Mortgage Broker or Correspondent? New Pay Plan is Looking Good!

Mortgage Broker or Correspondent? New Pay Plan is Looking Good!

Courtesy of Tucson Rates and Real Estate

Author: R. Smith

There has been a lot of anxiety lately in the Mortgage Industry. After a few years of uncertainty, the bottom of the barrel has gotten deeper. Financial Reform passed through Congress easily, punishing the people at the bottom rung of the ladder and rewarding the same entities who orchestrated our downfall. The Fed has been almost non-responsive to any clarification of the new rules. When they do come out with a new interpretation of the vague rules they have imposed, it just seems like they are pushing the knife in deeper.

The people in the Mortgage Industry that are left will probably end up benefiting from laws that were obviously written to send them to extinction. All of the bailout banks have more business than they can handle. Just check with your local B of A or Chase Branch and you will find that you will be paying a premium to procure a mortgage with them. Plus, you will wait about three months for it to get done. The good news is

if you work for a Correspondent Lender, you are going to be more than alright. Your company will have the flexibility within the law to pay you the same as you are making now, just in a different way. You will still have better pricing than retail banks, and of course it won't take you three months to close your loans. If you are employed by a straight Broker, you should probably start dusting off your resume. If you are a broker and you own the company, you will be OK for a little while, but you should start filling out the paperwork to become a correspondent. Of course you will have to meet net worth requirements, which should be no problem after the last few years. If you are already a correspondent, now is a good time to apply or re-apply to expand your credit facility. Since the Broker Channel is disappearing quick, they need to replace that business through their Correspondent Channel, and their requirements will be a little easier in the short term.

Now, lets talk about the supposed beneficiary of these new regulations, The Consumer. All of the great deals that were available to them are now gone. As a broker, you have to choose what percentage of the loan amount you are going to get paid on. The hourly or salary option just isn't going to work for the guy cutting the checks. My guess is the minimum amount a Loan Officer will choose is going to be 1%, without a split. The company has to make at least 1.5% to pay the bills and make a modest profit.Sure you can use YSP to pay Third Party closing costs, but mortgages just got more expensive. The most illogical part of the new regulations is the part where once you quote your terms, you cannot change them, even if they are LOWER. Unless of course your company is willing to take it out of their end, because as a Loan Officer, you still have to be paid the same revenue. Yes, the industry will survive. Correspondent Lenders will be quoting loans more towards the retail pricing side, but that means more money in the Loan Officers pocket in the way of bonuses.

The outlook in the next few years could be very good.There is an overabundance of inventory and there is plenty more on the way. First Time Home Buyers are always going to be around. In most areas, houses have become more affordable . One of the biggest factors is that people who foreclosed their houses over the last few years are going to be able to come back into the market.The economy might not be growing like crazy, but it is at least stabilized for the most part.

Bottom line is, consumers got the bad end of the deal. The very laws meant to protect them will cost tens of thousands of dollars over the term of their loan. If you are in the Mortgage Industry, you have made it this far. The future has to be better than the last few years.

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