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frank drigotas j
1801 Posts |
 Posted - 04/28/2008 : 1:37:17 PM
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If my review of the financial marketplace is correct (and it may be flawed, grant you) there were decades when there were absolutely no mortgage brokers.
Banks wrote directly to the consumer. The country moved along nicely. Well, there were blips, but nicely overall.
I think that was true during the pre depression era, post depression, and for a long while after. Say from the 1800's through the 1950's. No mortgage brokers to speak of, unless you included your uncle down the street who was friendly with the local banker. Again, better history buffs than I can be more specific or prove me wrong.
If I am historically correct, It seems to me that all the folks here (and elsewhere) who say that brokers are so necessary as cogs in the financial markets that they will never be eliminated, ought to realize that this country has functioned without mortgage brokers much longer than with.
I invite information. I don't need more cries of "the strong will survive" and "they need us" etc. Or "volume leads and telemarketing will always keep us in the game. Hit the phones!"
dollar |
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GWaldkirch
122 Posts |
Posted - 04/28/2008 : 1:47:13 PM
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| There was also a time when people didnt have to pay taxes. Think the country could survive without that too |
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AGreene00
2901 Posts |
Posted - 04/28/2008 : 1:47:35 PM
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This country survived without the Internet from 1492 until about 1994, too.
You think you could go back now? |
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frank drigotas j
1801 Posts |
Posted - 04/28/2008 : 1:52:17 PM
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I'm not worried if you are not,
in spite of your logic, which to my taste is strained.
But, let me ask you this: does it appear that the business model of the banks/lenders might, just might, be shifting to the elimination of mortgage brokers?
Naw, could never happen, or be happening. Right?
dollar |
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rtrefflich
3892 Posts |
Posted - 04/28/2008 : 1:59:38 PM
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| At the time when there were no brokers people went to their local bank to get a loan. If your local bank said no you had very few options. Brokers came into the field to help people who couldn't get loans, thus they were brokered between the client and one of the financial institution that the broker worked with. There are very few local banks, and tons of people who cannot get traditional A paper financing. Brokers will always be there for these people. |
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frank drigotas j
1801 Posts |
Posted - 04/28/2008 : 2:03:18 PM
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"Brokers will always be there for these people."
Richard, above
Ah, but will the banks/lenders and ultimate markets take the risk now, of providing alternative programs for the brokers to "sell" to those poor souls?
My point is, given recent history, do they think it is more prudent to lend direct, instead of going with the cadre of people (brokers) who in their eyes screwed things up? Will the options be there for the red cross, er, mortgage broker, as your imagery suggests?
And, so what if some folks don't get approved, it seems the banks are saying. Do you get that feeling? There are, you realize, a lot more places to deploy bank risk assets than mortgage loans. Did you know that?
"They can't replace all of us, can they?" Air Traffic Controllers, a moment in history
dollar
"this country has functioned without mortgage brokers much longer than with." |
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jlmandl
142 Posts |
Posted - 04/28/2008 : 2:34:18 PM
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| This is an issue of consumer choice and a free market economy. Funny that here have been stock brokers and real estate brokers for years but when a few really old financial institutions feel the pain of their own making they want to bite the hand that feeds about 60% of that profit due to greed. Sorry the more bad regulation and less choice consumers have the worse we will all be. |
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homer5
364 Posts |
Posted - 04/28/2008 : 4:11:41 PM
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I have worked for and with banks for a number of years. Not in the mortgage capacity but rather I was the "investment guy". What I can tell you about banks without any reservation whatsoever, is that banks do not know how to sell or market.
They are totally incompetent at both. It is more due to the political structure of banks as opposed to a lack of talent or know how. In banks, employees strive for longevity. They do so by laying low and not bringing attention to themselves. Risk takers do not work in banks. I witnessed more azz kissing in banks than any other industry that I have come across.
Mortgage brokerage was an invention of necessity. Demand outstripped the banks ability to meet it. Further, there were many more opportunities to be had in lending that didn't fit the "order taker" mold that is so prevalent in banks. The brokerage industry met this need.
