The number of mortgage broker firms nationwide is expected to fall a staggering 72 percent from its peak back in 2005, according to Wholesale Access chief David Olson, who spoke with National Mortgage News.
Olson believes there will be just 15,000 mortgage broker firms left by the end of this year, thanks to continued turmoil in the wholesale space.
Aside from banks and mortgage lenders either shuttering or greatly reducing their wholesale presence, regulatory issues like yield spread premium restraints and loan officer registry requirements are taking their toll.
He said the nation’s top banks are also showing less interest in broker-related research, something that affects his company’s bottom line.
Apparently some former mortgage brokers are working as car insurance salesmen, while others have moved into loss mitigation, probably via loan modification firms and the like.
Despite all the bad news, Olson believes things will eventually turn around, as expenses tied to keeping loan officers on payroll becomes too much to bear.
He likens mortgage brokering to outsourcing for big banks, which he believes will always be the cheapest alternative.
Of course, a housing recovery will probably be needed before the wholesale space gets humming again, as loans originated via the less traditional channel seemed to perform worse than those funded via the retail channel.