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The Hidden Agenda of Banks: Why Mortgage Brokers Will Become Extinct

WILL THE LAST MORTGAGE BROKER ON EARTH PLEASE TURN OUT THE LIGHTS?

Will there soon be a day when the last mortgage broker on earth quietly turns out the lights, sadly looks back, then joins the other victims on the growing list of economic extinction?

Are mortgage brokers being squeezed out of the business as, one by one, the nation's largest lenders move to block them from offering their loans?

You bet they are.

But here's the problem: Anytime you remove competition in the marketplace, anytime consumers lose choices? That's when service goes down and prices go up.

It is why registering a car is a pain in the asset. It is why a hamburger costs $10 inside Disneyland.

THE WAY IT WAS

Only a few years ago, the halls of the mortgage office were crawling with lender reps begging mortgage brokers to give them business. The list of lenders to whom loans could be brokered was 4 pages long.

These days, seeing a loan rep is about as rare as seeing a bald eagle fly over San Francisco. We price loans and check guidelines on the Internet.

Did I mention that I really do miss our reps? The Internet, as swell as it is, just isn't the same as a real person who shows up to offer support.

Most lenders don't answer their phones. Our list of approved lenders is short and sweet....less than one page and shrinking monthly.

Mortgage brokers are fighting for survival. They have flocked to companies (like mine) that not only broker loans, but also have their own direct lending bank.

THE WRITING ON THE WALL

Leaders in our industry think the proverbial writing is on the wall, as one by one, banks stop doing business with brokers.

Many lenders (think subprime) have just disappeared. But many more have dropped off the list because they no longer want to accept loans from mortgage brokers.

Banks argue that dropping brokers reflects more conservative business practices. The most recent example is Chase, who announced last month it would no longer process loans by brokers.

Chase has publicly stated that the increased number of branches (from mergers and acquisitions and new branches) means they do not need to rely on brokers nearly as much. They have also said that loans originated within their branches have out performed those originated by brokers.

Is that the real reason?

BANKS GETTING RID OF BROKERS: A NASTY PUBLIC RELATIONS MESS

Some less progressive thinkers (who must be living under a rock) still believe mortgage brokers who placed subprime loans are at the root of the entire economic crisis. Well, we all need a scapegoat, and I guess mortgage brokers are used to this line of thinking.

Could it be that banks want FEWER mortgages (as red ink gushes from all those toxic loans that have gone belly up)? Think about this: Would YOU want more business like that?

"Hmmmmm...," thinks Mr. Banker. (You know, the one who got gobs of taxpayer money to lend MORE, not less money)...

"Wouldn't admitting I want to get rid of brokers, and do fewer mortgages be a DOWNRIGHT NASTY public relations MESS?

Well, YES, it would.

WAYS TO LIMIT LOANS BESIDES GETTING RID OF BROKERS

Oh, sneaky lender, you. I almost forgot you have other ways of getting rid of mortgage business.

You can:

slowly raise credit requirements.
increase underwriting requirements.
make getting an appraisal more difficult.
slow down the approval process.
raise rates.
fire your reps, and not answer your phones.

Oh wait. You've already done that.

Next stop? Broker, buh-bye.

And you, Mr. Mortgage Applicant? Well, now YOU can sit on hold.

Written by Janet Guilbault, Mortgage Lending Specialist Based Out of the San Francisco Bay Area

Shameless teaser for next post: When an appraisal comes in low, there are 5 parties involved: buyer, seller, buyer's agent, listing agent, and mortgage broker. Who do you think should grab the steering wheel and drive the deal home? How do you bring all the parties together? Are you up to renegotiating the deal without freaking out?

Knowing how to handle this could save the deal (and your commission).

Posted by Janet Guilbault California Mortgage Banker on 02/07/2009 10:57 AM

Comments (159)

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159 Comments on The Hidden Agenda of Banks: Why Mortgage Brokers Will Become Extinct

FEB

2009

Janet - Well said. Love your blogging voice. I have also been reading the writing on the wall as our (PacFin) own list of lending sources gets smaller and smaller as some of our sources discontinue doing correspondent/wholesale business.

I was having this same discussion just last night with a current client who said he chose me because I didn't work for a bank (he was a lead from one of my marketing sources). He said that after talking to a couple of local banks, he decided that he did not want to do business with a bank for his home loan.

He and I have been working together for a couple of months and during this time, he has had to pre-qual with two different REO bank reps in order to make an offer on a particular REO property. Both times, he told me that the experiece was terrible and that he didn't know how those reps that he had to deal with could stay in business based on the way that they treated him.

Well, you and I both know the answer to that: they are just some lowly hourly wage employee who doesn't give a &^%$ about serving the client because to them, it's just a 9-5, 40hr a week job.

Janet - Though Banks have been trying to do this for years, this is the perfect atmosphere to get the job done. For me, I think it's a damn shame. You laid it out well here. Even though I now hold the monicker of "Mortgage Banker"... I will stay true to my roots, my service, and my passion for helping others. Adapt or Die, even if the adapting isn't necessarily the right thing... but the necessary thing.

Jason: I, too, can call myself a mortgage banker. But the word broker is not a nasty word. It is a sweet word, in my opinion. It means I can offer choices....the best choice, not just what is on the menu of the one and only bank I represent. It means lots of different banks will compete to get the business we brokers originate.

Our bank does not offer jumbo financing, and yet here we sit in one of the most expensive zip codes in America. Thank goodness I don't have to pass on those million dollar mortgages that are the niche of outside broker lenders.

And yet, when the owner of the million dollar mortgage wants me to finance his kid's first house, I can turn around and do FHA...which the million dollar lender would not touch.

Donne: I think this whole business of making clients qualify with the REO lender is borderline illegal, not to mention uneithical. Honestly, what if you went in to buy a car and already had your financing done by your credit union?

Should the car dealership refuse to sell you a car unless you submit all of your financial information to the finance dept and give them a chance to finance you?

And you are right to say that it is not very hard to compete with those lenders. They are overwhelmed and probably underpaid. Most of my clients resent even having to go through this step.

Years before I was in the mortgage business (but still knee deep in the finance world as mgr of an auto lease company), I decided to go to my bank, Bank W, to do a refi. Bad idea. When YOU are telling the mortgage person how to qualify a self employed borrower and explaining tax returns to them....something just isn't right.

I did it because I somehow thought (as many people may) that a broker is a middle man and I would some how get a better "deal". Wrong.

Janet - My clients and I also hate the REO/short sale pre-approval lender. It is such a stupid practice and absolutely ramapnt around here. More times than not, my clients will often just ask me to take care of it for them since I have their info. Needless to say, the REO bank rep is none too pleased to speak to me instead of getting a crack at trying to pilfer my client.

Don't even get me started on the uneducated people still in the business right now. Earlier this week, I had to explain to a title rep how to read a title report. AAARRRGGGHHH!!!

Donne: Should we blog about the REO/short sale approval? Good Lord, I think I have found someone as opinionated as me.

Another great post, Janet! I have a client who at this very moment is attempting to compare the loan products, services and fees between a mortgage bank and a local mortgage broker. He and I discussed the reputation of mortgage banks these days, and how so many of them are incredibly difficult to work with, non-responsive and clueless about customer service and basic people skills. Right off the bat, he's promised call-backs and communications from the bank, none of which they kept. Mortgage broker, on the other hand, is right on top of things. So my client is quickly learning the way it is. I realize this is a stereotypical issue, but I'm also one who abhors the tactics and strategy of the big banks squeezing out the brokers. It's bad form and bad PR! My hope is that it ends up biting them in the a$$. ;-)

Randy Hooker - Dreamcatcher Realty - Arizona Real Estate

Randy: It is hard to imagine that as much business as brokers have been able to send banks, they would simply fire all of us!

The thing is, banks and brokers can exist side by side. Some people will always prefer to go into their local bank and sit down with the mortgage person. Others prefer the whole broker thing which as you pointed out, is different than dealing with a bank.

What is interesting about your comment is the fact your client is making a judgement based on service instead of price (rate).

On a side note, there is one other way to get a loan...on the Internet. This could be how people who don't like banks will end up getting loans in the future if brokers disappear.

Bravo Janet! Only a few short months ago, I would have told you Brokers would always exist as a valuable source of business for mortgage companies and banks. I have since changed my tune and truly believe that that time is near that brokers as we have come to know them will be extinct in the very near future. It seems to have been a goal of bankers for quite some time. As has been said, this climate is perfect for accomplishing that goal. Just one example, Wells Fargo bought Wachovia, the largest bank here in the Lehigh Valley. Virtually every branch has vacant office space which could be and is being filled by commission only loan officers of the retail variety. No additional bricks and mortar, no set salaries, limited support expenses......hmmmm....sounds like the retail version of a broker to me. It's terrible to think that the wider variety of products that Brokers enabled the public to procure is likely going to be a thing of the past. I believe the only Brokers to survive will be part of a 'mortgage banking system' as well. Independents as we knew the with join the Raptors, Brontosaurus and T-Rex as really interesting and long gone.

Scott: And they laughed at me when I told them stated income loans would go away......

Then again when I said better get the cash out of your equityline....its gonna get frozen......

You and Jason both nailed it when you said that the circumstances are perfect...all the stars lined up. It is a loss for the consumer, but not many really understand this. Can you imagine how much more difficult it will be for someone to shop for mortgage financing without the ability to simply trust one person to shop on your behalf?

Borrowers have no idea how really coddled they have been by commissioned mortgage professionals.

Hi Janet - Wonderfully "spoken" once again. I am contacted regularly by borrowers who were told something wasn't possible by a bank's loan officer, of course with no clarification that it is ONLY THAT BANK who won't (not can't - WON'T) do what plenty of other loan companies MAINLY BROKERS can easily help the borrower accomplish. Such displayed arrogance has made borrowers question the answers they are receiving, thank goodness.

Karen: It is uncommon for me to NOT be able to place a loan. But it is fairly common to try several banks before one sticks. It is an absolute truth that there are gray areas in the approval process and every bank has it own little personality when it comes to what they want.

Sure, it is challenging to know the nuances of various lenders. It would be so much easier to just know your own bank's guidelines and go to town.

But for the borrower, especially in this lending environment, being able to stick with one person is the same concept as MLS.

I wonder how Realtors would feel if suddenly you could only buy a house from the office where it was listed.

Janet - I LOVE your last comment to Karen:

"I wonder how Realtors would feel if suddenly you could only buy a house from the office where it was listed."

I am a mortgage broker, pure and simple, and I am one by choice. I have worked for both banks and direct lenders and, when it came time to go it alone, I chose to become a broker because I was tired of the red tape of "Corporate America." It seems, however, to have followed me. Urghhhh!!!

It wouldn't surprise me if, one day soon, mortgage brokers were illegal. Jason is right, this is the perfect environment to throw us under the bus.

Maryellen

You hit it right on the head. In the past few weeks, the mortgage broker that I work for has been notified by Chase and Countrywide that they are not taking applications from brokers. What most people and especially the general public does not realize that this is creating a monopoly. If the only place you can get a mortgage is from one of a handful of banks, do you really think you are going to get the best deal? Banks have been wanting mortgage brokers out of the game for years. And on the real estate side of things, several repo listings in my area are requiring buyers to obtain pre-approval from banks only. No pre-approval letters accepted from mortgage brokers if you want to buy certain bank repos. Coincidence??? I think not.

MaryEllen: I should have found a picture for this post of a mortgage broker being run over by a bus LOL! How cool would that have been?

I hate to think we would be illegal. Does that mean we would be deported back to the big banks?

I think I would go back to being a Realtor. I know someone who did that and she told me that she has done more business than all the others in her office just because she knows about lending.

Rhonda:

I have heard that these REO's will only take approvals from banks. Can you believe that ? It is so insulting. As a broker, you can give them an approval from a bank.

So what's the difference?

And I love the way you call them Bank repos. Coming out of the car business I always say repo instead of foreclosure....and everyone here thinks that is a total crack up.

Janet: That is a very astute observation. I believe mortgage brokers will be all but gone by the end of the year. I was talking with a lady at our church who works for a mortgage broker and asked her if they were working on setting up warehouse lines. She said she thought they were. I told her the sooner the better. These days it pays to be a banker who can also broker if need be. I heard that mortgage brokers now command 50% of the business. It used to be 70%. Expect it to decline further as banks continue to exit wholesale lending.

Exactly my theory with appraisal underwriting right now. Every clean, academic appraisal seems to have a way of returning with an almost impossible, mostly irrational request. It is almost to the point of putting on my three "matched" comps, and three for the underwriter that are not good indicators, but fit there bizarre criteria for the day. I think it is tidier" to blame an appraisal or something else as a way of "getting rid" of business they are know for wanting, but no longer do. Brett- http://www.Appraisers.IN

Great Article. However I will fight the battle and the war to protect the profession that I love. I hope my fellow mortgage brokers/lenders will also protect the profession they love.