Now that there is no product to sell and little if any mortgage activity to be had due to the economy deleveraging (simplistically, that means less lending), the need that the brokerage community filled is no longer there.
It's easy to say you don't need an umbrella when it's not raining. Well the rain stopped and the brokerage community is the umbrella no longer needed.
This is fact. You can recognize and adapt or keep your head in the sand waiting for 100% nina's to comeback while you go totally broke.
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jcanepa
800 Posts |
Posted - 04/28/2008 : 4:16:44 PM
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| From what I've learned from my brother, who has been in the Banking Industry for the last 11 years is that the bank cares more of the "Banking Relationship", i.e. deposits, investments. They will make huge adjustments on Loans just to get that relationship. Sometimes Brokers can't compete. But for the majority of the business out there and in the future will still go to Brokers. |
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GWaldkirch
122 Posts |
Posted - 04/28/2008 : 4:28:02 PM
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My point is, given recent history, do they think it is more prudent to lend direct, instead of going with the cadre of people (brokers) who in their eyes screwed things up?
Need I remind you, Brokers didnt screw things up, sloppy underwriting did. We dont create loans, merely find the best alternative/ solution to the problems our clients face with a variety of investors. Brokers may or may not survive, I am not clairvoyant. I do know that we are a very inexpensive way for investors to find clients vs have retail branches all over the place. There will always be investors that cannot afford to have retail braches all over, so I believe they will be the ones looking for and catering to us ( Brokers). Not to mention how corrupt retail LOs can be as well. Its much harder for me to schmooze and underwriter I have never met to step outside of the guidelines ( not that I ever would) that some retail LO who is their drinking buddy |
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MortgageBoarder
4464 Posts |
Posted - 04/28/2008 : 5:20:16 PM
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Hmm... I have been a Retail LO for 3 out of my 6 years in the biz and I have never once seen any love like that from an underwriter. Trust me, I have been at companies where LO's will try too. It's possible with Processors, but never with an Underwriter. If anything, they are the ones who fight much more with the LO vs the Wholesale underwriters with their AE's.
And those who try, get shot down very quickly. An underwriter at a Lender has their job on the line when making commitment decissions, there is no "just ignore that" or "just budge a little this one time". If anything, that is on the WHOLESALE side for AEs & Underwriters. Retail LO's are always under a tight watch bud, so I'm not sure where you are grounding this opinion from.
quote:
Originally posted by GWaldkirch
My point is, given recent history, do they think it is more prudent to lend direct, instead of going with the cadre of people (brokers) who in their eyes screwed things up?
Need I remind you, Brokers didnt screw things up, sloppy underwriting did. We dont create loans, merely find the best alternative/ solution to the problems our clients face with a variety of investors. Brokers may or may not survive, I am not clairvoyant. I do know that we are a very inexpensive way for investors to find clients vs have retail branches all over the place. There will always be investors that cannot afford to have retail braches all over, so I believe they will be the ones looking for and catering to us ( Brokers). Not to mention how corrupt retail LOs can be as well. Its much harder for me to schmooze and underwriter I have never met to step outside of the guidelines ( not that I ever would) that some retail LO who is their drinking buddy
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GWaldkirch
122 Posts |
Posted - 04/28/2008 : 5:42:27 PM
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| In my 10 years, I only worked one year retail and I saw things I didnt believe ( even when I had no expirence I couldnt believe it). Worked with many other loan officers that have worked retail longer than I did with many stories from what I consider credible sources. I guess you cant consider your expirence the same as everyone elses. Moreover, I have no idea how some brokers get away with the things they do............but it still happens |
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1003s.com
3431 Posts |
Posted - 04/28/2008 : 5:57:41 PM
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The only thing I know for sure, on this topic.
No one really knows anything for sure.
