Mortgage Industry News

In the October issue of Origination News (www.originationnews.com) our EVP, Ruth Lee, had published an article, Opportunities Exist For Experienced LOs.

We talk with brokers everyday who are interested in becoming a banker/correspondent lender.  The industry is perfectly set up for these brokers to take advantage of banker opportunities when it comes to warehouse lending and direct delivery to investors.  Many are now extending lines with only $150,000.00 net worth and same for investors.  Becoming a full fledge banker is now in the grasps of most all established brokers.

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by: Cindy Breternitz

It makes me so sad…

Today I had a long discussion with one of our customers in Florida, a soon to be ex-customer and ex-mortgage banker.   This is a good man, a smart man, with over 30 years in the industry, and sadly, his end wasn’t from a dip in rates or a swing in the market but from the losses he took in his first year as a correspondent lender.  He is leaving the industry; and that is the industry’s loss.

As we all know there is no handbook for becoming a correspondent lender, no proven training you can attend to educate yourself on the business of managing warehouse lines, investors, or best business practices for your internal staff.  By the time our client recognized he didn’t know what he needed to and found us, it was too late.  The damage had been done and the debt from errors and restitution overwhelmed his company.

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Ruth Lee

I never fail to marvel at the sheer survivability of the entrepreneurs in the mortgage industry.   For those that are sounding the death knell of the small mortgage entrepreneur, I wouldn’t ring it too loudly.  Most of the mid-tier wholesale lenders are fleeing from wholesale production and anything to do with the word broker.

Any quick overview of the implode-o-meter will show a who’s who of the players in the wholesale arena that have all exited stage left by force or design.  Plagued by the inability to fund many products through their line, draconian haircuts, exposure to risks from brokers, and a general lack of profitability in wholesale… they have made the only sound business decision available…stop the insanity.

However, from the ashes does rise the phoenix of the small correspondent lender.  Without massive overhead and unruly production, they are still offering boutique wholesale.  They don’t have massive rate sheets or innovative technology.  They don’t offer hundreds of products.  They have a small line, a small select group of brokers and a willingness to produce quality loans.

Perhaps it is the genesis of a new class of wholesalers… ones that offer conservative yet substantive support to their brokers.  Wholesalers that, at least right now, are not interested in risks…. Or getting it done for the sake of getting it done.  They have proven that they have a business model that supports their survival.