We must work together.

Here is the February 6, 2009, issue of NAMB FIGHTS FOR YOU!

Click on this link to read this issue of NAMB FIGHTS FOR YOU!

Inside this issue:

NAMB Legislative and Regulatory Conference Advocacy Day - Tips for Successful Lobbying
Save Your Business!
Home Valuation Code of Conduct (HVCC) Update and Call to Action
Mortgage Brokers Under Attack!

ALSO WRITE YOUR REPRESENTATIVES TODAY.

http://www.house.gov/house/MemStateSearch.shtml

Very well put. As a mortgage broker I too have found it increasingly difficult to place loans due to the shrinking lender list. It seems that the mortgage industry is headed down the same road as utility companies and the customer will get the short end of the stick.

Hi Janet, Thanks for an excellent review of this tough issue. I wonder, your premise " They have also said that loans originated within their branches have out performed those originated by brokers." How do brokered loans perform against traditional loans ?

From a REALTOR's perspective: if you want the market to come to a screeching halt, eliminate the Professional Mortgage Broker. Brokers are the only people I've run across in the lending industry who give a whit about people and get things done. Banks are the monolithic oligarchy that is bleeding our economy into a coma, on disinterested & disconnected drop at a time.

Regretfully your comments aren't as far off base as they seemed at first read. As a Realtor, we are finding it progressively more difficult to qualify a Buyer expeditiiously, this prevents good customer care and the customer just does get the chance to buy the homes they want and are qualified to purchase. This too will change or the Banks will lose this important lending income. This is the subject of a new Atlas Shrugged, if only Ayn Rand were still around.

I hope folks looking for homes in Wilmington, NC don't encounter this problem.

What a great blog! Pardon, but if you ever need another gig, your editiorial skills will get you into many media doors!

Having said that, you can offer your clients something banks can't: a mortgage accelerator based on the Australian system. No, it's not a "scam", it really works (and no, people can't do it themselves). Strangely enough, my company provides a very good one (at an affordable price) along with an affiliate program that many brokers find attractive and gives them a value-added service on top of the brokerage service.

See it at www.MortgageMagicSystem.com

If the idea of competing with banks is the topic- this is surely a solution.

Marv Eisen

Great Post! : I was thinking as I was reading all the comments ( of which I agree wholeheartedly) and I was thinking , "How do we change this?" How do we get this information out to the masses? Comments?

I'm so sick of reading all of these posts. Do you so called "bankers" think that you are going to be excluded from this wave of being shut off from from lenders just because you have a wearhouse line? You are insane. What make you any different than a broker. Nothing! You are a broker with a wearhouse line thats it. Thats the only difference. Oh yea....you better run and get your wearhouse line and hire more staff to manage that secondary and make sure your underwriteres don't screw up so you don't have to buy a loan back. And it all for what??? .30bps. You go ahead and spend all that money to set up a line just to make enough to pay your new employees to manage that. I'm so sick you hearing people say brokers will be extinct. So that means that all of the strictly wholesale lenders will be extinct as well and there are a whole bunch of them. I am strictly a broker and have no intention on being a "lender" or "banker". I am hud approved and have no issues on getting busiiness or beatng up banks left and right and i love it. So all you people go ahead with all your negativity and spend that money to get set up to get a wearhouse line. Let me know how much more money you make and if you don't get cut off from lenders just cause you have a line. You guys are unbelievable. Why don't you spend some of your efforts and call your local and state representatives and try and make a difference.

Janet,

This is very well said. Unfortunately, mortgage brokers have very short lists of lenders these days and its making it tougher to help people who desperately need help these days.

Janet - your post is right on point with an earlier discussion I had today - my mortgage consultant works for a 'correspondent lender' which I understand to be a broker with their own lines of credit to use, or they can broker out to other lenders. Apparently Chase is still working with selected correspondent lenders such as her firm, here in Washington - what do you predict for these correspondent lenders? Your point about closing down the options for the consumer is scary - but so darn obvious with all the money that is available but not being loaned.

Marv,

I don't think a blatent ad belongs here. Shame on you!

Janet,

great post, you put a lot of thought into it and I've now subscribed to follow you.

Some other things to think about:

- HUD is helping the banks with their RESPA and GFE revisions! Brokers have to disclsoe profits on loans, but banks don't have to disclose SRP? How is that fair?

- the new appraial requirement mess was caused by a federally chartered S&L called WAMU. How did brokers get penalized?

- Many banks bought subprime lenders out of greed. How did brokers get blamed for all of this mess?

- Warehouse lines, try finding them. That exit from the burning building of brokering is being cutoff also!

- REO approval requirements: I have to respectfully disagree with all those lingin up against this practice. If I persoanlly had a house to sell, I'd have a hard time taking my property off the market (especially this tough market) and accepting a pre-approval letter from some unknown broker. I'd prefer to have the buyers get pre-approved by someone I trusted. Wouldn't you?

- If we're going to point fingers at banks and challenge their ethics, we need first to look in the mirror and come 100% clean with our faults.

To a large extent, we did this to ourselves. We allowed idiots and crooks to get in our business because of our lax entry requirements. We also did a terrible job of policing ourselves.

Want a better example? Look at Realtors. How is it that every state has licensing requirements for INDIVIDUAL Realtors? Realtors also have continuing education and have their own boards of review.

Why didn't mortgage brokers do this? Instead, the mortgage meltdown caused the federal government to address the problem with a national registration program. States have lined up, one after another, with legislation to police us.

All because we didn't do it ourselves.

Now we want to circle the wagons and protect ourselves against the onslaught of the banks and politicians? When will we lose our, "every man for himself" attitudes?

I'm proud to be a member of NAMB. I'm disappointed in how many mortgage brokers still haven't joined, but want to cry & complain.

One of the founding fathers of this country, Benjamin Franklin, said it best - "We must all hang together, or assuredly we shall all hang separately."

Are you at real estate loans dot com yet?

I think we have all seen this coming. I guess i didn't really think about it as much as you have here. I think most of this fallout is going to help our business. Truthfully I'm happy to see most of these mortgage brokers and real estate brokers going out of business. We all know the playing field has been too crowded.

Janet, banks have been trying to squeeze out mortgage brokers for years. In honesty some of them should be squeezed out but the majority of mortgage brokers are honest hard working people. It's the mortgage brokerswho have kept this industry booming for years. It's the mortgage brokers that have been the industry's biggest originators. It's been the mortgage brokers that were forced to disclose their earnings in some attempt by banks to take business from them. It's been the mortgage brokers who receives no credit for the success of the industry but all the blame for what has gone wrong. It was Wall Street that unveiled ridiculous loan programs that had no chance of performing not the mortgage broker. It was the banks who offered these ridiculous loan programs, with very high yields, claimed historic profits....until they realized oops these loans aren't performing! Duh! Once again the mortgage broker (and mortgage bankers) were the blame. Despite how hard this industry has tried to squeeze out the Mortgage Broker...they will survive. Why? Because unlike the order takers that work at banks, mortgage brokers are ORIGINATORS AND THEY WILL CONTINUE TO ORIGINATE.

You commented that mortgage brokers have flocked to work for places like yours..I doubt it. You may have picked up a few who were too afraid or too inexperienced to survive the industry's current state of affairs . It almost seems like all this gloom and doom and the extinction of the mortgage broker being spread through the industry by banks is an attempt for banks to pick up some good originators to replace their order takers. Hum. I wonder.

To all you mortgage brokers out there...stay strong. We mortgage bankers love you, need you and together we will survive.

Drew,

.........and this is with apologies to Janet, who wrote an excellent post:

You miss the point. I provided information as a service that directly addresses Janet's blog post. I don't have time to write much here - I'm inundated with calls from brokers all over the country asking how they can offer this product to their clients. My company provides many sales and marketing services to the public and the industry, this being but one of them. One of our divisions is also ranked #1 on Google for selling estate property.

There are too many on this site who use it to cry on one another's shoulders, bemoaning the difficulties they are experiencing. When someone writes something helpful, I understand it can be taken out of context.

I'm very busy, and very seldom consult AR. I provided information about a product that gives brokers a decided edge - especially in this market. If you choose to see it as a distraction, you have misconstued the purpose. Nevertheless, it directly addresses Janet's excellent post. I stand behind the content and information I provided as constructive, I ask that you accept it as such. I don't need the business, I help people. You're more than welcome to follow up with it.

Marv Eisen

Janet, Wells Fargo, bless their overworked hearts, is now 20 days in underwritng (make that 30) and our wholesale lenders who sell to WF are running 5 days max. Now --who would you go to right now? A bank who will make no excuse for kicking you out 'eventually' or a broker who will CLOSE your loan in 45? Susan

First the banks all tripped over their feet to give loans to anyone who could fog up a mirror. Now they refuse loans to qualified borrowers. Lots of wisdom these people have... (not)

Marv,

a very professional response:)

I'm glad you're doing well and sharing.

Let's agree to disagree and leave it at that.

Drew Sygit

Janet, I always enjoy your posts and appreciate the passion you bring to the table. However, in this case I'm going to have to respectfully disagree with a good portion of the statements you use to prove your hypothesis.

You wrote "Are mortgage brokers being squeezed out of the business as, one by one, the nation's largest lenders move to block them from offering their loans? You bet they are."

Really? How many of the nation's largest lenders have cut us off? Of the major wholesale lenders that are still in business, how many have stopped lending via mortgage brokers? Countrywide doesn't count because they are owned by Bank of America - who had already exited the wholesale channel before purchasing Countrywide. So that counts as 1 lender not 2. Indymac? Well, they are owned by the government now so that doesn't count. As far as I know the ONLY major lender to cut off mortgage brokers is Chase Manhattan. My guess is that had more to do with the fact they ran out of money and had to cut back on lending activity altogether.

You mention your company's list of lenders is "less than one page and shrinking monthly." I don't understand that - I just clicked into my company's web page and there are 30 pages of wholesale lenders I can chose from -291 in all! I'm sorry if this sounds like a game of "my horse is bigger than yours," but I have to offer a retort to your offer of your company's short list as proof of impending doom. The only roll back of mortgage brokers I'm hearing of is of the small mom and pop shops - and they are not LEAVING the business, they are just joining the larger mortgage broker firms as you mentined.

You add, "Oh, sneaky lender, you. I almost forgot you have other ways of getting rid of mortgage business. You can:

slowly raise credit requirements.
increase underwriting requirements.
make getting an appraisal more difficult.
slow down the approval process.
raise rates.
fire your reps, and not answer your phones."

Let's be honest, banks and lenders have NOTHING to do with that list (well, they did fire their reps when business dried up last year). The credit requirements, underwriting guideline changes, and rate increases were all the DIRECT result of Fannie Mae and Freddie Mac altering the guidelines of what kinds of loans they would buy and at what price. And most of that was a direct result of government pressure or outright intervention. The appraisal fiasco is due to a legal settlement between Fannie, Freddie, and the New York Attorney Generals' office. Banks and lenders are just following the rules attached to the money the get from the upstream distributors!

Someone mentioned the Correspondent banking thing. What a crock! This is nothing new. Mortgage broker firms have been making that switch for years as more and more misinformation around Yield Spread Premiums have hit the press. For our Realtor friends on AR a little explanation is in order - the reason your in-house mortgage company has Correspondent lines is so their loan officers legally do not have to disclose how much Yield Spread Premium is being made on the loan. I've got no problem with earning Yield Spread Premium - but I do have a problem with the fact that "banks" do not have to disclose it and "brokers" do. Believe me, it exists in both cases. If you didn't have to disclose your commission on the HUD would it be larger or smaller than if you DID have to disclose it? Yeah, we know the answer.

One of the last posts was from Lending Edge - while I agree with most of the points raised I don't know what backward state they are from because they say brokers did this to themselves by not being licensed. WHAT???!! I've been licensed up the whazzoo since about 1995. As far as I know every Western state REQUIRES licenses for mortgage brokers. Hell, I have to pay to license myself and my branch in both WA and ID. I guess they were afraid my office building might commit fraud and they'd need a mechanism to discipline it. But that's cool - if my building gets caught doing something wrong I can go work for a bank.

Can anyone tell me why bank and credit union employees are not required to get licensed but mortgage brokers are? Well, mortgage brokers need somewhere to run to when they lose their license! Hey, that was a cheap shot but you tell me Mr. and Mrs. Realtor - where would you turn to if you had your license yanked by the state? Admit it... you'd go work for a home builder!