For now while there is a huge trend toward equity based lending,
many lenders still deal with brokers. I expect as the number of
brokers continues to decline, many banks will return to their
thick spreads of the past. And consumers will once again find
a better value can be had, by finding the right broker to deal
with.. |
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jcanepa
800 Posts |
Posted - 04/28/2008 : 6:12:07 PM
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quote:
Originally posted by sold_an_EsKiMO_IcE
TO BE A BROKER YOU HAVE TO HAVE GAME...I HAD A BORROWER TODAY THAT CAME IN, HE WAS WORKING WITH COUNTRYWIDE..OFFERING HIM A 7%...I SIGNED HIM AT 8%...I HAVE GAME
How often do you get "repeat" business? |
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syndicator
112 Posts |
Posted - 04/28/2008 : 6:39:56 PM
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LOs are commision based and only get paid when the loan closes.
Underwriters are on salary and get significant monthly bonuses if things are done right.
Thats how it was done when I was on the retail side.
Even if the underwriter was negligent and when risk management found the error they were huge dedutions to their bonuses
quote:
Originally posted by MortgageBoarder
Hmm... I have been a Retail LO for 3 out of my 6 years in the biz and I have never once seen any love like that from an underwriter. Trust me, I have been at companies where LO's will try too. It's possible with Processors, but never with an Underwriter. If anything, they are the ones who fight much more with the LO vs the Wholesale underwriters with their AE's.
And those who try, get shot down very quickly. An underwriter at a Lender has their job on the line when making commitment decissions, there is no "just ignore that" or "just budge a little this one time". If anything, that is on the WHOLESALE side for AEs & Underwriters. Retail LO's are always under a tight watch bud, so I'm not sure where you are grounding this opinion from.
quote:
Originally posted by GWaldkirch
My point is, given recent history, do they think it is more prudent to lend direct, instead of going with the cadre of people (brokers) who in their eyes screwed things up?
Need I remind you, Brokers didnt screw things up, sloppy underwriting did. We dont create loans, merely find the best alternative/ solution to the problems our clients face with a variety of investors. Brokers may or may not survive, I am not clairvoyant. I do know that we are a very inexpensive way for investors to find clients vs have retail branches all over the place. There will always be investors that cannot afford to have retail braches all over, so I believe they will be the ones looking for and catering to us ( Brokers). Not to mention how corrupt retail LOs can be as well. Its much harder for me to schmooze and underwriter I have never met to step outside of the guidelines ( not that I ever would) that some retail LO who is their drinking buddy
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Scrooge McDuck
9787 Posts |
Posted - 04/28/2008 : 6:45:55 PM
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man frank, you love stirring the pot.
no matter what anyone thinks, only time will tell. |
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khoiey
1709 Posts |
Posted - 04/28/2008 : 6:50:18 PM
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Why don't you guys just live for today and plan for tomorrow? Planning or wishing the future still wouldn't change a damn thing today. If you can't survive in this market then you would go broke and force to take on another field. If you can survive this market, then you will do well until there is no more loan products to sell. In that case, you will adapt and find another gig. Entrepreneurs will always seek and find new ways to make money.
Life can be simple unless you want it to be complicate.
What if brokers are finally forced out of business and go back to tradditional banking model? Well, then I will probably be an exclusive contractor for a good bank and act as an independent LO/banker etc. Example, in my area there is no Wells Fargo retail bank. Yet, there is a guy works for Wells Fargo exclusively and he pays for his office & advertisements and still make good money. He treats it as his own business even through he doesn't own Well Fargo. |
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Tsnyder
8303 Posts |
Posted - 04/28/2008 : 9:02:52 PM
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Frank makes some excellent points.
The broker side of the business exploded with
the advent of secondary market securitization.
That market has all but dried up for the majority
of products that were the primary staple of most
brokerage firms.
I know there are many who will laugh, say us old coots
are crazy, and go whisting down the lane believing that
people will always need mortgage brokers.
I hasten to remind you that two years ago many of us
warned that the current debacle would be coming sooner
rather than later. We were laughed at , criticized and
called names by those who said we were crazy because people
would never stop buying homes. Most of those people are
now gone from the business.
I'm not saying that brokers will become extinct... although
it's certainly possible... I'm saying that those who think it
isn't possible aren't considering all the facts before them.
