I’ve just been informed about an e-mail sent by Countrywide to brokers today regarding the current state of affairs in the mortgage industry.
The e-mail opens by stating that the current market environment is the most difficult period in the history of mortgage lending. I’ll say!
Then there’s a bit of fluff about the Bank of America investment and the secondary mortgage market, and finally some interesting dialogue about the wholesale channel.
The author of the e-mail describes the wholesale lending division as a challenge, and explains that the mortgage industry has shifted to a retail mentality.
He goes on to explain that wholesale lending is under pressure because loans originated and processed by third parties tend to perform poorly as compared to loans originated in house via retail channels.
He suggests that mortgage brokers and loan officers can remedy the situation by evaluating borrower and loan quality more closely, and by working directly with their assigned Countrywide Account Representative.
The e-mail expressed that the mortgage lender only wants to work with the most upstanding mortgage brokers, and that no broker should pursue a loan they wouldn’t be willing to fund with their own money.
I spoke about the possibility of the Countrywide wholesale division closing a few weeks ago, and I think this could be the first step towards that happening.
Countrywide makes it pretty clear that retail lending is the way forward in today’s market, and that brokering loans is becoming an increasingly risky endeavor the company is more than likely to stamp out.
And even if wholesale isn’t explicitly discontinued, higher wholesale interest rates and fewer available programs will make it very difficult for mortgage brokers to survive.
Needless to say, mortgage brokers were rather infuriated by the e-mail.