By Moe Bedard
The mortgage and real estate industry has resembled a battlefield marred with carnage and destruction with what appears to have no end in sight. 210 imploded lenders and thousands of mortgage, real estate professionals and anything related to these professions in one way, shape or form, litter the path of no jobs and no hope. The bad apples spoiled it for the good apples. Loose lending standards and easy money for everyone (loan officers, real estate agents, appraisers, homeowners, investors, lenders and anyone associated with real estate) may have killed this business for good. A black cloud is following many of the good people in the mortgage industry as they try and find employment to no avail.Many have said they can’t find a job outside the industry because there is now a stigma associated with all mortgage professionals. Lack of regulation on the loose cannons and bad seeds, resulted in unscrupulous mortgage broker, chop shops sprouting up in almost every neighborhood in the country. Churning out cheesy, unlicensed loan officers, fresh out of high school, that sold one toxic and fraudulent mortgage after the other.
Unfortunately, it may be difficult to decipher the good broker from the bad broker because many borrowers were victims of the old wolf and sheep’s clothing. So, human tendency is to just place blame on the whole lot of them.
Trust is not going to come easy and brokers may never get a chance to earn that trust back. Hell, I remember real estate and mortgage fat cats that were selling and lending on homes here in Corona, Ca. by the bunch. $50,000-$70,000 gross commission months were common. Brand new Cadillac Escalades, 750 BMW’s and daily sushi and Martini lunches were the norm.
They themselves jumped in on the investment bandwagon and gobbled up multiple properties all over he inland empire. Now, well, let’s just say that they are way in over their heads. Those $50k months and sushi lunches are ancient history. Most are lucky to get a deal a month and are working just as hard, if not harder, for a much smaller piece of the pie. Many have given up and decided to throw in the towel because they feel there is no hope or dignity left in the business. Some have taken low paying jobs wherever they are lucky enough to get hired.
A lot of these professionals are 10-20-30 year respectable industry veterans with educations and impressive backgrounds. Just take a look at the local MLS, Riverside County Notice of Defaults or Trustee Sales and you will find several prolific agents, mortgage brokers, contractors etc. that are listed for the foreclosure auction block. I will give them the respect and not mention their names here, but it is quite a list. Many lenders are slowly but surely cutting off access to mortgage brokers by closing down their wholesale channels. The day I saw that Bank of America announced it was closing down it’s wholesale business back in October, I thought to myself that this was the beginning of the end of the mortgage brokerage business. B of A is one of the more conservative players and survivors in the lending game. Many suspect that the other major players will soon do the same.
If more lenders follow suit and shut down their broker business, this will mean that there is no way a broker can survive. Couple this with an already severe mortgage and credit crunch and you have a lethal cocktail for the mortgage broker professional.There are just not that many loans to be had out there and there isn’t much money being made. These people need food and shelter and selling mortgages or real estate doesn’t seem to be cutting it these days.
Yes, there are mortgages being made and deals being done. But it looks like most of the business is being completed on the retail side of the lending industry and many seasoned mortgage brokerage vets have already jumped ship to go work for the man 9-5. I’m sure I am going to get the comment from the guy who is still killing it on the brokerage side and even doing better now then back then. But either A, You are a BSer or B, you are of the extreme mortgage and real estate professional minority.
There have been many rumors circulating of other lenders that are going to shut down their wholesale channels in early 2008. With lending guidelines so tough and such a small mortgage market, isn’t that the common sense business move for lenders to make? Isn’t this a perfect time for lenders to just dominate, consolidate and own what is left when this market finally turns around? Is this the perfect time for Countrywide and other servicers or lenders to expand their services into real estate service companies? Think about the massive residential REO portfolios that they need to manage and sell? This isn’t about saving an industry, it’s about business survival. Make no bones about it. When people and massive companies are in survival mode, they make common sense and wise cut throat business moves to increase their bottom line. Wouldn’t one of those moves for the lenders that are left to cut out the middlemen and the commissions? Do lenders really need brokers anymore, now that subprime is a thing of the past? Will non-profits now be the conduit for borrowers and lenders to keep the greed out of the equation. (one of my theories)
There are long time veterans like Joe who believe and hope that they will survive.
