Death of the mortgage broker?

It seems as if every week there are new guidelines, requirements, licensing etc. to remain operating as a mortgage broker these days. It appears as if the big banks want to be the only option to turn to when you look for a mortgage.

Every day I recieve a call from long standing veterans in the industry asking my opinion of the state of affairs in the mortgage broker world.

People - It ain't pretty.....

There are several options consumers can turn to when looking for a mortgage.

Mortgage Brokers - known to produce 65% of all loans originated.

Mortgage Bankers - a mortgage broker that utilizes a warehouse line and then typically sells the loan off to an investor.

Banks - we all know about them. I reccomend to support your local banks and leave the big boys alone. - Before dealing with a bank, be ceratin the will be around long enough to fund your loan. More bank failures are imminent!

Credit Unions - very strict underwriting guidelines but possibly the best terms in home financing if you qualify.

Private Investors - typically equity lenders that will make certain the reward far outweighs the risk.

OK - Mortage Brokers and Mortgage Bankers are being slammed with new guidelines such as increased net worth, more liability to repurchase bad loans and generally more sructiny with their closed loan packages. Broker cannot make loan decisions. Mortgage Bankers can make lending decisions but are very scared to do this currently because investors do not have to buy a closed loan and it could remain stuck on the mortgage bankers warehouse line - which creates a whole new set of issues.

Banks march to their own set of rules. Yes, some of the rules are more stringent, yet some of them definitely tip the scale in favor of banks surviving this mortgage meltdown and outlasting the survival of mortgage brokers and mortgage bankers.

In this risk/reward world we live in, expect to see more mortgage brokers and mortgage bankers close their doors. In a recent report I have read, 75% of mortgage brokers/bankers that were in business in 2005, just a few short years ago, are now defunct. Consumers are witnessing a new breed of loan originators and should expect more to come, possibly at an even rapid pace.

The intention of our government is to regulate the loan process but in my opinion, when you destroy an industry and eliminate 75% of the competition, You know what happens when competition disappears? You got it... inflated rates..... I will keep everyone posted on the state of the industry but for now... rates are at the lowest point ever and it is a great time to refinance or purchase a home.