Are Mortgage Brokers a Dying Breed?

I have been reading a lot about how I am a member of a dying breed, one that should fall by the wayside and will not be missed.  Hmm.  I guess I should stop blogging right now, right.  Why should I, owner of a mortgage brokerage, even bother to help the consumer with free advice and information they need?  After all, I am a dying breed, right?

That's right, I am a mortgage broker so I must, by stereotype, rip off my clients at every chance I get.  I must charge the absolute maximum on every loan and if I can't get it, I will just say you don't qualify anymore so I can place you into another loan where I can get it.  And if you don't like it, too bad because I stuck you with a 3 year prepayment penalty and there's nothing you can do about it.

By now you probably realize I forced you into that loan you cannot afford, even though the house was beyond your means anyway.  You are obviously going to face foreclosure because I underwrote that loan in reality and not the lender who gave you the money.  As a matter of fact, I kept telling you to get the maximum loan possible so I could line my pockets with as much cash as I could while I was still in business.

Sure, I used YSP as way to get paid even more and hid it from you in plain site on the closing statements.  I wanted you in those adjustable rate mortgages because I knew I could get you back in here to rip you off on your next loan, again and again, that is unless foreclosure gets you first.  Wait, that just means I could get more money from you because now you can't get a loan from your bank and have to go through me.  Damn I am a devious person and didn't even realize it.

Oh wait, I just realized that not all brokers fit that stereotype (Isn't that called racism elsewhere?), and thankfully I don't.  Will mortgage brokers be a dying breed?  I certainly hope so, at least those that do fit the stereotype above.  Certified Mortgage Planners are the wave of the future in my opinion, whether they are brokers, correspondent lenders, or lenders. 

Mortgage brokers acting in this new role have an advantage as they can use the tools from across the lending spectrum to the clients advantage.  Wholesale lending will always be around because lenders lend and they will do so every chance they can. 

It seems that many arguments stating that mortgage brokers and the wholesale lending channel will go away are encased in what the Bank of American and Countrywide merger will do, which is eliminate the wholesale channel.  Interestingly enough, I was asked about this by Inman News and my quote was presented in this article.  One thing I would add, I never used Countrywide or B of A, and I am still here.

What about if YSP goes away?  Big deal as we will just charge a fee for service at closing like we do every time we offer the wholesale rates anyway.  YSP simply allows the borrower to pay less at closing through a higher rate. 

What's a wholesale rate?  Basically the same rate that lenders charge you points for, so mortgage brokers actually don't cost any more and in many cases are actually cheaper than going to the lender themselves (I have a testimonial to prove that also).

So, despite what you read, you can see that I will not be going away anytime soon, unless I am the one who decides to do so. 

Comments

[Brian Brady]

I remember hearing about how stockbrokers were a dying breed, in the 90s, Robert.

Of course, they adjusted their compensation to being much more advice-based than transaction-based and now, they're thriving.

People pay for advice; pure and simple

[The Mortgage Cicerone]

Robert - Mortgage brokers of the ilk that fit the public persona of what mortgage brokers represent, are indeed a dying breed...as they well should be. The business cycle we are experiencing is "the invisisble hand" in which Adam Smith wrote that is cleansing and self correcting the industry. The question at hand is what is the industry going to do to prevent the wholesale abuses that gave our industry a black eye. I don't believe any of the quick fix proposals being advocated by the publicity seeking politicians are the anwser. However, it is the cream of the crop originators (such as yourself and the Brian Brady's) that have to take immediate action to solution for the future and well being of consumers and our respective industry. If we don't, ill qualified politicians will do it for us at the detriment of what is best for all.

To end, I think high quality brokers will always play an important role in the delivery of mortgage services to the public, however I do believe the way, methods and qualification standards will be changing.

Great post Robert!