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Will Brokers Weather the Storm?

By
Mortgage and Lending with Extraordinary Processing MB-116250

I just read an article that a friend sent me about mortgage brokers that was published in the NY Times Real Estate section last week. It is titled "Banks Bypassing Mortgage Brokers" .

 

In summary, the article is about how banks are blocking brokers from offering their loans and only allowing retail transactions. We all know that lenders are imploding daily and there are fewer places for brokers to take loans, which is not as beneficial for the customer.

 

I have heard several cohorts wonder aloud if mortgage brokers will be around in a year or two given all of the regulations that are being implemented. I personally think that brokers are being over-regulated and that it is not fair that banks do not have the same regulations as brokers. I also am of the mentality that it is a few rotten brokers and loan officers that have caused most of the problems and passed bad loans to borrowers. As the article states, "mortgage brokers say they have been unfairly blamed for the industry's failures in recent years. They point out that it is the lenders, not brokers, who ultimately approve a borrower's application."

 

I believe that brokers have the ability to "shop" for the borrower and get them the best product and rate out there and are not limited as banks are. I do see a continued need for brokers and think (hope) that this is just a cycle that we are going through. As a contract mortgage processor, my livelihood is tied to the success of my brokers. I think that there need to be some changes and things need to be shaken up a bit which is currently happening. My hope is that, once things settle down a bit, the program guidelines and some regulations will be relaxed within reason. I am all for keeping people honest, but I think a few of the new regulations go a bit too far and don't really benefit the borrower.

 

I'd love to get opinions from the ActiveRain community. Do you think mortgage brokers will be around in a few years? Why or why not?

Posted by

business port 

Libby Cousins

Extraordinary Processing - Spokane, WA

Contract Mortgage Processor, licensed in WA

phone:   509-465-5585

email:    LCousins@comcast.net

Comments (11)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

No.  I believe that they'll be priced out.

Feb 05, 2009 09:31 AM
Marie Ogle
Mortgage Processing Solutions - Spokane, WA
Contract Mortgage Processor

Well said.  I do feel there is a need for Brokers and that they will be around for a very long time to come.  While the brokers seem to have been hit the hardest, our whole country is suffering from the current economic crisis.  Once we hit rock bottom there is no where else to go but up.  I only hope that I am still able to hang in there for the ride.

 

Feb 05, 2009 03:13 PM
Anonymous
Real Estate Broker

I think you bring up some valid points. There will be hurdles for brokers to clear but with proper planning and by offering quality services they should survive. The market seems to be getting better, albeit slowly. Hopefully the storm doesn't last much longer!

http://associatedbrokersnw.com

Feb 06, 2009 07:32 AM
#3
Lara O'Keefe
North Texas Home Finders - McKinney, TX

Libby, there has got to be some balance in the regulating. It seems that it is very all or nothing.

Feb 06, 2009 07:49 AM
Libby Cousins
Extraordinary Processing - Spokane, WA
Contract Mortgage Processor, licensed in WA

Lenn-  I hope you are wrong as my job at this point relies on brokers! ;-)

Marie- We just need to hang in there and hope for the best.

Lara- I completely agree with you about the balance. I think it will take a while to even it out though if that ever does happen!

Associated Brokers NW- I hope that you are right and that the brokers that I work with are planning for it! Let me know if you are in need of a processor, I'd be glad to help. Thanks for stopping by! (I love the background pictures on your website.)

Feb 07, 2009 04:39 PM
Susan Peters
Dove Realty Inc. - Seattle, WA
The Better it Looks the Better it Sells

Hi Libby,

The way banks have screwed everything up I can't imagine that most buyers are going to turn to them for their home loans. 

If all lenders were as competent and ethical as the mortgage broker I work with, we'd be in a much better place right now.

Feb 14, 2009 12:51 PM
Lisa Udy
Platinum Real Estate Group - Logan, UT
Logan Utah Realtor

Hi Libby,

I do believe brokers will be around, the good ones are just way to useful in finding the right product for the right person. The Broker of yesterday is, however, becoming extinct. I do think they will remain but will have a serious upheavil of the currnet amount of brokers of today. great post and very nice insight into the future.

-Lisa

Feb 14, 2009 02:15 PM
Libby Cousins
Extraordinary Processing - Spokane, WA
Contract Mortgage Processor, licensed in WA

Susan- It does seem that brokers are more vested in the transaction than banks are. We (brokers and processors) have a vested interest in making sure the loan goes through and often work harder on the deal.

Lisa- I agree with you that the good brokers are useful. Again, we have a vested interest in the transaction so it isn't just a "number" to us. I also think that we are able to get a little closer to the client and have their best interest in mind. With a bank, the loan officers must realize that if the bank down the street can give them a lower rate, the borrower will go elsewhere. With brokers, we can keep the client yet take the loan to where the best rate is.

Feb 14, 2009 04:07 PM
Norma Toering Broker for Palos Verdes and Beach Cities
Charlemagne International Properties - Rancho Palos Verdes, CA
Palos Verdes Luxury Homes in L.A.

I have a love/hate relationship with my banker guy----his communication leaves much to be desired, but the loans get funded.  The mortgage brokers are better communicators and keep me posted on the ups and downs of the loan, but they do not have all the rates and loans banks are offering. 

Banks are re-building their own profit and loss statements and they are in the mood take a larger piece of the real estate loan business.

Feb 21, 2009 06:08 AM
Not a real person
San Diego, CA

It's entirely possible that they might go the way of the professional travel agent. I used to know a lot of travel agents, but they all are now out of business. The airlines, hotels, cruise operators, and car rental agencies discovered that they could make a lot more money by doing things direct, especially online. Mortgage brokers might be headed that route.

Mar 02, 2009 07:49 PM
Khash Saghafi NMLS
Liberty Home Mortgage Corporation - Cleveland, OH
Mortgage Loan Officer, Cleveland OH NMLS 1114762

Hey Libby,

  This is a great post that you have.  I think that brokers will ultimately be pushed so far to the margins, that they will become "almost" non-existent.  Yield spread will become a thing of the past which will cut their margins so far down that they cannot make a profit.  I definitely believe that there is a lot of business there for the "quality" brokers, but the noose is going to tighten heavily.  Correspondent lenders and mortgage bankers are nothing but "glorified" brokers, so we are all in the same boat at the end of the day.  In the end, the guidelines were way too loose and as with all solutions, the pendulum has swung way too far to the other side right now.  It's a storm that I am sure we will all make it through.  I think any broker, correspondent or banker who has built a solid foundation of referrals will be fine.

Mar 09, 2009 10:45 PM