Janet, I like your stuff. And it may even come to pass that the mortgage broker business looks different in 5 years than it does today. But there is NOTHING on the horizon right now that would indicate the end of the mortgage broker.

Fannie Mae, Freddie Mac, VA, and FHA rules are EXACTLY the same whether the money is being delivered via a bank, credit union, mortgage bank or mortgage broker. Brokers can deliver loans cheaper, faster, and with TONS more care for our clients and our Realtor partners than any bank or credit union. In American that is the type of business model that wins!

I hope this is not the case. The $10 Disneyland burger is a great analogy.

FEB

2009

Does anyone know approximately how many mortgage brokers there currently are?

Many great points. Loss of choice and competition always leads to higher fees and less service. I have to say I don't miss the junk AEs dropping by my office with donuts, pens and rate sheets every week. As many Realtors hate brokers/bankers that drop by their office and interrupt their staff with useless items.... I hated AEs that did the same to me.

I do miss the great AEs that would provide useful programs, advice and service that let me stand out and impress clients. As banks have cut back, we don't get the same great personal service that we did a few years ago. Those banks willing to broker are also increasing their fees and guidelines above and beyond what Fannie Mae, Freddie Mac and FHA ask for.

I understand that there were some bad brokers out there that did fraud, lied to clients or were basically clueless. But the banks created the programs and underwrote the loans.... and basically looked the other way or invited the bad practices to fuel growth at any cost. Now that the growth is gone, many want to squeeze any profit they can out of the brokers that remain, while blaming them for all the ills. There are justifiable reasons to cut off bad or underperforming brokers, I cut off marketing and referral partners that give my junk leads or aren't producing and banks should do the same. But many of the policies are way beyond that and are going to hurt consumers in the end.

Of course, consumer groups are walking into this trap and the government and taxpayers are paying billions of dollars to banks to seal our own fate.

Michael,

I am not a mortgage broker but I can see this happening ! Just because you have list of lenders doesn't mean you will get your loan approved when you sent it in.

Bank wanted to control the RE market for a while, we all know they WOULD LIEK to be able TO SELL HOMES DIRECTLY TO BUYERS AND DISCLOSE NOTHING.

Mortgage Brokers Originate (stat since I've been in loan business - 1984) over 70% of All residential fundings Nationwide. Banks (we're really talking 2; BofA and Chase) are looking down on that Pie and see a Huge slab, sitting there for the taking? Or so it would seem, to their top brass??

Even if they were successful in making us Brokers Extinct by continuing to squeeze us out with bad wholesale service, Slashed appraisals and all the games being played out currently - they Cannot Possibly Eat the Whole(sale) Pie by themselves! It would look like that classic scene from "Stand by Me" if the did, LOL!!!

Last time I checked this was still Free Market Capitalist America, with Anti-trust laws. Like you said in this blog Janet - if a couple banks monopolize the lending business, Rates/pricing would increase and the once high number of 60% home ownership across the Nation would be closer to 25 or 30%. And that's After all the dust settles with the foreclosure debacle created by Greedy Wall Streeters packaging global securitized Junk Bonds that were fraudulently and temporarily AAA Rated when the World was buying them up like ravenous starving dogs from 2001 to 2006. Don't get me started on how this all started!!! That's been hashed and rehashed already!

I will however gloomy this looks right now, remain "glass half full" positive about the rumors of our demise as a sector! The Large Banks, need us little mortgage brokers, they just need to stick to their story about us being the cause of the sub-prime/foreclosure mess, to keep up Appearances and continue getting more hand-outs, I mean bail-out money from the Fed!!!

Tough times don't Last, Tough People/Brokers do! We might have to adapt as you say, but We're Here to Stay, like it or not!!!

Tom Purcell, Broker/Owner

Pinnacle Mortgage Group, Anaheim Hills CA

Janet:
Your comments are very insightful, and yes, unless we do something, we will become extinct. This is exactly what the banks want. With mortgage brokers out of the way they are left with a business to take back (remember, they once owned it all...) and can reduce their expenses by paying their people relatively little.

But we can reduce the effect of their efforts. I believe that by attempting to partner with organizations like NAR (National Association of Realtors) as well as their local counterparts and, to some extent, NAMB, we can survive. Most realtors I speak with understand that eliminating mortgage brokers would have serious ramifications on their business and generally be a bad thing for the real estate industry as a whole. Unfortunately, the MBA is caught is a political Catch-22. Some of their biggest supporters (B of A, Wells, Chase, etc.) are the ones that want us out. At the grass roots level, probably the majority of MBA members are small-medium sized "mortgage bankers" like me, but MBA sees where the big money comes from and they truly become powerless to help at that grassroots level.

The good news for us is that the last 9-12 months has shaken most of the used-car salespeople (to use a stereo-type) out of the business. Those of us that are left are honest and want to help people through the process.If we were only in this for the money we would have left a year ago. If we looked at our business objectively, we would also get out, and get out fast. The business is harder than it has been in the last 15+ years I have been in it, the profit margins are almost ridiculously low, and the stress level has increased significantly. We typically have to work 4-5 times as hard as we did to earn 1/2 or less as much. From an economic perspective, we should leave. But we have so much invested, that gets to be very difficult.

By discussing these issues in a serious way with others in our business (realtors, title people, appraisers, etc.) we might be able to make a difference through their state and national organizations. A good friend of mine is on the national board of NAR and I continue to have discussions pointing out what a difficult situation we (and they) are in. If we go away, it will severely hurt them and the overall industry as well. We need to either throw up our arms or put up our dukes.

Mark Stephan
Las Vegas, NV
Metrocities Mortgage/Prospect Mortgage

Janet, thanks for a well-written and thoughtful post.I enjoyed reading it, and the comments that followed.

I'm a copywriter and one of my projects at the moment is a series of articles for a credit report site. Thus, I've been reading and reading and reading some more about things going on in the world of credit.

Everything I read points to banks not wanting to lend. They're cutting credit lines for customers who have never had a late payment, calling loans on builders who have never had a late payment, refusing to fund new loans and declining credit card applications.

What I can't figure out is what all these banks plan to do for an income when they stop lending money. I know they make money with checking accounts and other services, but wasn't lending and collecting interest the basis of their business?

The next question, not satisfactorily answered by my reading, is this: Did the government insist that they make all those bad loans, or was that a decision driven by their own greed? I have read opinions on both sides.

Janet,

Regarding your earlier comment to me, I thought about writing something whitty and insightful, but I couldn't help myself, I hope you get as much a kick out of it and I did making it. LOL!

Mortgage Brokers getting thrown under the bus by banks!

Have a great weekend!

Maryellen

Janet, I am very grateful for lenders in our country who make mortgage funds a little more difficult to attain. There seems to be more criteria that needs to be met and sub prime mortgages have not been offered by lenders for a long time now. I certainly hope that your banks don't take to the strategy of eliminating mortgage brokers as that is just plain bad business. Take care and happy blogging!

Although I'm not a mortgage broker, this is what I have been seeing in my area. Dealing with the banks directly has been a NIGHTMARE for my clients. So for this last transaction, I went to a mortgage broker that I've used for quite a number of transactions. He knows his business and is quite honest. We secured a loan with Chase and it was locked down the day before Chase lowered the boom on brokers. Now we are cleared to close! But NO!!! OMG!! Chase now claims that my client doesn't have enough cash after her downpayment. BUT NO!!!! WAIT!!!! She HAS the money - oh! but her parent's loaned her some money - GOD FORBID they help with the down payment!!! PLEASE....This person has enough money in the bank for a year of payments and a 780 FICO. You aren't lending to her you aren't lending to ANYONE!

Now...here is where you are going to disagree. This is a republican mess. Paulson pushed the TARP with NO CONTROLS over how the banks used the money. It was Christmas for the bankers. A little REGULATION would go a long way here. The only way banks will use mortgage brokers is if they are FORCED to when they bring valid and sovent clients to the table. The only way the banks will start lending again is if they are FORCED. You want more TARP MONEY???? YOU LEND IT OUT! Otherwise, go away. And those multi-millions in bonuses! It's OVER. You want a bail-out - the public gets a say in how much the bankers get paid. Competition is a good thing, but large institutions have a way of quashing competition - not because they built a better mousetrap - but because they were so big they could squash anyone who came up with anything better for the consumer. That's what anti-trust regulation is all about. But make no mistake - it was the free-market cowboys who thought markets would "fix themselves." My father (a methuglican) is a "believer." Let the free markets do their job....Well - we've had 8 years of that nonsense - how's that working for you!

Regulation is not a dirty word when free markets descend into anarchy. No market is truly "free" and unfettered - because anything that free is equals chaos. That's what the free market cowboys have yet to learn. A lot of them will learn by being forced out of business.

I hope the good mortgage brokers including present company and the broker that has been working on my current transaction somehow make it through. But in many ways mortgage brokers are in worse shape than real estate agents.

Your point about fewer players resulting in higher costs and lower prices is well taken and one that should be taken more public.

Ruthmarie,

Take your nonsensical political dribble somewhere else. This is not the place.

Janet,

Congratulations on a superb post as you have hit the proverbial nail on the head with precision accuracy. I somewhat enjoy the best of two worlds like you in that we operate as a direct lender and mortgage broker and changes in the marketplace are far from over. Our list of investors is indeed a "short list".................and getting shorter. When I first read about Chase's changes and consolidating/streamlining their regional offices my immediate thought was within 3-4 months brokers would be shut out!

Janet,

It's true the public is hearing what the banks are saying -- Just this fall, I had a client telling me she only wanted to work with a "real" bank -- NOT a "broker". Clearly, "broker" equaled "bad" and she was very concerned her mortgage be SAFE!

The good news for all of you Mtg Brokers, is that the bus running over you was slowed down by first running over the entire appraisal industry. The HVCC is going to drive the majority of qualified appraisers away from lending assignments. All that will be left is the skippy who can fill out the form and return it in 24 hours or less. The fee's offered by the AMC's are insane, $150 or less for a full report. Skippy can pump out cookie cutters no problem, trouble starts with the difficult assignments and quickly snowballs from there. I am really happy to see that the NAMB is fighting the HVCC. After spending years obtaining clients and developing my business, it will be gone with the stroke of a pen. Please say hi when you pull up to the window to get your lunch.

HSBC, with their mortgage unit here (Depew, NY) recently got rid of their broker division. They said their own division, direct to consumer, outperformed the broker division. So I see it here locally what you are talking about.

Tom Larsen

I had written a small note a few months ago wondering how all loan officers (not just mortgage brokers) were managing with the sudden freeze in lending. And I received several caustic comments!

I loved your post.

For the record, all you mortgage brokers, last week, when I was trying to refi my own home, I did ask for a GFE from a mortgage broker as well as several banks. I have worked with some great mortgage brokers and do not want them to get extinct.

I can't say I disagree with the move toward bank consolidations and such. How else are we going to get to socialist government unless we give them less choices. Personally, it makes me want to go right out and take all my money out of my WAMU accounts-now Chase- and give it to the little banker down the street!

Pat Barnett, Atlanta, Ga

Amen and amen. Very well spoken and the truth is always hard to hear but yet, someone must sound the alarm. The ax must be taken to the root... what's the root? In my opinion the Federal Reserve. They are not federal nor do they have reserves. They are the power in the world, not the White House or any other government... the Chairman is the real ruler of everything... why has there never been an audit of the Fed? Because they won't allow it. Top leaders in Congress have called for auditing the Fed for years... they are slowly silenced and shut down. I hate to sound like a conspiracy theorist, but it is what it is. The Great Depression was orchestrated and so is this debacle we're in right now. It's just another way for the money people to keep control. Oh, they can't control every twist and turn... but they are most definitely steering the ship... guiding us into... one world order, one world monetary system... total control of the wealth. The more we think we progress, the more we are enslaved. Wake up everyone... keep sounding the alarm Janet... sooner or later someone will rise up and take the ax to the root.

I enjoyed reading your post. I hope the government will realize it's role (we probably need to push back much more) is to level the playing field NOT make the play calls.

So many great points! Does the mortgage broker industry have a Code of Ethics? Can a mortgage broker become a "buyer's agent" where a commitment is made to represent the client's best interests above their own dollar? I know a few mortgage brokers who behave like this (just like Realtors), and I just think a buyer would value this type of representation. Just a thought. We know they wouldn't get this from a bank.

What about the shrinkage of YSP? Anyone noticed? Hmmmmm...the steady demise of YSP from one end and states banking regs limiting points or fees charged by brokers on the other end. I would definitely agree with this post. The ousting has picked up speed and its full steam ahead now. Brokers are getting the squeeze. If the ousting continues and succeeds, which it probably will, I myself will definitely take the Realtor exam because I specialize in HUD 203(k) home improvement loans which aren't going away. There are TONS of homes in need of repair and there always will be. Well written post, Janet.

