Mortgage brokers are becoming a dying breed. Across the nation, mortgage brokers are finding it more and more difficult to survive. During the beginning of the mortgage industry debacle, many of the problems within the industry were laid at the brokers' feet. Commonly cited reasons for the meltdown were exorbitant fees, higher interest rates than necessary and putting borrowers in homes they could not afford.
In the vast majority of cases, these claims were unfounded. As the mortgage crisis has continued, it has become pretty clear that the brokers are not the ones to blame. It was not the broker that pushed for programs for borrowers that were not credit worthy. Fannie Mae and Freddie Mac, at the urging of our government, pushed for programs that allowed borrowers to buy homes with little or no down payment.
Programs were developed that allowed for borrowers with low income or income that could not be proven by traditional methods to buy homes. Common sense rules about debt to income requirements fell by the wayside. Borrowers could state an income that sounded reasonable and even state the assets necessary to close their loans.
Interest only loans were made available. None of the borrowers' payment went toward principal reduction of the mortgage. While that may be fine in a time of quickly appreciating home prices, it is devastating in times when home prices are falling.
There were even loan programs developed that allowed the borrowers the option of how they would repay their mortgages. The borrower could elect whether to pay a fully amortizing payment, an interest only payment, or a minimum payment that was even less than the interest only payment. This last option resulted in a negative amortization. Again, that works if home values are appreciating at a rate fast enough to offset the negative amortization.
It was not the mortgage broker that developed these programs. These programs were made available by the big lenders and the brokers were encouraged to use them. Now, many mortgage brokers find themselves struggling to survive because of the faltering mortgage industry.
Will the mortgage industry turn around? In time it probably will. People whose livelihood is dependent on this industry can only hope that prudent measures are practiced to insure this never happens again.
In the interim, many brokers and loan officers are being forced to search for ways to supplement or replace their incomes. Home based businesses and network marketing can offer viable solutions. Many of the skills honed for years in the mortgage industry can be used in these endeavors.
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