Is the mortgage broker profession in danger of disappearing? If so why? Where will the jobs in the industry go?
I don't believe so. While some large banks have dismantled their wholesale divisions to gain more control over their applications (for example B of A claims that broker-originated loans were 4-5 times more likely to go sideways than employee-originated files), many wholesale operations don't even have retail employees.They benefit from not having to fund retail offices, advertising, a sales force, marketing and PR. It's a valid structure as long as there is sufficient quality control to thwart fraud (which is easier to commit when you're dumping the loan off on a company not your own).
Who's better: Bankers or Brokers? Bankers and brokers have been throwing the same arguments around for years. Brokers claim to be superior because they have access to programs offered by many different lenders and can therefore find the best program and shop rates for you. Bankers claim they have more control of the process and can offer lower rates. Both arguments are true to some extent. However, it really depends on the size and reputation of the institution involved.
Brokers According to Bankers: For example, bankers like to characterize brokers as fly-by-night opportunists who don’t care about their conduct — by the time the borrower realizes that he’s been taken advantage of, the broker has left the business and begun a new career selling cars or Amway.
Bankers According to Brokers: Brokers prefer to portray banks as moss-covered behemoths that only offer two programs and charge outrageous fees.
New Truths: The truth is that in the wake of the mortgage crisis brokers’ access to programs has been sharply curtailed. Another hard truth is that bankers have cut back on their own programs or have tightened up guidelines enough to severely restrict access to many programs such as stated income mortgages.
Show Us the Money: So where can borrowers turn? [According to BlownMortgage.com, to larger institutions with good reputations. Larger brokers work on volume (so they can charge less) and are financially stable enough that they will have access to more programs. Larger banks offer an economy of scale and pass the savings on to borrowers to remain competitive. If you need a loan fast and don’t present any special problems for approval, a bank may get it done faster and cheaper. If you need someone to analyze your situation or require extra help to get approved a broker may be your best bet.
**What About Jobs? **The bottom line is that both kinds of lenders need good professionals more than ever. I think that the contraction in the industry will force out those who can't sell in this more challenging environment. And while institutions have been reducing support staff, the bottom line is that they are grieviously understaffed in their servicing and workout departments. If they end up with government mandates to speed up that process they will have to hire more people to handle the workload.