Well done Janet. I worked for a mortgage broker for 4 yrs and saw the writing on the wall beginning in Aug 2007. I loved my job and believed in educating people BEFORE they got a loan. However, in Jan 2008 I began seriously to look at other options and in Feb. my best realtor partner recruited me over to real estate. I also love what I do now, but do get quite frustrated with the multiple approval requirements when putting in offers for REO properties. I guess the powers that be at these banks don't care that most buyers are having to submit several offers before getting an accepted REO and with each new approval comes the potential impact to the clients' FICO.

My clients and I are hanging tough but I have to agree a bit with what Bob and Bonnie wrote above...There is a whole other agenda going on than I think anyone realizes....and I've thought this since the wheels started falling off the bus...It has all been just a little too coincidental for me...

Thanks for an awesome post!

Evil bankers should be made to pay for being so wicked!

Janet, yeah these banks are now going to use taxpayer bailout money to eliminate their competition and raise their rates to consumers (aka taxpayers). The entire mortgage industry needs to be scrapped and start all over!

While we're at it, let's make sure they stay out of real estate sales, too.

Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice

Regina P. Brown

wouldn't you think buy the time all the short sales and foreclosures are off the market banks will lend to brokers again (just be a little cautious who they lend to)?

I come from an area where many sellers will not accept an offer unless the buyer is pre-approved through a local bank. Why? Because unlike what many here have experienced, the banks seemed to be able to get the loans closed when the Brokers couldn't. Maybe it has something to do with the bank's loan officer being able to walk down the hall and speak in person to the underwriter. Because our area has a large military population and credit unions like Navy Federal are so popular, getting the banks to offer competitive rates has rarely been an issue; in fact, the mortgage broker fees were often much higher than that of the local banks and credit unions. Also, many first time buyers here use the VHDA (Virginia state program) along with their VA or FHA loan and very few mortgage brokers are VHDA certified. Very interesting to see how lending practices differ throughout the country.

Tina in Virginia

Janet,

Looking forward to your next post and enjoyed this one, although it's scary that my beloved mortgage brokers I refer business to may cease t exist.

Perhaps you should look at the broker industry as a whole before shooting the banks for what they are doing...while there are excellent brokers in the industry and I am sure you are one of them, I was, there are more shady make a fast buck and run brokers than the honest ones and they have tarnished your broker name for everyone. The lenders you are slamming saw over 80 percent of their losses come from their wholesale divisions and you are wondering why they are closing down their wholesale divisions?? Would you leave your front door wide open 24-7 if people are stealing things from your home?? No way, you would close it and lock it like a sane persaon would do. Buy a clue!! Should the lenders share the blame for letting these brokers sell them garbage, and do business with no oversight, you bet they should...but you are blaming them for cutting their losses in an effort to stay in business. Google what Barry Habib recently said about Sarbanes_Oxley (sp) and you will see one of the real reasons the lenders and the secondary market are imploding. There is plenty of blame to go around, and the politicians that got us into this mess will never get any of it. This industry is a continuing ongoing cycle of change, and if you are not prepared to ride out the changes, (they have happened before, and will happen again), then its time to find something else to do.

Great Blog. Saw this writing on the wall back in the 2nd half of '07...and it has happened just as feared.

Aside from how wrong it is to put all mortgage brokers out of business - what becomes reality when banks don't have brokers as competition is 10 times more horrifying. Price manipulation and obscenely stringent credit requirements will crush any chance this country has of ever recovering. While lending standards DO need to be firm - far more so than we saw from 2001-07 - with banks as the only lenders to choose from, NO ONE is on the buyer/borrower's side. Mortgage Brokers by nature have the buyer/borrower's best interest at heart inherently in the consumer - lender struggle. Unfortunately much of the backlash we see today is because far too much brokers only had their own best interests at heart. But that still doesn't change how banks want total domination of the market and the borrowers for that sake....

Bankers would like nothing more than to eliminate ALL of us who stand between the bank and the borrower, real estate brokers, mortgage brokers, independent fee appraisers, and control and profit from the entire transaction themselves. They have been trying to get in to the real estate business for years! I have a question for you: Why do we (Realtors, mortgage brokers) continue to rush to their doorstep looking for money whenever we need to fund a real estate deal? My thought is it's because we haven't worked to establish our own pool of investors, private money that is, frankly, sitting in some stupid bank at a nominal interest rate waiting for the banker to invest is so THE BANK CAN PROFIT FROM IT! If bankers want war, fine. But we need to be smarter and a little more aggressive in finding alternatives to banks. When we can stand on our own, they won't have the power to eliminate us.

Janet - I have not seen a mortgage broker at the office for months--still receive the occasional email, but even those tend to be farewell, I'm starting a new chapter in my life...

What's next, real estate agents on staff at the banks?

I have been saying this for years.... That is why I left brokering and went to a Mortgage Banker.

Realistic loan conditions and on-time closings!!

We all need one another, Mortgage Brokers, Appraisers, Surveyors, Inspectors, Realtors, Lawn care, Plumbers, Electricians, etc... They might temporarily do away with a job. But when the Banks are overwhelmed with business they have to have people to do it and they will have to pay good in order to get good help.

Janet: This seem to be so true.. We just had on Mortgage Broker in our town go Bankrupt and another closed one of their two offices.

Janet: Sorry.. looks like I was not logged into my account with the above commet.

Janet,

It looks like this has been coming down the pipes for over a year now, it is really unfortunate.

Ultimately, the consumer loses.

And what is also problematic is that these job losses are only going to continue to add the this economic fire that is sweeping through the country.

Janet,

Excellent blog AND excellent responses to comments! I'm sure your REALTOR base appreciates YOU!

Kathy Opatka Re/Max OCEAN CITY,MARYLAND

Hi Janet -- I have mixed feelings on this. I have seen some mortgage brokers whom I have sent buyers to spend literally a FRACTION of the time that I do as an agent with a client, from start to finish, and they can sometimes end up with almost the same amount of dollars, and that, simply isn't right. Most of these brokers provided absolutely horrible service to my clients.

If a person is worth their weight in gold, regardless of field, speciality, etc., one would be wise to latch onto them, as quality people are in short supply, regardless of field.

I agree with most everything you say.

One very big disadvantage of working with a bank is they work Monday through

Friday 9:00 AM to 5:00 PM and are off evenings, weekends and hoiidays so is their cell phones.

My buyers are usually working at those times. Bank hours don't work for buyers who would like to know how much they qualify for NOW so that they can start the search process. When "strike while the iron is hot is the motto" then it makes far more sense to work with a mortgage company.

I forgot to log in when I posted...feel free to delete the comment directly above...

If a person is worth their weight in gold, regardless of field, speciality, etc., one would be wise to latch onto them, as quality people are in short supply, regardless of field.

Janet,

Excellent blog and congrats on the feature. I have ben trying to get a hold of a bank in Austin texas on an REO for about a month now. Message after message after message and no response. I have a full price cash offer on the table, CASH, and I still can't get any one to call me. I miss my brokers as they are intent to call you back because it's all they do is mortgages. Great post and thanks for the info!

-Lisa

Are you kidding me. The banks have nothing to do with removing brokers from the lending world. I am so sick and tired of hearing this. I was a broker for several years and I switched about 1.5 years ago to a Bank. The funny thing is that now, we are all in the same playing field. There are no crazy creative programs that the broker world can run to. The programs are basically the same. Lately the bank I work for, our pricing has been better then the broker world. The investors do not want brokered paper. They want complete and total security. So stop blaming it on the banks for crying out loud. Use some other excuse. People are afraid and they want the reputation and security of a bank. Sorry these are the times my friend.

Janet,

Thanks for the very informative article. It certainly explains many of the problems we have been having keeping our contracts moving forward lately. I anxiously await your next blog as I know that I will learn something. Thanks for the shameless teaser.

Dan

Janet, Excellent post and congrats on the feature. I have always had success in the past dealing with the brokers, not the banks. Wish we could go back to the old days.

Reply to Christine O'Shea; I'm still operating and funding loans as a mortgage broker in O.C. CA, since 1986. What do you mean - "wish you could go back to good ol days"?

Sounds like you think brokers are already extinct?? Contrary to popular negative opinion, Good resourceful Mortgage Brokers are Still in Business And Funding loans. We're still using Flagstar Bank (other banks and wholesalers still out there, just gotta know where to look and who to deal with) who Loves broker business and funds our residential loans without much red tape.

I just funded a deal in Dec with Flag, where the Appraisal was from June and it didn't even get cut. The deal closed without a hitch!!

"Rumors of our (brokers) death Are greatly exaggerated".

Tom Purcell, LowRatesOnline.net

i think we ought Citi corp and other banks fail. i believe it would be better for the country and everyone.

I can't say anything that hasn't been already said.

I have been preaching this for the past 2 years.

WAMU & BofA are the big leaders in removing the rights of the mortgage broker.

I will eventually be a bank owned world where you must speak to the bankers 3rd removed nephew who has no clue but completely affects your ability to own or buy a home. It is crazy to believe that the banks are working to improve the benefits to the consumer. Their sole intention is to remove the 3rd party and keep the $ in their pocket. Screw the client should be their new motto. I hate the fact that I now have to suggest that a client go to an instutional lender to get pre-approval for a loan to purchase a foreclosure.

Brokers Rule.. the writing is on the wall. I am also a mortgage broker as well who has seen his list of lenders drop to such a small list it is hard to believe I am actually a broker (not associated with a direct lender, "yet"). Follow that up with the fact that my guidelines are so tight with the lenders we do still have it drives me crazy. If it weren't for repeat clients I would be in the welfare line.

Mortgage brokers arent going anywhere. A little bit of history maybe neded here. Before the advent of Fannie and Freedie people had little choice to obtain a mortgage usually their local bank who most often offered adjustable rate loans. Banks simply can't hold too many long term fixed rate loans.

When Freddie and Fannie came along so did the mortgage banker and subsequently the mortgage broker. Remeber Freddie and Fannie do not originate loans they only purchase closed loans and securitize them to Wall Street. It took most banks years to get into the Fixed rate market and start selling loans to Freddie and Fannie. This is the same time Angelo Mazzilo founded Countrywide and much the reason for his huge success. He saw the huge potential and learned how to package loan pools and used brokers to fill his pipeline. He did so well at it that Mike Perry approached him with an idea to do the same securitization from Jumbo loans and thus came Independant National Mortgage Acceptance Corporation later to be renamed IndyMac. IndyMac at first was a REIT and later became a bank.

The 1990's saw a literal explosion of mortgage bankers trying to get a piece of the pie. With interest rates steadily falling and more Wall Street firms begining to securitize more and more types of exotic loans the pie got bigger. Consumers began using their home like an ATM Machine. refinancing every chance they got.

What we are witnessing now is a correction of those principals by both the consumer and the lenders.

Most banks are pulling out of wholesale lending because it is not profitable. And yes the quality of loans you take verse your closing ratio is part of profitablity.There quite simply isn't enough fundable loans around to support all the wholesale lenders in existence. Its is nothing more then basic economics.

While some banks might feel they don't need the broker there is not a grand conspiracy to eliminate brokers. This is why Greed is good. Once it becomes viable the banks will open up again.

Lenders are not going out of business because Banks are trying to eliminate them, there simply just isnt enough business around.

As this correction continues more mortgage brokers, bankers,realotrs and banks will continue to go out of business. More homeowners will puchase a home within their actual means verse their projected and hopefully not refer to their home as a piggybank.

The best solution to all of this is to realize the the volume leves of business in previous years was unsustainable and we probably wont see those levels again for years.

With all of that said I do think they days of the one and two man brokerage will become harder to justify. Bankers and wholesalers will demand more quality and quantity. Smaller brokers should consider merging together to amortize their expenses.

Most people do not realize what is involved for a bank or banker to accept third part originated loans the systems needed and expenses invloved require more volume then can be provided now.

Hang in their folks its going to be a bumpy ride for a while, but it will pass. Just don't look for it to go back to what you have seen in the last few years, at least anytime soon.

I have been in the business for 20yrs, what I dont like about brokers is the way they brag about how much they make on a clients loan. "I just made 4000 on a 85,000 mortgage" I heard this over and over again. I work with a bank and we are capped at not making any where near that on each loan. I also took the time to take the State Banking Exam to be a Licensed Mortgage Banker. This should be mandatory for any one writing mortgages. My bank also requires me to go to Underwriting training, and requires me to constantly update myself with changes to Regulation fines. If Brokers had to send each one of their mortgage reps to take the state exam we would have a lot fewer of money hungry SALES people and more Mortgage professionals that are actually trying to get the client into a home they can afford at a reasonable price. Most reps wouldnt be able to pass the exam, and brokerages wouldnt pay the money for them to take the exam unless they thought they would do well. Brokers hired any one that walked in the door and placed them in public with a 60 dollar solicitors license. Realtors have to pass an exam and so should mortgage reps. I say bye bye brokers and hello to change for the better, under a controlled industry that imposes harsher penalties for misleading clients into mortgages they shouldnt be in. RIP brokers

This is going to sound strange coming from someone who has made his living from this for 23 years, but I wonder if the time when any mortgage originator - banker or broker - is paid on commission might be about over.

