As published in Scotsman Guide's Residential Edition, November 2010.
Everyone in the mortgage industry knows that there are fewer brokers now than there were at the height of the market. But do you know by how much?
According to Access Mortgage Research and Consulting Inc.’s recent study on brokers and bankers, there were 70-percent fewer mortgage brokerages in 2009 than there were in ’06. And this year, it is likely that there are even less -- more than 75-percent fewer than ’06.
That drop is striking -- but as David Olson, president of Access Mortgage, points out in his report on the study, the number of brokerages may hit its trough this year and start to work its way back.
Those brokers who remain -- and anyone who enters the industry now -- face many legislative and regulatory changes. This month’s Scotsman Guide lays out some of those changes for you.
For one, the way you’re paid is changing. Sheshunoff Consulting and Solutions’ Amy Avitable explains how brokers can adapt to the Federal Reserve Board’s final rule on loan-originator compensation, which bars yield-spread premiums in this month's Lead Article.
Another big change -- or rather, many other big changes -- to the industry come from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes the Mortgage Reform and Anti-Predatory Lending Act. Peter Hébert discusses the act’s implications on brokers in his article.
The Federal Housing Administration (FHA) also made changes in the past few months. In September, Congress extended the FHA-loan-amount increase for another year. And this past Oct. 4, FHA-insurance-premium changes took effect, with the upfront premium decreasing to 1 percent of borrowers’ loan amount and the monthly premium increasing. A lesser-known change occurred this past February, when the FHA removed the option of “spot approval” for condo purchases. FHA Pros LLC’s Christopher Gardner explains the administration’s condo guidelines in this article.
Clearly, there’s been a lot that brokers have had to -- and will continue to -- adjust to. And it’s likely that more changes will appear on the horizon.
Staying on top of those changes and making sure you understand how they’ll affect your business and your clients can help keep you from falling out of the 25 percent of brokers who are still in business.