Are Wholesale Mortgage Banks putting themselves Out of Business on Purpose?

Mortgage and Lending with Lend Smart Mortgage NMLS#207208 NMLS 207208

In the last year, mortgage guidelines has changed completely.  We have seen tons of mortgage companies go under.  Heck I think we all enjoyed visiting mortgage implode

But now that the herd has thinned and the competition has been eliminated, I am having a hard time understanding why wholesale banks are still treating us remaining loan originators like kindergartners.

I work as a mortgage lender.  I originate loans through my company and then my company chooses later to sell the loans in a secondary market.  I originate about 90-95% of my loans within my own company.

The only time I need to deal with a brokered relationship is that 5-10% of the time.  However, when I deal with a wholesale mortgage bank in these times, it seems I get nothing but troubles.  Lately, I have been victim to wholesale banks not knowing their guidelines, program changes with no follow up to me the customer and also having them not honor committed locked loans and guidelines.  I recently had a bank change program guidelines in the middle of the transaction and would not honor the loan. 

Are these banks really trying to stay in business for the long route, or are they just trying to make some income until they can wrap up affairs and close their wholesale business? 

Many mortgage companies have closed their wholesale division doors to brokered relationships.  With all the bad business they booked in the last couple of years, they have had no choice.  I can respect a business for making these choices, however, I have little respect for wholesalers who are saying one thing and doing another.

Does anyone know a couple of great mortgage wholesale banks that have not thrown you under a bus in the last 6 months?  

Posted by

Gary Miljour, Licensed Mortgage Loan Originator: 







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Matthew J Blum - (retired from the business)
Palm Beach Gardens, FL
Gary, I hear you and know exactly how you feel. In my experience it also helps to have great Account Excutives from the Wholesale Lenders.  This is hard to find. I am lucky with most of mine because we have a good communication. Recently my AE from Chase sub prime called me and told me about changes that would be happening very soon he just did not know when.  Because of that phone call I was able to make a backup plan incase things changed.... by the way they did...
Dec 30, 2007 11:24 PM #1
Bob Sloop, Consultant, Indianapolis, IN
RS Mortgage Consulting - Indianapolis, IN
Well Gary did you know that the fall out was not as bad as it could have been?  If you look back on the companies that are gone now, they were all dealing with sub prime lending practices.  Now they are gone, all the heavy hitters are out.  We will be turning around in a year or so, but the losses we are experiencing has the public, and our people in government a bit worried, that's all.  THAT'S ALL ..LOL ...right, and rightfully so.  Take care, have a great 08.
Dec 30, 2007 11:33 PM #2
Scot Rife
A Major U.S. Bank - Springboro, OH

A new addition to the implode list...Today National City announced they are closing their Wholesale division.

Dec 31, 2007 09:12 AM #3
Jeff Fullmer
FM Properties - Idaho Falls, ID
Real Estate Investor/Financier

I doubt they are trying to cause unnecessary pain but when things change as much as they have, it can be hard to stay on top of it all. That begs the question then of if thats their business, why cant they keep track of it? I know many buyers were very put out as the guideline changes trickled down and they thought the loan officers were the ones being screwy. When things tighten up, nobody wins in the short term!  

I had to stop looking at lender implode. Its all about the negative. Anyone know what happend to the lawsuit they were in?

Dec 31, 2007 09:28 AM #4
Jason Wheeler - Pleasant Hill, CA
National City just closed too!  It really helps to have your own in house bank to help you get your deals done these days.  I am lucky to have this advantage in my brokerage.
Dec 31, 2007 10:05 AM #5
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Gary, this is a very interesting perspective, I hadn't thought of it this way.  Many of the wholesale lender reps that I work with know less than I do.  Now granted, I'm a highly educated newcomer to the industry but the level of professionalism of many of my reps is less than stellar.

What will be especially interesting is to see how long it takes for these companies to re-enter the wholesale side of the business.


Dec 31, 2007 11:56 AM #6
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I couldn't agree more with your statements. I've seen too often where on Monday they say one thing and by Friday it is something completely different and they have no idea if by Monday it will be something different again. Buyer's aren't sure what to think and they get frustrated with the process and who can blame them.

Jan 07, 2008 04:19 PM #7
Christopher Ohlsen
Credit Werx, LLC. - Malone, NY
Well, I've been thrown under a bus a couple of times throughout 2007. I have had a few deals in mid-process, locked and loaded into the system die as a result of changing guidelines. One Wholesale Bank that I think is really great is Homecomings financial a GMAC company. They, just like everyone else are undergoing changes, but they take a common sense approach to their UW. Many lenders like HSBC will just deny or suspend a file when guides change. Homecomings gives advanced warning and they honor all loans already locked in the system. New guides for them count against new submissions. I hope this information helps you a little bit.
Jan 07, 2008 11:57 PM #8
Rey Gallegos
Supreme Lending (NMLS ID #2129) - Las Vegas, NV
FHA, VA, Home Loans Las Vegas, NV


I agree with you completely.  I think mortgage brokers are a dying breed.  Banks are turning their focus to their retail operations.  The profit margin is much higher and they have more control of their files.

Jan 10, 2008 04:55 AM #9
Mike Tullio
Guaranteed Rate NMLS# 2611 - Sarasota, FL
VP of Mortgage Lending
Hey Gary.  Appreciate your words and your perspective.  I hope for my company's sake that the wholesale model doesn't completely evaporate.  It could happen.  What I have noticed in addition to your comments about the changing guidelines is the near extinction of the wholesale AE.  Many have lost jobs or worse, they've taken huge pay cuts and are working twice as hard for ten times less.  For someone like you that only brokers out 10% of your loans, it's going to be like hunting rabbits with blowdarts trying to get the right information.  Getting help, answers, and more importantly, closed loans, is becoming tougher by the day.  I wish there were some answers, but I have had some great wholesale banks deliver what they've promised: Provident Funding, AmTrust, and Flagstar.  Check them out and best of luck.
Jan 10, 2008 08:39 AM #10
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Gary Miljour

Mortgage Originator NMLS Licensed in AZ and NC
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