Mybe we do not need the big banks with all their executives and the need to devour and move out of local areas. Lets see what happens next but it is never like it seems until we have gone down the road.

Not long ago banks wanted to be realtors as well.

I think Gary above doesn't like brokers. RIP Gary anyway I think you hit many points right on the head. But I think you might see some small lenders come into play that fill the gap. Chase always had lousy service anyway. Slow processing and so -so rates most of the time. See you Chase. Your days of having lots of branches are going to be coming to an end soon with this economy. It isn't feasible to have that much overhead.

My prefered Mortgage Banker went from 23 lenders to 5 ! Most stopped lending for new construction 1st , then went out of business , the survivors then stopped wholesale lending . The remaining lenders are so gun shy that it's almost impossible to get a construction loan ! Then you through in the appraisal nightmare , lack of green building comparables , & the sales comparable dead zone from the market crash to Martin Luther King Day -- a Perfect Storm . Thanks for saying what alot of of were thinking !

Janet,

I think the problem without Mortgage Brokers is that unlicensed originators who aren't trained properly as mortgage planners contributed to clients getting bad loan and not understanding what they were getting. I think we can all agree those who lied commited fraud. I am currently a Realtor engaged in the CMPS Certified Mortgage Planning Specialist Certification. I to agree in competition, however there are those who should not be Realtors or Mortgage Brokers. Unfortunately I do think Mortgage Brokers are on thier way out. :(

Here in Manhattan, getting a mortgage through a broker or bank is a big decision. There are so many complex scenarios for purchasing here that working with somebody who really knows the products is a huge asset.

I believe you are right about the intention of banks, and I believe you're right about the higher cost that will accompany less competition.

I don't think mortgage brokers will become extinct due to an overthrow of them by the banks. Please go back a little futher in the story and which came first - the dinosaur or the egg?

Banks had very stringent lender requirements, and most people who didn't have the 10% or 20% down payment to qualify for a conventional, 80% fixed rate loan could not purchase a home.

Period.

Then "necessity is the Mother of Invention" played out, and owners were doing carry-backs. They were selling their property, accepting 10% down payment to the bank, and then taking their own note on the second.

The mortgage "broker" industry grew from this. They replaced the sellers in the scenario. In the beginning, they did broker the deal to the bigger, loan servicing companies, and sold the loans to them.

But, they got sloppy . . . and played fast and loose with everyone's money . . . and they grew and grew.

When I got into the real estate business, professionally in 1999, a "broker" NEVER brokered the deal to get the buyer the best loan possible. That's what they said they'd do. That's what they NEVER did!

They had a pipeline . . . a plethora of Countrywides all set up to "broker" to. But, they didn't waste their time on doing any brokering, they just made a phone call to their nearest and dearest buddy or other such partner and packaged all the loans to them. It was easier for the "broker" to do this. They didn't waste time trying to establish business with anyone else. Why bother?

Although they told the borrowers that this is how they worked, and would work, i.e., to broker their loan to over 1200 mortgage lenders . . . HA HA HA -- they never did! NEVER! They never "brokered" the deal to any other person, place or thing -- other then their buddy. Who, quite often (cough, err . . . all the time) do a back-end kick back!

Can we say RICO violation, boys and girls?

Oh . . . PLEASE . . . tell me I'm wrong. But I don't think so.

You might have been the only mortgage broker who actually looked at all the various loan product out there and you might have been the only mortgage broker who actually piece-mealed your loans out to individual entities . . . rather then just flopping a ton of bundles into the lap of your friend at Pacific Screw You Mortgage Co., Inc.

Only you know the type of business you provided your clients over the years as a broker, is all I'm sayin' . . .

The good mortgage brokers worked in the best interest of their customers. A lot of them left the industry because they wouldn't "bait and switch," and couldn't compete when stupid, stupid buyers thought they knew more . . . and shopped the loans to every loan shark, smelling blood.

Most were NOT good mortgage brokers and worked only in their own, personal best interest, and used the old bait and switch technique time and time again.

I had many borrowers see the packed on, added to loan fees -- the junk fees -- only at the signing table . . . when it was TOO LATE to back out of the deal. Too late to back out, REASON: There is no provisions in our Sales Agreement providing the buyer can back out, i.e., fail to perform under the terms and conditions of their contract, because the figures weren't correct from their lender (they saw the junk fees too late). Walking away from the signing table is not an option, and wasn't at that time. The buyers' Earnest Money deposit could be forfeited.

The last minute tack ons by their mortgage broker at the last minute was something I would caution my clients about, and urge them to go to a reputable broker.

Oh the games they played . . . and played . . . and played . . . those silly mortgage brokers, with their appraisers and underwriters eating out of their hands.

OH . . . like that never happened??

Any prudent agent would get a copy of the Estimated Closing prior to going in to escrow with their client. Yeah, and how many PRUDENT FIDUCIARIES are out there either who actually reviewed the closing costs before their clients went in to sign??

Mortgage brokers, for the most part, were not regulated and not licensed -- and have made my life miserable! And this is why they are a dying breed. The are dying at their own Peter Principle. They rose to their own level of incompetence. The banks had nothing to do with it.

And I can't stand agents who write their own loans. Caveat emptor . . .

WATCH: http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pl=&ncl=true

Another well thought out and informative post, Janet. I agree about everything you said. I am actually also with RPM- out of the Platinum Capital- Manhattan Beach office. It's great to have the diversity of being a mortgage broker and a mortgage banker.

From a Realtor's perspective: God, I hope that is not the case, and I really don't look for extinction for the mortgage broker; let me explain. I have sent clients to several banks in the past few years. The big banks blew them off because they acted as though they had all the business they needed. Another thing was, try as they barely did, they could never outquote my local mortgage broker contact on rates. Now, who do you think I'm going to send my folks to?

Janet! Almost all REO's in my area say must have direct lender approval! I have a client we have approved though our mortgage broker and he has been going to bate for me with the banks. I am so greatful to him.

The banks aren't on top of things and they take forever.

I hate knowing this is the future. can you say price fixing?

Good post. But on the consumer side , the consumers (at least a number that we see) are becoming more skeptical of going to a single lending source and would prefer to go to a loan broker who can check many venues for them.

Love the comparisson to hamburgers at disney. I think your right on.

great post. Thanks. It seems that all trends teeter totter... we need balance. Too much one way is bad, and too much the other way could be bad. But, less service for consumers is definitely bad. This extreme is slowing down the market, and making our reboud out of this economic slowdown slow-down... if you know what I mean!

I have been telling people that the banks have been trying to squeeze out the brokers. However, keep in mind that the large real estate brokers started doing that a while ago. First they start to put a plug on the flow of leads to keep the loans with their inside company (usually with a financial tie), and now the banks begin this process of closing down their wholesale businesses.

In both instances, the consumer loses. How many loan officers (broker) will lose their jobs? What will that do to the economy and property values? Banks will use "in house" appraisers, attorneys and title companies. More job losses.

Janet, eluded to the fact that borrowers will pay for these changes in the form of higher rates and fees. Of course that will also result in a reduction of property values when these borrowers have less buying power.

By the way, I am looking to place an 80 LTV Stated Income purchase ($400k) but none of my lenders fit the bill. Does anyone know where I can place this loan?

don't feel bad. there are a lot of people who want to get rid of us also.

I always read the comments along with the post and amazes me that so many people in this business (realtors, loan officers) still have so many misconceptions about brokers. Mainly that brokers are some sort of unlicensed, unregulated entity that made up all of these crazy loan programs in order to rip off consumers and charge high fees (see lengthy realtor comment above).

As far as branch loans outperforming broker loans, perhaps this is true. However the reason for this would be that most branches only offered conventional loans and the subprime loans etc were only offered through the wholesale division. It's interesting to note that the insurance industry is still largely dependent on independent insurance brokers and does not have the same problems as the mortgage industry, in part because the insurance industry is not set up in a way where all high risk people must go through the brokers but the low risk directly through the company.

Michelle

FEB

2009

Well, I do think the mortgage industry does not need that much brokers but to bypass all brokers is really a bad idea.

Geez. The more I learn about our industry's mess, the more I learn that this is a huge rabbit hole that I know nothing about. I'll be re-blogging this one.

Thanks for the post - This is one of the best comment streams I've seen on AR>

I am a Mortgage Broker and proud of it. I read the above comments and love the responses. I have been both a Realtor and Lender. I have seen both sides of this and can say, the resonsibility is in the hands of the individual. I have not had one foreclosure to date, because I made the decision not to sell or obtain the loan that would go into default. Was it all the bank, the broker, or the Realtor? Who did the underwriting on these loans, who took the loan application, who was the agent that wrote the contract, knowing a clients 40k in yearly income could not buy an 800k home. The responsibility is on you. What decision did you make? Lets all start with this question.

As for the post, I am a broker out of the east bay in California, our company is thriving due to reputation. Some banks are making the decision not to have wholesale departments. Most of these were not the cheapest nor did they have the best service. My loans are going to the exact same banks they have been for the last 10 years.

Interesting post! It would be a shame if lenders completely eliminate the ability for mortgage brokers to offer their services!

Wow! I saw this last night but didn't have time to read the comments. There are many differing points of view. I am going to go out on a limb and say that I agree with those that think that mortgage brokers will be here in the future. I also posted a blog a few days ago http://activerain.com/blogsview/918787/Will-Brokers-Weather-the-Storm that was not near as eloquently stated as Janet's. I do think that there is a great need for brokers and that there will be many changes. The storm is not over and there will be more damage (brokers exiting the business, regulations, etc.). However, I believe as others have stated, that many of the brokers that were in this business to make easy money and take advantage of borrowers have already moved on. Those of us still here are working hard for our money and are committed to out borrowers.

As for regulations, it sounds like there are a broad range of them for each state. Here in WA state, not only do the loan officers and brokers have to be licensed, contract mortgage processors (or those that are not paid on a w-2 by a broker or mortgage company) have to be licensed as well. If they are w-2ed and not in the same location, then their LOCATION has to be licensed as a branch of the company. We also have a FIDUCIARY RESPONSIBILITY to the borrower. I find it frustrating that LOs that work for banks are not held to the same requirements/responsibilities for licensing and continuing education. Don't even get me started on the whole YSP issue!

I also agree with Wm Moores about the HVCC driving away many appraisers. The one's that are making money on that are the AMCs since they force the appraisers to accept at least 1/3rd less and keep that fee for themselves while saying they do it to save the borrower money!

Here's hoping that we all band together and hang in there. There is power in numbers and we need to unite and be heard!

In general - the bank consolidations have me extremely worried. I'm surprised that the issue of anti-trust has not come up. With this quantity of consolidation there are going to be serious issues of monopoly - the last thing we need in the banking system is to have only a handful of viable banks. Chase blatently admitted that they were "saving" the TARP money to buy more banks which is infuriating. Not only aren't they lending any money, but they are gobbling up anyone else that might and using taxpayer money to do it. My feeling has been that they have been trying to squeeze out mortgage brokers - or anyone else that stood in the way of a high-fee monopoly. This post helps me feel less paranoid.

great post and great comments - my recent experiece is that the local banks seems to be able to handle loans that the brokes used to handle and no longer can get done - seems like I will be sending people to actual banks now - not sure how all thsi will play out

It amazes me when I hear a mortgage broker say that he/she is not worried about banks squeezing out mortgage brokers. They say there will always be small lenders who will take their loan. Don't you think the banks will manipute the rates so it favors the big banks? If the Chase & WAMU merger and the fact that Chase is no longer accepting broker loans on the FHA/Conventional side of the house doesn't speak volumes of where the mortgage broker's future may head, then sit back. It will be fully explained to you when you as a mortgage broker lose market share.

Janet - Your article, not to mention your shameless teaser, enticed me to subscribe to your blog. As I'm seemingly stuck in the exact appraisal conundrum you cite in your teaser right now, I'm waiting for your post with baited breath... ~ Julia

Carla makes a good case. Many mortgage brokers only sought out many investors only after their favorite sources dried up.

Janet - great post ! It is interesting from a Realtors perspective to know what is going on in the mortgage world. I have had some great deals in the past with mortgage brokers and I agree, they should not be squeezed out since the customer service for many of these pros is excellent. It will be interesting to see how things shake out...

