The national trade group representing mortgage brokers hews to the well-worn saying about the glass containing half its total capacity. Depending on how you view the new government net worth requirements, strengthened lender approval criteria and greater lender liability for the practices of their correspondents, it’s either half good or half bad.
“Brokers who possess warehouse lines and small banks are impacted more negatively since they may no longer close in their name,” says John Councilman, treasurer for the National Association of Mortgage Brokers and president of AMC Mortgage Corp., a brokerage and lender operating in Maryland, Pennsylvania and Florida. The 25-year-old company originates all types of loans including FHA, conventional, USDA and reverse mortgages. “It will simply give brokers less flexibility in pricing their loans and assisting borrowers,” he adds.
As it relates to the reverse mortgage sector, Councilman says “there is a lot good about the change from mini-Eagle to sponsored originator. Small companies no longer are required to have audited financial statements or cash-on-hand requirements inappropriate to their needs.” However, he points out that “brokers will need to work more closely with their sponsors to obtain case numbers and pre-select the intended lender. Those could be negatives for the broker and the borrower.”
Ultimately the new broker-aimed government guidelines help one interest group, according to the NAMB treasurer, who believes “the real winners are the large banks and those who purchase loans from them.”
Joshua B. Shein, managing partner, Great Oak Lending Partners, says “everyone is stressed out” about the coming changes. “There is a lot of uncertainty and some brokers are trying to decide whether to make a move or wait and see how huge the changes will be. It’s anyone’s guess what will happen,” according to Shein.
Meanwhile, the federal Bureau of Labor Statistics had some good news for the industry. The number of active mortgage brokers rose in October by 900 from September to 59,500, driven by the surge in refinancings that started in early fall.
Written by Neil Morse