Mortgage Brokers Making a Comeback

By
Real Estate Mortgage Broker 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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Rainer
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Tina Willoughby
Sentrix Financial

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
Ambassador
437,199
Paul McFadden
Mortgage Loan Officer, Bellevue Washington Home Lo
Alaska USA Federal Credit Union

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
Rainmaker
605,882
Pamela Seley, REALTOR®
Menifee Lakes California Real Estate
REALTY EXECUTIVES OTF

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
Rainer
103,610
Kevin Guttman
Residential Mortgage-Lending Virtually Nationwide
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
Anonymous #21
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
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Doug Jones

Mortgage Broker - NMLS 286668
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