The list of available lenders a mortgage broker can go to has to get shorter as there are fewer lenders.

I truly hope that mortgage brokers don't become extinct. I have had much better experience with a mortgage broker and the less than perfect loan. They know which lenders will be most likely to take the deal and if no one will, they know that as well.

I have experienced clients that went directly to banks, payed the application fee, and, were denied a loan. They couldn't get their application fee refunded. Why would anyone want to get rid of the mortgage broker who charges one fee and can take the loan to multiple lenders.

Like all species that survive extinction, adapt, mortgage brokers, adapt!

Janet, oh my I do hope that doesn't happen to the Mortgage Broker that I use here in Sacramento. He is fabulous and ethical. This year, I actually had a buyer that came to me with Wells Fargo approval and at the 10th hour they suddenly said the buyer couldn't have a loan.

I immediately got in gear and called my Mortgage Lender who had to shuffle quickly with very little time. He managed to take care of the issue Wells Fargo didn't bother to do and get them a better loan than Wells Fargo was going to do in the first place.

So, I certainly hope that he continues to be in business as an ethical, hard-working, experienced Mortgage Broker for years to come!

Gena: For sharing that wonderful testimonial and success story I send you some kisses and hugs. We need mortgage brokers to stay in the game.

Catherine: The point you bring up is a huge advantage to mortgage applicants....the ability to go to multiple lenders.

I would love to think we could rally together and adapt. It seems as if we are being swept along in a giant tsunami where we have little control.

C& S: Although Realtors often don't have the best relationship with mortgage brokers, I believe if the only lending source left to your client is a big bank, then the Realtor would actually miss that mortgage broker that pestered them for loans, and brought them rate flyers.

Julia: I will be writing the post today....there is a situation going on within my office that has inspired the next post. Welcome as a new subscriber! Yesterday I got scolded by another AR member for not writing more to the consumer. My answer was this: I write for my subscribers. Period. If a consumer or a lurker happens to read it, that's fine. But everything I write is something that I hope will bring discussion, opinions, and entertainment to my subscribers.

Brian: Let me find Carla's comment and I will make my comment there. Thank you! A whole lotta commenting goin' on!

Jim: My sentiments exactly! Everytime we lose a lender it is a nail in the coffin of consumer choices and of mortgage broker survival. I hate that we are in this situation.

Janet - Loved your comment above to C&S. I have thought for a very long time that Realtors don't know how really good they and their clients have it by having so many lending sources available to them in mortgage brokers. Unfortunately, many will probably not truly appreciate what they had until it's gone. By then though, it may be too late for them and many of their clients who will not be able to get a loan through a bank.

Randall: At this point in time in my local market, the only time I am at a disadvantage to a big bank is when the big bank is holding lots of big bucks from a client, and client needs a jumbo loan. Bank will drop its drawers to keep that guy's mortgage, and there is a severe problem with jumbo loans right now: they are ridicuously expensive!

In all other cases, it is usually easy to compete with banks. As many comments pointed out, the number of banks I have, plus the service I can offer usually blows the bank out of the water.

Ruthmarie: You always bring such a fresh perspective with your comments. However, I still feel paranoid that with only a few banks left, no brokers, and no restrictions on how they spend the TARP funds, that the actual price of a loan can only go up, right along with the requirements to get a loan.

Libby: Thank you for directing me to your very well written post on this same subject. I suppose in one way or another this subject has been haunting many of us. How wonderful that we have this forum to hash out our opinions and come together.

I believe you make one of the most important points. It is this: raise the bar! Don't throw out the baby with the bathwater. And don't just make education and licensing only applicable to mortgage brokers! Education and licensing isn't to protect the bank from the broker. It is to protect the consumer from having someone without the proper education handling many thousands of his dollars.

There is going to be alot written about the appraisal situation. It will probably dominate as the single most important issue this year...VALUES. How and when will we start to see appreciation again and will the new appriasal rules hurt or help?

Hello Mark P.: It is nice to hear from someone in my neck of the woods. Thanks for the comment. You are fortunate that you are using your same lenders. I must confess I miss having Bank of America (was great for jumbo loans) and also Chase and HSBC.

I never really did subprime, so that did not really impact me nearly as much as the demise of decent jumbo money and the loss of stated income loans.

Our company is also thriving, and will definitely survive. But there will be way fewer companies, and I also believe that in house banking will become a much bigger deal.

Myrick: I agree...mortgage brokers should not go away!

George: When a comment stream actually morphs into something much bigger than the post itself, that is when ActiveRain is at the pinnacle in my opinion. This post and the passionate comments definately are amazing.

Lisa: Thank you for the reblog....it is kinda like a rabbit hole, isn't it? Feels like we are spinning out of control sometimes, not to mention spinning our wheels.

Huiting: I disagree! We need brokers.

Michelle: What an enlightening comment. I had never thought of this as the reason mortgage brokers got stuck with the reputation you describe, but you are right on target. Your analogy with the insurance industry really puts it into perspective.

That won't be happening again anytime soon. There is virtually no financing for less than perfect credit. For cars or for real estate.

Readers and subscribers: Will be back shortly to answer more comments.

Janet,

This is very saddening, espceially considering how hard it is to get ahold of the bnak loan reps! The corporate banks are horrible with customer service and it's somewhat frightening to see our brokers go. Great post and I hope this trend will turn around in the long run!

-Lisa

Janet, I, too, saw the writing on the wall about Chase moons ago- I had finally "had" it with them when they shot down two deals recently- one was a refi. where we used their appraisal management company who "got" value only to have an UW challenge it. Then I had a couple who made over $300K a year (major money in depressed W. Michigan) who were buying an investment property for a relative- again, had to use an appraisal management company, and the UW called for repairs on an REO property. We decided not to use them again and within a month they were out of Wholesale. We also see the writing on the wall when we see rate sheets- if you have a marginal borrower, you now have to charge a lot on the front b/c there's no room on the back. I'm glad we were already a conservative company.

Dannell: I agree with you about the appraisal issue. Although many would claim there is no connection, I also had my loans nit picked to the hilt, then the property nit picked to the hilt.

Nothing at all is a guarantee any more, which is why having more than one bank is such a good thing. Ultimately, you can have the best buyer in the world, but they can always say no with the appraisal.

Lisa: If you asked most people, they do not think banks have great customer service. I just got 2 new loans where the client said, "take me anywhere, just not this bank." ( yes it is a bank I broker to)

Michael in Overland Park: LOL! I guess Realtors can relate, but then, who could actually drive a Realtor out of business? Those Internet companies have tried, but it just isn't working.

Eric: I actually don't even think a Realtor with an inhouse lender is any kind of threat to the mortgage brokers of the world. Reason? I do not see very many of these arrangements that work out. I could explain why, but it would take a whole blog. Suffice it to say Realtors are mavericks and don't like being told to use the in house lender. And for the most part, most of them don't...in my area anyway.

PS I don't know of a lender that still does stated income loans.

Brian, I agree. If mortgage brokers exit you will see a very unbalanced lending world that you will not even recognize.

Justin: I see you have had to pay for lunch at Disneyland.

Carla: In California, all mortgage brokers have the same real estate license as real estate agents. We take the same test, and fall under the same regulations. You can and will lose your license for a kickback.

Regarding your statement that mortgage brokers only sent loans to their buddies, and didn't shop for the loans, and then got a kickback. I am sorry, but that just was not my experience and I have worked for 2 of the largest and most prominent mortgage companies in the Bay Area. I never saw kickbacks, and I never saw underwriters or appraisers in a conspiracy to screw a borrower.

Now that I think about it, if a borrower goes to a bank, that bank couldn't shop the loan. The chances that there would be a conspiracy would be far higher since appraiser and underwriter all worked for the same big bank. Why pick on mortgage brokers?

All the banks did subprime mortgages back then, too, just like we mortgage brokers. We did not invent subprime....the banks did then gave it to us to sell.

Did I see mortgage brokers who were just in the business for the money and really should have been somewhere else? Yes I did. I saw Realtors like that too.

Is it a disaster and completely wrong to surprise a client at the closing table? Yes it is. That should never happen.

I am wondering Carla, if you are a Realtor, how you came to all of these conclusions about our industry?

And I am very sorry that you feel this way. You must have had a horrible experience somewhere along the way.

Gary, the mortgage banker: I think it is improper to brag about commissions, but please remember that much of what the bank provides to you, we must pay for out of our commission (just like a Realtor).

A commission that big on an $85000 loan would never happen Gary. For many reasons.

I do agree with you that mortgage brokers should be licensed. I am all for raising the bar and making it a more professional industry. We are already licensed in California.

The ones in it for a quick buck are long gone. I think bankers and brokers can survive together. Some people will always prefer to go to a bank to get their mortgage. Others prefer the broker route.

Paul M. Thank you for your comment, I have always respected your opinion. I do agree with you on this: things for brokers are going to get worse as the year progresses. I am very glad our company has warehouse lines. We broker through Wells, and I do think it would be a disaster to lose them.

William Moran:

I really enjoyed reading what you write, and agree with you on most points. We are in a transistion in our industry, and often it is hard to see that when you are right in the middle of it. This shake out does mean that we will lose many more people in our industry. I agree with you on that.

And while I do not believe there is a conspiracy, I do think banks have been burned badly, and are are looking for ways to slow down the flow of loans.

When rates fell below 5, they were quickly flooded with loans. That shows me that there is a lot more demand out there than anyone knows about. Banks definately can turn the faucet on and off, and have many tools to enable them to do so.

And I do think, to a limited degree, mortgage brokers have been the scapegoat of the crisis (unfairly so)

FEB

2009

After retiring from a career in financial services, I became interested in how the mortgage industry operated and have spent a considerable amount of time doing research on it. I found the topic of this thread interesting and thought I would pick out several comments that were made and add my own take on them. As this is mainly a pro-mortgage broker group here, I am sure I will get some flack. That being said:

"Mortgage Brokers Originate (stat since I've been in loan business - 1984) over 70% of All residential fundings Nationwide."

According to Inside Mortgage Finance, mortgaqe broker origination share was 31% in the 4th quarter of 2005, 30% 4th quarter of 2006 and only 25.6% in the 4th quarter of 2007. Wholesale Access had mortgage broker share at 58% in 2006 down from 63% in 2005. Whatever, the actually numbers, to claim over 70% of mortgage originations are done by mortgage brokers is clearly an exaggeration of the facts and the numbers will undoubtedly continue to decline in the future.

"Rates/pricing would increase and the once high number of 60% home ownership across the Nation would be closer to 25 or 30%."

This is quite preposterous but it shows how some brokers have a highly overrated assessment of their importance in relation to the mortgage market. Time to get real and realize any sales position (and thats what a mortgage broker's position is) can easily be eradicated and replaced.

"Loss of choice and competition always leads to higher fees and less service."

Less choice and competition is not and would not be the problem. The problem is the process of originating and funding a home loan has become a bloated and highly overpriced service that could and should be done for a fraction of the current cost. A borrower should pay a flat fee to arrange their mortgage instead of the widely ranging fees they are now being gouged for.

"I have heard that these REO's will only take approvals from banks. Can you believe that ? It is so insulting. As a broker, you can give them an approval from a bank."

Back on 14 May 2004 Realty Times had an article that pertained to a survey regarding mortgage closing delays. I quote: "Underwriting delays, blame the agents, are usually caused by mortgage brokers who issue next-to-worthless preapproval letters, often on their own letterheads, without credit or employment verification."

Whether or not this is still a problem the one way to eliminate it is to deal directly with the lender/bank who underwrites and approves the loan.

"The good news for us is that the last 9-12 months has shaken most of the used-car salespeople (to use a stereo-type) out of the business."

I find this an arrogant and demeaning comment implying mortgage brokers are somehow higher up on the retail sales totem pole than others who make a living in sales. In fact, tell me of any other single group past or present, that has directly inflicted as much financial harm on the public as that which has been done by mortgage brokers? I will look forward to hearing an answer on this one.

Some of the comments I have read here are very astute and the posters have a realistic assessment and view on what is going on with the mortgage business. I think it can be predicted with a fair amount of certainty that the industry will continue to evolve with more consolidations taking place while others continue to exit permanently.

The days of the mortgage broker as you know it are coming to an end, of that I have no doubt. If you are not associated with a direct lender/mortgage banker you will soon need to be if you want to survive. The smartest of you will also take to the internet which will continue to increase its share of where consumers both seek advice and apply for a mortgage.

Jim,

Insightful - and IMO, an excellent and realistic reply and one of the only helpful ones. Two days ago, I added a positive reply to this post, with a suggestion that brokers offer their prospects the Australian mortgage system as a way of a value-added resource that banks don't offer. In addition, I said that my firm offered this to brokers.

