Many, many moons ago in San Diego I became a mortgage broker. In the year 1990 to be exact. As a broker, we were able to offer a variety of loan programs at very competitive rates. On a regular basis, I could out-quote any retail bank or savings and loan. In addition, many of the “bricks and mortar” operations of big banks and S&Ls didn’t offer a full array of available loans. But as a mortgage broker we did.
I recall we had rate sheets from BankofAmerica, Countrywide, NationsBanc, First Franklin…some of those you may have heard of. And some you probably hadn’t heard of like Dollar Mortgage or Trilogy Mortgage. When a buyer applied for a mortgage I was always confident that I could beat any bank in terms of both product and price.
But no longer. Gone are the “niche” loan programs…all that is available is the standard conventional and government fare. Brokers no longer have an advantage of offering unique loan progams…they don’t exist. Rate shopping? Sorry, but once an applicant applies for a mortgage the loan is then disclosed by the mortgage broker’s selected lender. If the broker tries to move the loan to another lender the applicant will likely have to pay for a brand new appraisal, as appraisals can’t be transferred.
Further, many banks who used to work with mortgage brokers have chosen not to do so. Default rates for brokered loans are higher than ones originated by bankers and such defaults carry a higher premium in rate.
Whether by design or by accident, the future of the mortgage broker looks grim.