While I am a mortgage banker, and have been on both sides of the fence over the past 29 years, it pains me to think what may happen if mortgage brokers are shut out and competition dwindles for the American borrower.
In recent weeks there has been a number of articles and bulletins through industry publications, as well as large media circles, stating that the era of mortgage brokers may be coming to an end.
Without a doubt there will be plenty of people who will use the small amount of information they’ve heard through the media and political circles to say, “Hooray, glad their gone.” I would suggest withholding that glee until you understand the huge impact of this potential loss.
I do not want to spend time explaining my version of what went wrong and who did what, but I would ask people to consider that while there were definitely those who did not belong in this industry, there were many more who outnumbered them that did.
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Many of these people are familiar faces in our communities who understood that it was not hard to ask for a pay-stub or bank statement to prove you could qualify for a loan. They understood risk and they understood ethical actions. These were friends and families who, just like you and I, had a job to do and most did it professionally and ethically.
These were the people many of you sought out to find a better deal. Lower rates or lower fees in some cases, or they were able to be more creative to help those who needed to go outside the box. These are not the people who caused doom and gloom and who took advantage. These people simply followed the guidelines provided to them by the lenders and hedge funds who figured there was no need for that paystub or bank statement.
The question going forward is at what price homebuyers will pay to simply purchase a home or refinance? In my opinion, it will be plenty. Competition will be limited to only a few large players, mostly banks and a few non-banks. While that may not be all bad, one must consider which bank to do business with. After all, many of the banks still standing participated in the creation of the problem loans we still hear and read about day in and day out. In addition, the question remains unanswered as to which banks will be owned by the government and if they are, how will that enhance their services and costs?
People will also lose that personal touch, as brokers provide a personal service knowing they can earn more working for themselves and their clients. They usually can offer a better deal because of lower overhead. Yet this is all changing as regulators tighten the grip that in turn costs brokers and their companies more and more to do business. Yes, I am a banker and proud to be one, however I believe in Democracy, free speech, and entrepreneurship that separates us from many countries and right about now I’m hoping that we do not lose sight of that as an excuse to end a crisis.
Joe Adamaitis, a home mortgage consultant for Wells Fargo Home Mortgage in Sarasota, can be reached at (800) 309-8939, ext. 109.