In doing so, I was attempting to be helpful and address the problem. although my response was immediately misconstrued as self-serving. For trying to be helpful and offering a positive idea, someone actually called me out for replying with what he termed a "blatant ad".

In the last two days, my inbox has been inundated with mail that brokers have posted in reply to this blog - VERY FEW of these have attempted to offer a positive idea, and most have been of the form 'misery loves company'.

It seems rediculous that someone with a business problem and who spends the time to post or answer a blog wojuld not want to get useful info that could address the problem. Otherwise, what's the point of being here??

Let's make sure those evil bankers stop making mortgages too because afterall, that is the real problem, tricking people to borrow more money than they can pay back.

Jim. before the day begins I would like to reply (and to thank you) for you insightful comment.

Although you have supported your statements with facts, clearly you are someone who is not in favor of mortgage brokers. I am wondering if just your research combined with your opinion is enough to give you a clear picture.

For example: You claim that applicants for REO properties are subject to closing delays because pre-approval letters are "worthless" from mortgage brokers. And you quote from a 2004 article? 2004?

When my client is buying an REO they have already been underwritten THROUGH THE FINAL LENDER. That's right. The REO lender can see the approval from the bank and does not need to rely on my "next to worthless" (your words...) pre-approval letter.

You think REO sellers do this because they think a mortgage broker is a substandard version of a mortgage banker?

It couldn't possibly be because REO seller wants the loan themselves (or wants to be in control of the loan themselves)

Why is it arrogant for us to be glad our industry has shaken out the rotten apples????? This means we think we are "higher on the totem pole" and overestimate our importance? You have imposed an attitude on the commenters in this post that I simply don't see.

I do agree with you on something however. This statement:

it can be predicted with a fair amount of certainty that the industry will continue to evolve with more consolidations taking place while others continue to exit permanently.

If you REALLY think that mortgage brokers have inflicted more financial harm than any other group?

I don't even know how to respond to this question. I completely disagree.

Our economic situation is America is so much bigger than a bunch of mortgage brokers, who were the pawns in a game where someone higher up was making huge dollars.

Mortgage brokers were merely the guys selling hamburgers with tainted meat. They did not taint the meat. They just sold the hamburgers at a time when everyone thought eating hamburgers would make you rich. Although some recognized that tainted meat could make you sick, the prospect of getting rich meant you accepted the risk of getting sick.

Go higher up on the food chain. Much higher up.

Ricardo: LOL Love that comment.

Marv: I appreciate you solutions mind set and agree that is more helpful than misery loves company. Please understand that discussions like this are a very mixed bag and that there is a fine line in the blogging world between advertising and commenting.

Great post. I've been saying this for about 1.5 years now. When the largest banks went to Washington to deal initially with the issue one of the main thing that came out was lack of control over brokered mortgages, and the high incidence of broker fraud. There was no one there representing the mortgage broker. Yes, we are getting squeezed out as the scapegoat for a nation of over spenders and under savers.

While there is plenty of blame to go around (Gov't mandates, Fed monetary policy, real estate agents, builders, city planners who only wanted increased revenue through increased roofs, and mortgage brokers) what needs to be addressed is life without the broker.

How does the consumer benefit, if they do at all. We are the only industry (residential real estate) where you know what the salesman is making on the deal. You can't walk into a supermarket and tell the cashier to take less in her check so that the cost of your groceries can be less. You don't even question it. Yet our fees are questioned day in and day out. Who hasn't heard, "My bank is not charging points." There are numerous responses to this, and this is not a sales seminar. The bottom line is that while a broker might have to disclose YSP (YSP will soon go away altogether) a bank will not. The consumer will have no idea what the bank is making on their mortgage, and there will be no one there to explain the difference between Rate and APR ("its all there in the fine print Ma'am')

Case in point of how bad it is for the brokers. I purchased a home a few months ago, doing my part for the industry. I'm a broker, my wife is self-employed, all her income is derived from overseas. No 1099 or W-2 for her, no bus lic, no corp filing, no DBA, no CPA. None of my lenders would take us full doc, even though tax returns and bank statements were available. One would have taken us stated (credit scores in high 700s), 25% down wasn't a problem, of course we'd take a hit on the rate going SIVA. My wife on a whim called Bank of America, since we have our accounts with them. They said that our loan shouldn't be a problem. BoA took us Full Doc and we fell into their 'no closing cost' program. Of course the rate was higher (something has to cover the closing costs) but with having to put down only 20% (or less) I could easily buy down the rate to where I felt it should be.

Great.. I get on the phone with the BoA LO and have a nice conversation about the state of the business and how this should be very easy for him since I'm in the business. I find out that he is not paid commission but a regular salary. I found that interesting.. joked and asked if he knew of any job openings.

I quickly found out the problem with LO's who work on salary. When I have a file on my desk there is urgency in getting it closed. Why? because if it doesn't close I don't get paid. With BoA (I don't know about other banks but I imagine that this will be the model of the future) there is no ugency, the LO is getting his check come Friday if I close or if I don't or I'm out in limbo somewhere.

You have to deal with the processor directly and while in some cases that might be a benefit, it wasn't here. It was a nighmare. The first thing we sent them after getting the pre-approval was the purchase contract, complete with short sale addendum. Their system said it was rec'd and reviewed. They did an AVM (with a drive by) on the ppty and came in higher than sales price. As with a short sale we had a deadline (very doable) to close. Within 2 days they had everything from us that they needed, our processor goes on vacation and our file sits there for 2 days before any one picks it up. Three days before closing they said that had no idea that this was a short sale and that they needed to do a full appraisal. I came down on them hard at that point, "This property is in Florida. At this point in time you need to assume that every sale in Florida is either a foreclosure or a shortsale unless told otherwise. Not to mention the fact that you had the short sale addendum that you reviewed 2 weeks ago." They also couldn't figure out how much my RE taxes were going to be. After numerous phone calls and emails from both me and my title agent to supervisors at BoA they finally figured it out.

My wife of course was freaking out because of the looming deadline. She said to me 'you're in the business so you understand all of this and know what needs to be done, but what does the average person do?' I replied, 'They get screwed.'

And that is precisely what will happen when the mtg broker becomes extinct. Sure this might be an extreme case, or it might not be. There were mtg brokers out there that screwed people, I'm sure they're out of the business now, probably selling mtg mod scams. No referrals for them. The majority of us are honest and hardworking, earn our pay, and have the best interest of our clients first and foremost. We'll push and advocate for our clients, because we know the business and they don't. But Janet is right, the country needs a whipping boy and scapegoat, and mortgage brokers are taking on the nose.

Obviously the errors in mortgages began with what now seem like very loose guidelines for risky products... in other words, with the lenders who created the products, not with the sales people (read: LOs) who sold them... but that said, more of this has to do with convoluted securities that were sold against the loans... and noone knows what is the actual risk for these securities... in any event, we need to go forward, not backward.

Great post. and looking forward to your teaser post as well.

Nice Post! I ran into a deal recently that involved a unique property. That lender that used to allow us to lend on it no longer will, but their retail guys can. The customer didn't want to work with their retail guy because of service.

I agree that less options is bad for the consumer. The problem here is that the lenders' own the bat and ball. If they want to take both and go home, what can we do?

It would be easy to say support the mtg brokers association. but as you say, the banks have the bat and the ball and the ear of congress (which is attached to the pocket of congress). The Associations will not get a seat at the table and will at best be tossed a few scraps.

Knowledge is power. Write blogs on the value of brokers, the value of choice and the truth about what's going on. It's about all we can do I guess.

Michael: Nothing is better than an actual testimonial like you have layed out for us here. Thank you for sharing your experience, along with your opinions.

There should be another post attached to this one. The one that informs all who have put down mortgage brokers as worse than pond scum, and said good riddance.

And that post would be entitled "Life After Mortgage Brokers". No, it would not have anything to do with rates. I will leave that one to the money geeks.

It would have to do with exactly what you have described: Who do you think will have more interest in getting your loan completed? The guy who gets a salary, or the guy who gets paid only IF your loan is completed.

Who will the Realtor call at 3pm on Saturday afternoon to discuss the pre-approval, or to GET one?

Sure, we can all adapt, and sure maybe this is just another business that does not fit in the brave new world. But no one can deny it will close the door to a consumer (and Realtor) choice that many people have come to rely on.

Janet, the signs may point to brokers becoming an endangered species. Maybe we could get Ashley Judd to do a video for us like the one she did showing wolves being shot from the air.

Even in the most recent boom market, 70% of Countrywide's loans came from either wholesale or correspondent (mostly builder mortgage companies) and wholesale dominated those two. Most markets today are FHA and those loans are really rich, so I doubt they will cut off the income stream.

I think the bright spot for us as brokers is that the originators for the big mortgage companies are spending all their time "cross-qualifying" buyers for the purchase of their REOs. They don't have the time to devote to "business development" and as short sales and loan mods continue to grow I don't think we will have to worry much about them as competition.

Hang in there, there are better times ahead!

Janet,

Just a few more comments regarding some of your comments before I move on.

Yes, I do have a very clear and accurate picture of the mortgage industry and the role the mortgage broker has played in it recently. Much more than you think I do.

My comment regarding pre-approval was intended to make a general point and illustrate it has been a problem for some time now. (Among many other potential problems that were and are more inherent when dealing with a mortgage broker).

You somehow left out from the other posters comment the part of "shaken most of the used-car salespeople (to use a stereo-type) out of the business." Making a derogatory statement about another sales profession is arrogrant and demeaning but I guess you don't agree from your reply. (Oh sorry, just noticed you were Mortgage Expert - how did you earn that title?)

Your last two comments have convinced me you are both in denial and delusional when it comes to the pain and suffering inflicted by mortgage brokers leading up to the mortgage crisis:

"Our economic situation is America is so much bigger than a bunch of mortgage brokers, who were the pawns in a game where someone higher up was making huge dollars."

"Mortgage brokers were merely the guys selling hamburgers with tainted meat. They did not taint the meat."

The comments you made above are quite frankly ludicrous. So much so, I am sure even some of your cohorts were shaking their heads after reading this.

How about instead of passing the blame and denying the damage that was done by not just a "few rotten apples", you fess up and admit the wrongs that took place knowingly and willingly by a large number in your profession. People who readily put greed ahead of the needs and concerns of the consumer they claimed to be helping. Or would that be asking too much of you?

This has been another interesting thread that continues to support what I already knew about the typical mortgage broker. For the select few good ones out there, I suggest you align with a direct lender/mortgage banker who does everything in-house and offers a full range of products including FHA, VA and RD loans. For the rest of you, a career as a used car salesman might be your best bet. Just don't tell them you were once a mortgage broker - they tend to look down on that.

Have a nice day.

You are right to say I missed your point about putting down the used car industry. I am hoping you will let me off on that one since I spent many years (over 20) in the car business and living with that stereotype. I never tried to defend it, I actually found humor in it.

I still would not interpret a statement like this from a comment as the arrogance of an entire industry... or as a superiority stance towards the rest of the salesmen in other industries (as you accused).

I think it is ludicrous of you to paint an entire industry (except, as you said "the select few good ones") as greedy self serving low lifes out to take advantage of consumers. Did you come to this conclusion from your research or from personal experience or both?

This is far more judgemental and arrogant on your part than the guy who simply sterotyped a used car salesman....as having questionable sales tactics.

Wow! I just got some free time to look at your blog. I cannot agree with you more. The amazing thing to me is the lack of loan originators and their broker owners to take heed and see what is happening. I am a retired Realtor (California) back in the good ol days of 1976 through 1997 as active , then a couple of years just working through what was left of my property management portion of my business. Retirement is the term we use to describe the too much husband, too little income syndrome. I decided to jump back in and be a LO for a mortgage Broker. This has been one roller coaster ride. I could spend all day just learning but then that won't put the beans on the table. Anyway, I looked at the NAMB website and there is a Portland, Oregon Chapter. As I recall, there are only about eight people in it. That's like calling yourself a Realtor and never joining NAR. I confess, I have not joined NAMB myself because I wanted to get my feet wet and make sure my feeble mind could still pull it off, not to mention some income to cover the cost. I can now plainly see that the AMEX card is going to take a hit for about $195 and join the fight so when I do learn I'll have a job to go with the education!

Thanks for the blog. I think I will subscribe to you so I can glean away some of your wisdom. By the way, I was active in my Board, even was honored as Realtor of the year in 1991. Also I had the disticnt pleasure to serve the board as their President in 1992. Of course YCBoR ( Yolo County Board of Realtors, primarily Davis and Woodland) has long since been absorbed by Sacramento Association of Realtors. To send you my response I have type in the graphic word, "peach". That was a "peach" of a blog. Keep up the fight!

