Challenges Seen in Wholesaler Broker Relationship
By Bonnie Sinnock
1,014 words
8 January 2007
National Mortgage News
12
Vol. 31, No. 15
English
(c) 2007 National Mortgage News and SourceMedia, Inc. All rights reserved.
NEW YORK -- Despite the increased competition in what has generally been a more challenging market and
the stated aims of most funders to make their dealings with their origination sources as conducive to the
latter as possible, it appears third-party originators have been experiencing some frustration due to a
disconnect between what they want and what lenders give them.
Among the areas where this disconnect can exist is in the customized automation that so many lenders work
so hard to make TPO-friendly, Daniel Jacobs, chief executive officer of national mortgage broker
1st Metropolitan Mortgage, Charlotte, N.C, indicated in a phone-based roundtable discussion that took place
between he and a group of origination technology and service providers recently.
"A lot of times ... [lenders] will invest rather enormous amounts of money to communicate in one way - in one
rigid way, their way," when trying to reach third-party originators, he said. This generally manifests itself in
the form of wholesalers' proprietary websites that require brokers "to manage multiple programs, multiple
websites, multiple passwords [and] toggle between programs, Mr. Jacobs said.
"It's inefficient, and I think there's soon going to come a point where not just brokers but I think, generally
speaking, Americans are going to say 'enough is enough'" when it comes to this technological trend, he said.
"I'm not saying that every company should use one platform or one type of technology. I think people should
create some unique personality with their technology but I think ... they're going to ... [need] to integrate it
with the major programs that people are using," Mr. Jacobs said, citing as examples of the latter the couple
of loan origination systems used by the majority of the industry.
"In order to make the life easier for the broker you [need to provide] easy tools for integration," agreed
Michael Van Hee, chief executive officer of Sollen Technologies, Dallas, who noted that, while his
technology company primarily serves correspondents, he indirectly has some knowledge of brokers'
concerns.
"I think that people need to realize that they've got to have access through a few of these common portals
and not be so proud to think that if they create the best technology out there people are going to use that
exclusively. It's not the nature of brokers to do anything exclusively," Mr. Jacobs said.
Brokers may not do anything exclusively but they do favor lenders that have automation that makes them
easy to work with, said Rob Katz, executive vice president of origination technology provider and Fiserv Inc.
subsidiary Del Mar Database, San Diego.
"What we've heard from brokers and what we hear from our clients is that the average broker is approved to
work with 40 different lenders but sends the same file to the same three or four lenders day in and day out.
... It's the tough loans that go out to the other 36 or so," he said.
Loans, and loan files, lenders find tough to deal with have become more prevalent in the more challenging
market environment seen recently, according to Mr. Katz, who said he believes wholesalers have allowed
this to happen by loosening their standards for files in an effort to bring more volume in the door.
Interestingly, although wholesalers that have done this have characterized is a broker-friendly move, not all
brokers - particularly those that would like to weed out "junky" originators and maintain a certain level of
quality in the industry - like it, Mr. Jacobson said.
"I think that mortgage brokers and loan originators have over the last five years demanded more and more
commission and been willing to do less and less work and they've been able to demand that because
lenders have accommodated," he said. Some discussion participants indicated that this concern could
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perhaps be addressed through programs that reward originators for quality originations or files - perhaps by
offering brokers something else that they have wanted but have not been getting and that is more control
and/or access to information in the loan closing process.
"What brokers want really to focus on is they really want more control, so they can give better service," said
Kenney Hayes, the Seattle-based chief operating officer of management consultant Mortgage Banking
Services Direct, Austin, Texas, noting that they can build on this to obtain other "wants" that they have such
as education and better recruiting, ultimately allowing them to make their companies stronger and more
valuable.
"I think a lot of them want to build value so they can sell it later on," she said.
Mr. Jacobs agreed that more control, in combination with more efficient communication, would be helpful to
brokers.
"As brokers, we are in the middle, we're out there finding borrowers ... and we're matching them to loan
programs and lenders. Unfortunately we have no control over the service levels that the lender provides.
"We [may] tell a borrower we expect to hear back [about] an underwriting decision in 36 hours because
that's been our experience recently. [But] we may not. We might not get it for 72 hours just because
something changed and we didn't get notified and now our credibility has waned in our consumer's eyes and
it's somewhat frustrating. And so I think ... some consistency, reliability and some really excellent
communication ... with our lenders would help tremendously for us to be able to deliver what we say we're
going to deliver every time and not wonder if we can even make a promise or a prediction." But while
brokers want more control they ultimately expect lenders to be the leaders in the business relationship,
discussion participants indicated. Ultimately, the lender is "at the top of the org chart," Ms. Hayes said, but
she also noted that "a lot of that control can fall more softly into the lap of the broker."
(c) 2007 National Mortgage News and SourceMedia, Inc. All Rights Reserved.
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