the big bucks back then, have left.  What you have left are  long term brokers, who actually did things right and stayed through the storm.  Sorry, it sounds like you had bad experiences with some of those "other" brokers.

 

March 15, 2012 09:03 AM #17
Ambassador
450,179
Paul McFadden
Environment Control - Kent, WA
Janitorial. Kent, WA.

I believe in the free market and wish you well. I've been on both sides and would take the options of a mortgage bank anytime. I hope your numbers continue to improve!

March 15, 2012 09:42 AM #18
Rainmaker
668,793
Pamela Seley, REALTOR®
REALTY EXECUTIVES OTF - Temecula, CA
Menifee Lakes California Real Estate

This is good news. Some of the big banks, I regret to say, do not offer the customer service and comfort level that a mortgage broker can. 

March 15, 2012 11:15 AM #19
Rainmaker
117,771
Kevin Guttman Colorado Home Loans
Fairway Mortgage Corp. - Colorado Springs, CO
Top Mortgage Originator

A borrower always gets a better deal when working with a broker!

More options vs. just one with a bank!

Thanks for posting!

March 16, 2012 08:22 AM #20
Anonymous
Anonymous
James Evans

Who have to be watched are the mortgage bankers not so much the mortgage brokers. Companies that fund on a line of credit and don't disclose what they actually make are a huge problem.  This is where the biggest problems were to begin with and remain. I suppose it makes a difference as to what state  you are in but in California Mortgage Brokers have for over 15 years been required to fully disclose all fees and anything they would make in YSP etc.  Mortgage Bankers because they fund on a credit line ( Not really their money and not like an banking institution) have managed to get away without disclosing what they make and their fees are always higher!

 

December 08, 2012 06:09 PM #21
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Rainmaker
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Doug Jones

Mortgage Broker - NMLS 286668
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