Ron Whitworth

Just have to Respond to Jim Gilly's comments: He says, he'll probably get some Flack? Got a kick out that and why I even read what he wrote to begin with. Hey Jim, some Flack? You think?? Mostly Pro Mortgage Group here, hell yeah?? Of course we're Pro-Mortgage and Real Estate for the most part. Some more afraid of Big Brother than others, but yes, mostly Pro our Industry! Active Rain is a Real Estate and Mortgage Website, meaning most of us Are In This Business and Want to See it Survive And Thrive!! Glass Half Full thinkers!! Were you Hoping that this was going to be a broker Bashing site? An angry mass of Haters of the Mortgage Broker, telling us good-bye and good riddance??

By the way - What line of Work are you in currently Jim. Are you just a retired insurance/investments/taxes guy who "researches mortgage stats" just for "Fun" in your extra free time? If you are Now Retired, just a suggestion; Go out and Have some Fun now, go play a round of Golf, take the misses and get outta the house more! You already said you used to do financial services, but I'm going to take a stab at it and presume you've also had a bad experience with a Mortgage Broker? Maybe you got ripped off, or thought you did? All I can really surmise is; Something motivated your analyzing, researching mortgage brokers?? Nobody takes that up as their Hobby in retirement that I know? Then you researched some more and googled this blog on "Mortgage Brokers becoming Extinct" and probably thought, Hey Hey gotta check that out, cuz I'm All for that, where do I sign the petition?! LOL. No, ROFLMAO

Then again, Maybe I'm way off base here about your motivations and you love us mortgage brokers and actually want to dip your own toes in the broker waters business, when "things get better" since you presume to know everything about us and how it works to the letter?? That is my definition of Arrogance? Someone who's never spent day1 in the business, yet feels "expert" enough to write your comments and contradictions. Maybe till then, you just pick out random blogs and bash or "Correct" others? Maybe that's your Thing? Dont' really care. What's the Real Story with you - your sub prime loan just recast again?? Anybody with half a brain knew these loans were going to be problematic once home values stopped their 20% annual sky rocketing (brought on yes of course, by these "band-aid" loans that weren't created for spec Flippers in the first place) and fell back to earth!

Brokers are governed by Predatory Lending Laws now, and there are Already Maximum fees and guidelines established, set in stone by HUD. With that flat fee remark, I have one final question for you Jim - Should Everyone in any sales position be Capped or Big Brothered by a Flat Fee arrangement for the Goods and/or Services they provide? Do you know how much your car salesman made on you last time? Or the guy who sold you your Big Screen T.V.?? Of course not, Don't be ridiculous. Mortgage fees/closing costs became a Hot Button during the last down market in the early 90's and got magnified this go round of mortgages refi's. Your comments start off saying that you used to be in financial services, and................well here's your words for others to read;

Jim's Quotes here; ("After retiring from a career in financial services, I became interested in how the mortgage industry operated and have spent a considerable amount of time doing research on it. I found the topic of this thread interesting and thought I would pick out several comments that were made and add my own take on them. As this is mainly a pro-mortgage broker group here, I am sure I will get some flack. That being said:") End Quote

I'm not a stats analyzer and researcher type, too busy with the business of business. I Originate, process, underwrite, draw docs and Close Loans - for 25 years now. Regarding the Stats I gave in my previous comments about Broker Origination as a percentage across the Country and Home Ownership Percentages - Go Get 10 polls/read 10 different industry periodicals and no two are identical. You'll come up with variations, plus or minus 2 or 3% sometimes more, on accuracy. Who Cares really, if it's 60, 65, or 70% bottom line is brokers originate and fund a Ginormous percentage of mortgage loans every year in the U.S. of A

Here's a Quote from another blogger, who recently commented to this post, that backs up my numbers quoted here;

"Even in the most recent boom market, 70%of Countrywide's loans came from either wholesale or correspondent (mostly builder mortgage companies) and wholesale dominated those two". Most markets today are FHA and those loans are really rich, so I doubt they will cut off the income stream." End Quote.

Funny how Countrywide's stat is right at 70% (according to this recent comment posted) of All their business was originated and came from their Wholesale (Mtg. BROKER) Division. But to repeat myself here, I WORK in the real world DOING Mortgage Loans every day. I don't have time to nit pick and Research whether or not a stat is really 67% or 71% and that goes for the Home-ownership stat at being upwards to 60% at it's peak in 05/06.

Response/Flack regarding your doubting of my other figure of 60% home ownership at one point in the U.S.

It's No secret - Anyone/Everyone from 2000 to 2006, with a pulse could get a lousey Sub-prime loan (No down, No job, bad credit) to buy a house!! Why then is it so Preposterous (Jim's word) to fathom that 60% (Clinton and Bush were preaching All American's should own a home) home Ownership could be an accurate stat and not out of the realm of reality or fact? What's your Research say Jim?? And of course it goes without saying that 60% was at the highest peak in late '05 and No where near that currently.

To sum up here; After reading Jim Gilly's comments, I'm reminded of all the loan rep's I've hired over the years, some great, most average, but there was always a fair amount who just sat around the office All day every day, Analyzing Rate Sheets and Researching Lenders. These types Never Closed One Loan? Coincidence? Hmmmmmmmmmmm

It's real easy to get the negativity balling rolling and then it takes on life of its own. So that's that about that, I hope!!? More Positive Feedback is what's needed. Everything is constantly changing, including Our Industry (Real Estate/Mtg.), and I've heard the Ice Age has been coming to wipe us out for two decades now. We're Still here!!!

Tom Purcell

Comm./Res. Mortgage Broker

FEB

2009

I decided to check what Janet's comments would be with no intention to making any further posts and then I spot this lenghtly retort by Tom Purcell that just begs a reply.

Hey Tom, I stated upfront I expected to get flack and I also know this is a forum for people who work in the mortgage/real estate business. No need to state for me what your agenda is.

I retired a number of years ago at age 50. Prior to that I was a Certified Financial Planner and Registered Investment Advisor and owned my own financial planning firm where I employed other professional planners and had an in-house staff attorney. In addition to my work experience and professional designations, I also have academic degrees including an MBA.

Since retiring at an early age, I have been able to do a number things with all my free time during the week. Golf, travel and just enjoying a leisurely day are all things I get to enjoy on an ongoing basis.

The reason I got interested in the mortgage business and how it operates is immaterial. What is important is what I found having worked as a professional in the financial services industry for so many years.

I, like most of the rest of the general public, had believed getting a home loan was a fairly routine event, where all fees would be within a narrow range and there would be no reason to doubt or worry about the person taking your application, regardless of the originator. Instead, what I learned was just how corrupt and unethical the entire industry is.

And while the abuse is systemic, I found the main culprits at the forefront to be the loan originators, and to narrow that even further, the biggest offenders to be mortgage brokers. I am not going to cite the many other sources I have that agree with my contention, but I can assure you there are many more who have either documented the abuses of your group or have been personally victimized. These are the facts and it's deplorable how you can all act like you played no part in any of this. Typical response is it was always the other guy according to everyone still in the business.

It would be interesting to see how many of you would swear under oath you have always held the consumer's interest before your own when conducting business. My guess is if this was done in a court of law subject to a penalty of perjury few if any of you, would be able to answer in favor of the consumer.

Whether you put someone into a subprime loan who didn't need to be, pushed NEG-AM or interest only loans, added pre-payment penalties, doctored the loan forms, did stated loans when the borrower could have provided full docs, or just inflated your commission/fees, you are all guilty of mortgage abuse at the least.

So like I said before, instead of casting blame elsewhere, you all need to accept your share of the responsibility for the dilemma the mortgage industry and country as a whole, now faces. Patting yourselves on the back in forums like this and acting like you're the ones being victimized is pure hypocrisy at its worse.

Janet... I read only a few comments... I would need to take a weekend to read this. But here is my take why banks can take the bat and ball and go home, as Olan stated in his comment. Because Banks & Bankers take the blunt of the risk. Brokers don't take much of the risk. Right or wrong? Accept full risk as a banker does and brokers can play ball, with the bat, the ball, the bases, and they can even drink beer on the field with the other bankers... ;o)

Again, I hardly read but like 3 comments, but that is my take on this for now. So, question... why should brokers have full reign? Be able to have the same exact programs? Conspiracy? Or as I mentioned, the banks take most of the risk after closing. I didn't really see anyone mention risk, but like I said, I only read a few. I'll be back later to give the rest of my opinion.

jeff belonger

FEB

2009

Jeff: The very reason you mention, RISK, is probably why our industry is moving in the direction of correspondent lending (where there is risk).

banks are also getting rid of brokers & trying to go direct to real estate brokers to get deals. See Bank of America's recent push... they no longer use mortgage brokers, but are trying to line up real estate brokers in a "partnership"

Recent push? Towards what? A little more clarification, please. :)

FEB

2009

Just read this in National Mortgage News. Looks like the net has been cast and the only way to survive will be to become a mortgage banker or join up with one. Probably for the best in the long run as too many who weren't qualified or ethical enough got into the business just to make a fast buck.

Hopefully, companies that operate as mortgage bankers/brokers will be more selective on who they bring aboard so we can continue to weed out those that shouldn't be in the business in the first place.

Daily Briefing for February 12, 2009

PMI Cuts Brokers Loose

In what could be another nail in the coffin of the loan brokerage industry, The PMI Group of San Francisco confirmed it will no longer insure any mortgages brought to them by third-party originators unless these firms have a warehouse line of credit

Daily Briefing for February 12, 2009

PMI Cuts Brokers Loose

FEB

2009

Mike M., I read that too and came here to see if someone commented about that. I have to say though, that most of the loans that I am doing for my brokers are under 80% so I don't know that it will have that much effect on my business. The bummer is that it is not as easy to do 80/10/10 as it used to be. The CLTVs are lower now.

Libby,

On the flip side of 80/10/10 loans being harder to do was that it was too easy to do 80/20s or 100% loans. Bringing boat loads of new home buyers to the market, while good for our revenue, it served to drive home prices higher as demand grew. Albeit it wasn't the only reason, artificially low rates also helped.

Without any "skin in" it made these new home owners, many of whom didn't understand the first thing about the responsibilities of being a home owner, nothing more than a glorified renter. It made it easy for these people to walk away. When they purchased with little or nothing down and the value of their house skyrocketed, they thought it was great. When it tumbled a little bit, they walked away. There was nothing to keep them there, no personal investment, hence my term "glorified renter".

The Mortgage Debt Relief Act of 2007 made it even easier for people to walk away from their primary residence by not taxing them on their forgiven debt. This only exasperated the problem by putting more houses on an already declining market. As usual the unintended consequences of government intervention is always greater than the benefits.

Mortgage brokers get the blame for this all because we are perceived to be the access to all the sub-prime loans. We were the ones telling people to use their homes like ATMs, that equity in the house was wasted. Run up the cards and let the house pay them off. There will be more next year for you to have. Don't go without that big screen TV and the boat and the trailer.

Now comes the time to find balance and value in the services we provide. It's all cyclical and like everything else it will come back. It just might come back in a different form.

I know I'm going to get a lot of comments from those brokers who will rail me saying that they didn't do any of the above. I didn't either, but as a whole our industry is taking it on the chin because a majority of us did.

Micheal: I was saying a LONG time ago that these 3 things combined were a lethat combination:

Stated income

100% financing

Adjustable rate mortgage.

If you add first time homebuyer, who, as you pointed out, is not often realistic about the cost or the responsiblity of home ownership, you get a receipe for disaster.

Yes, I agree, we have made a huge misstep in making it so easy to "walk away". What have we trained Americans to think with the rewards we have given those that have defaulted?

Maybe we were the gateway to subprime. Well put, I like that analogy. So let me elaborate.

A few years ago: Inside the gate there are riches to be had. No mortgage broker has to tell you this, or convince you of this. It is all around you. The worship of wealth and the era of luxury beckon. Naturally, you want to go through the gate.

The gate is wide open for all to enter. There is no price to get in. What do you have to lose?

The gatekeeper is just that. The gatekeeper. He gets paid for making sure as many people as can go through the gate.

But did he create the desire, and convince those that wanted to enter that there was no risk? Did he make the rules that EVERYONE could enter through that gate without any qualification and without any entrance price? Or was he just the gatekeeper?

And finally, should he take all of the blame? If he would have said, "do not enter, the risk is too great!", how many would have listened and turned away and how many would have gone to the next gate?

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Janet Guilbault California Mortgage Banker

Walnut Creek, CA

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RPM Mortgage

Address: 3201 Danville Blvd, Suite 195, Alamo, CA, 94507

Office Phone: (925) 552-3867

Cell Phone: (925) 212-6347

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