April 24th, 2015 3:12 PM by Richard T. Cirelli
Mortgage Brokers: Best Source for Mortgage Loans
In my last newsletter I wrote about the dramatic increase in loan originations by Non-Banks vs. Banks. Now, there are new statistics out attesting to a large increase in Mortgage Broker originations too.
According to the trade publication Inside Mortgage Trends, brokers played an increasingly important role in the conventional conforming market during the first quarter of 2015. The publication performs an analysis of mortgage-backed securities issued by Fannie Mae and Freddie Mac. It does not include Jumbo loans but I would assume that mortgage brokers played an even larger part in originating Jumbo loans.
Mortgage brokers were responsible for $23.8 billion of single-family mortgages securitized by the two government-sponsored enterprises (Fannie Mae & Freddie Mac) during the first three months of this year. That was up 16% from the fourth quarter, the biggest gain among the three production channels.
It also raised the broker share of Fannie Mae/Freddie Mac business to 12.6%, the highest it’s been since 2009. The broker share of Fannie/Freddie activity has been slowly growing since hitting a low of 9.9 percent back in the third quarter of 2013.
Why Mortgage Brokers are Gaining Market Share:
The trend in mortgage broker originated loans can be explained by many of the same reasons Non-Banks now dominate the mortgage market:
· Mortgage Brokers loans are locally processed whereby the originator and processor live and work in the same community as the borrower. Therefore, Customer Service is tantamount to their success
· Mortgage Brokers are required to go through a rigid licensing process that includes educational courses, testing and background checks. Bank originators are exempt.
· Mortgage Brokers, in general, have more experience than bank originators due to the necessity of having to be responsible for all aspects of the business. They must develop their own sources of obtaining loans and be responsible for compliance, lender guidelines, and may other facets of the industry.
· Mortgage Brokers have access to more lending resources than banks – more lenders, more programs, and more options. If a loan can’t be approved with one source, they can try others.
· Mortgage Brokers receive wholesale pricing. In almost all cases, rates and/or costs are lower.
This Just In: Study Says Realtors Prefer Mortgage Brokers to Banks:
A study just released shows that Realtors prefer mortgage brokers over banks. The study from Inman News said mortgage brokers were the preferred choice (47%), banks (31%) and non-bank lenders (22%). Over 77% of Realtors use just one lending source. The items listed as most important to them, in order of preference, were speed, responsiveness, cultural fit and breadth of products. Another great takeaway was that 68% of Realtors do not feel comfortable with referring or recommending clients to online lenders.
The momentum has definitely shifted back to the mortgage brokers and non-banks because we have the expertise and resources to get more deals done, and with local service. Let me know how I can help you.