Tsnyder |
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CoralSnake
11206 Posts |
Posted - 04/28/2008 : 9:07:10 PM
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| Yes, but doesnt he mean "Back to The Past"??? |
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SimpleMan
545 Posts |
Posted - 04/28/2008 : 9:30:29 PM
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Maybe Frank's right. Who know's.
I would tend to think you can't compare the past because there was almost no securitization. Broker's are the lowest cost distribution channel for the dough the way the game is set up now.
My opinion:
It's kinda like when you get up in the morning and take a shower. You turn the knob to all the way hot, then stick your hand in, then dial back, then stick your hand in until you feel a comfy temp to get in.......
The guys that securitize have the knob turned all the way, an over correction. I believe it will come back to a more normal process. Not like it was 2-3 years ago, but much better and broker friendly than now. |
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ritabradley01
3585 Posts |
Posted - 04/28/2008 : 10:07:40 PM
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| Hey Frank, tomorrow a positive post pretty please! |
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rad
1404 Posts |
Posted - 04/28/2008 : 10:08:35 PM
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quote:
Originally posted by frank drigotas jr
(and it may be flawed, grant you) there were decades when there were absolutely no... (fill in the blank)
abstract art
yoga in the west
cars
planes
boats
handwriting
chocolate dipped strawberries
shoes
hvac
sfr
money
clothing
books
banks
marshmallows
lawyers
condoms
now what?!
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KHufford
6490 Posts |
Posted - 04/28/2008 : 10:14:40 PM
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I think Frank posed a very good topic and managed to actually express it very well, without being negative just for the sake of stiring the pot.
I dont see it really going to a zero broker model, but maybe a ton less of em. Like insurace brokers, you dont see or hear from them all that much. Mortgage brokers are supposed to be nerds, not the life of the party.
Every corner was a broker office and RE office, I want brokers to be professionals and dorks, not the coked out guys at the bar laying down their last 5k check on bottles and bar tabs every weekend.
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ritabradley01
3585 Posts |
Posted - 04/28/2008 : 10:27:53 PM
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| I'm with you on that one Kyle. I ought to fit in just fine with the brokers of the future-Major Nerd here. |
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KHufford
6490 Posts |
Posted - 04/28/2008 : 10:30:23 PM
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quote:
Originally posted by ritabradley01
I'm with you on that one Kyle. I ought to fit in just fine with the brokers of the future-Major Nerd here.
Nice, sounds like you are here to stay!
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oldmlb
138 Posts |
Posted - 04/28/2008 : 10:48:39 PM
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| Mortgage Brokers actually morphed with the advent of "B Lending". That was always our "market". B Lending actually replaced us as the go-to guys when the suits turned borrowers away. Being adaptable, we simply told our Private Investors that they were going to see a lot less opportunity and quality than they were used to because we had institutional sources that were hungry for the product and yields that the Private Investors had been getting for many years. Now the pendulum swings back the other way. My private guys will see much more action and better returns. We can afford to be selective, there are alot of folks running around with their hair on fire at the moment. Repeat after me, its not hard money, its just a little stiff. |
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KHufford
6490 Posts |
Posted - 04/28/2008 : 10:50:55 PM
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quote:
Originally posted by oldmlb
Mortgage Brokers actually morphed with the advent of "B Lending". That was always our "market". B Lending actually replaced us as the go-to guys when the suits turned borrowers away. Being adaptable, we simply told our Private Investors that they were going to see a lot less opportunity and quality than they were used to because we had institutional sources that were hungry for the product and yields that the Private Investors had been getting for many years. Now the pendulum swings back the other way. My private guys will see much more action and better returns. We can afford to be selective, there are alot of folks running around with their hair on fire at the moment. Repeat after me, its not hard money, its just a little stiff.
Nicely put!
