Wholesale Lending is down and brokers consildate
The HVCC is causing some major shifts in the entire industry. One of the smaller things that is happening is slowly mortgage brokers are disappearing. As the months go by and they realize the HVCC is not going to go away they either have the option of putting up with being a pawn in the lenders business model or become a lender themselves. Currently you are seeing a combination of the two. Essentially you are seeing loan offficers move from mortgage brokers to lenders or banks, and you are seeing the broker owners consolidate there offices to one large office or open a branch office for a bank, lender or net branch like Allied, WestStar or Eagle.
Regardless you are going to see major changes in the mortgage industry and the way originators do business. The reason is because as a broker they just simply cant compete and be successful. Industry statics show the defalt ratio on a brokered loan is 50% higher than on a retail organited loan. The reason is simple, with no skin in the game its much easier to make the loan work.
Lenders have recongized this and they are taking steps to ensure they are protected. The HVCC is just one of many changes that are going to take place over the next few months and coming years that will limite the lenders exposure and increase the brokers. This is coming late as the mortgage industry is in shambles and banks are losing there shirts.
