Franklin Financial Group Blog

I recently read an article mentioning that some lenders are actually considering expansion of their wholesale channel (the channel that deals with mortgage brokers.) Over the last few years we have seen many lenders pulling out of the wholesale arena. While many were putting the blame for the "Mortgage Meltdown" on mortgage brokers, one lending executive was noted as saying mortgage brokers didn't create the products that went bad, but rather sold what they were given to sell. We all know there is plenty of blame to go around, and that ethics played a large role in what has happened.

The fact is that there are far fewer mortgage brokers around than say three years ago. I read a statistic that mortgage brokers working in wholesale arena account for around 13% of all loans funded in the U.S., as compared to 33% just three years ago. That is a staggering reduction! If you are able to read between the lines, you can be sure that the majority of the mortgage brokers left today are perceived as "the cream of the crop: hard working, professional and with decades of experience." (Source: Origination News, March 2010.Volume 19,No.6)

Personally I remember when first joining this industry, my early loan disclosure packages with borrowers were maybe ten pages in length. Today, my disclosure packages average around twenty-six pages in length. As time has progressed, the powers-that-be have increased what I as a mortgage broker have to disclose to my borrowers, which I have no problem with. While customers sometimes get lost in the shuffle over the amount of papers they have to review and sign, at least there is complete transparency regarding fees, costs, and details of the loan. In every course I have ever attended within my industry, the ideology has always been expressed that if there is ever any question at all about whether or not something could be confusing or misleading, protect the borrower (and yourself) and disclose and/or explain it in writing.

Mortgage brokers offer lenders a profitable channel to obtain originated loans because lenders don't have to pay our expenses to receive those loans (as they do their in-house staff.) We also offer our customers service that simply is unmatched by our counterparts. We as mortgage brokers are typically available outside of normal business hours and on weekends. We now have to pass a National and some State specific exams to maintain a license. We have to undergo criminal background checks and fingerprinting, and our individual credit reports are to be reviewed and could effect whether or not we maintain our licenses. We are held responsible for accuracy of fees quoted to our borrowers, and have to pay for any unallowed tolerances regarding those fees. Also, with many of the lenders we originate through, we have to agree to buy back loans if we are found to have committed loan fraud. I am not complaining about these forms of regulation and responsibility, but rather am explaining that if we have to go through all of this, there can only be one reason we stick around. That reason is because we love what we do, and we are very good at it!

So the next time you meet or work with a mortgage broker, understand what they have gone through to be there with you at that moment. It has not been easy, but they have worked hard to maintain their licensing and status. They aren't still around just by luck.