Right now, as I type this, there are multiple blog/forum threads on multiple industry websites, discussing different theories on why, how and where wholesale lending is headed. This topic comes up every couple of months and is worth following. After sifting through much of the cliché doomsday and broker bashing rhetoric, I glean useful and insightful commentary, to say the least.
Will brokers be able to survive? Or are they going the way of the dinosaur?
Over the last two years, a huge contraction has hit the broker business. Some sources have total broker originations down below 20% of the overall market (from approximately 80%). There is and will be, without a doubt, a change in the way mortgage brokers conduct business. With many states opting to conform to the NMLS and new regulations such as the S.A.F.E. act, the landscape has and will be changed significantly.
Many have transitioned their businesses to large and thriving correspondent channels. Originators who can’t or don’t want to conform to the new rules are moving to work under federally charted banks, for much less in commission and much less scrutiny. So you see, although broker biz has contracted drastically, it has for the most part transitioned to a different model with less headache.
I believe brokers will adapt and survive, barring unforeseen sweeping legislative changes. This form of origination is too lean (financially) for large lenders (who buy TPO) to ignore.
With NAMB West coming up in early December, it is very fitting that our Feature article this month is on “The Future of the Mortgage Broker” by Martin Andelman. Follow with him as he reflects on how we got here and why the broker needs to focus on a different philosophy.
And for those of you who will be attending NAMB West, December 6th – 8th, please stop by our booth and pick up an extra copy of this very important issue to give to your fellow loan originators.
Keep up the fight,
Robert Pegg