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oldmlb
138 Posts |
Posted - 04/28/2008 : 10:55:16 PM
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| Muchas Gracias Kyle. |
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rtrefflich
3892 Posts |
Posted - 04/28/2008 : 11:02:08 PM
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Frank, brokers will not be as numerous as they are now, he in CA everyone has a license and does lending. This is crazy and the laxed guidelines along with the banks being able to get the lonas off their books in the secondary market made it very easy for the challenges which transpired to occur. Nevertheless, retail banks will go back to brokers. They bring them business which they need without them having a branch nearby, paying for space and offices where LO's sit to bring them the same business. Regulation may come changing things, YSP may go away, but the market will work itself out (as it always does, barring govt. intervention) and brokers will bring banks loans when this debacle is said and done.
Banks need brokers to bring them loans that they would not get elsewhere. Brokers are the scapegoats for the debacle (and nowdays just about anything else you can think of). Brokers offer borrowers choice, many times a choice that retail does not, they allow for increased competition, allowing rates and fees to stay down thus benefiting the consumer. This is why "brokers will always be there".
quote:
Originally posted by frank drigotas jr
"Brokers will always be there for these people."
Richard, above
Ah, but will the banks/lenders and ultimate markets take the risk now, of providing alternative programs for the brokers to "sell" to those poor souls?
My point is, given recent history, do they think it is more prudent to lend direct, instead of going with the cadre of people (brokers) who in their eyes screwed things up? Will the options be there for the red cross, er, mortgage broker, as your imagery suggests?
And, so what if some folks don't get approved, it seems the banks are saying. Do you get that feeling? There are, you realize, a lot more places to deploy bank risk assets than mortgage loans. Did you know that?
"They can't replace all of us, can they?" Air Traffic Controllers, a moment in history
dollar
"this country has functioned without mortgage brokers much longer than with."
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anthonyt2325
1408 Posts |
Posted - 04/29/2008 : 06:25:29 AM
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| Brokers will exist for as long as the lenders allow them to exist. We as brokers are middlemen. If lenders chose to no longer allow middlemen to transact business then there is no need for mortgage brokers. We can't control what is out of out control. One day at a time.... |
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1003s.com
3431 Posts |
Posted - 04/29/2008 : 06:42:29 AM
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quote:
Originally posted by anthonyt2325
Brokers will exist for as long as the lenders allow them to exist. We as brokers are middlemen. If lenders chose to no longer allow middlemen to transact business then there is no need for mortgage brokers. We can't control what is out of out control. One day at a time....
If all existing lenders decided not to deal with brokers, I expect new lenders
would emerge, that would deal with brokers. I don't think brokers can be killed
off in the entire, unless by operation of law. |
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darkstar
19274 Posts |
Posted - 04/29/2008 : 07:03:18 AM
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In fluctuating markets there are always signs along the way telling us where things are heading, the ones we're seeing now are so bad I don't think we're giving them the attention they may need or more so, don't want to believe them hoping they will change before we have to really face them...
Since nobody knows exactly where we're heading we need to stick together and talk about it as much as we can(and do here on BO) to keep as many heads in the game as possible...Who knows, the few left here may have to band together to make it happen for each other!...
Just make sure you can afford to stay, don't break yourself waiting for a break!... |
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CoolMtgGuy
4094 Posts |
Posted - 04/29/2008 : 07:07:44 AM
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Why is it a negative post when all the guy asked is a question that requires some thought? As a business owner, I am thinking about this question every day. If I were like many on BO who are not business owners, I might be cavalier about this topic too.
For the record, I believe that there will always be at least one mortgage broker left standing (and it is likely to be Scrooge) ... just like the travel agents of long ago. However, the number of mortgage brokers will necessarily dwindle in the months to come as it has in months past. How do I know that? Numbers. There is a fraction of wholesale lenders left and most are offering the exact same products. Legislators are ensuring that we all standardize our disclosures to borrowers ... so bait & switchers are finally being squeezed and will fall by the wayside. The consumer does not need 10 sources of the same product, at close to the same price, unless it is something like gasoline ... a must have.
I do not consider it negative to have a sensible discussion about a relevant topic. Thanks for an articulate and good post!
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ritabradley01
3585 Posts |
Posted - 04/29/2008 : 07:17:49 AM
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| ok |
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