Reduced mortgage brokers

[SunTzu]

[Ubersalad]

[jillayne]

[perfectfire]

Wow, we're going to lose almost 50% of loan originators in one year?? I never thought we'd begin to fulfill forecast so quickly. And things aren't even that bad here yet. Does that mean that other states have shed even more LOs?

[perfectfire]

So, it's past 2/14. Any news on how many mortgage brokers and loan officers the world is now rid of?

[jillayne]

Hi perfectfire,

Well I expected hundreds of students to feign ignorance over the 12/31/07 deadline and to swarm into the classroom between Jan 1 and yesterday, Valentine's Day.

That did not happen.

Class sizes dropped dramatically. In December we had upwards of 90+ students in each class. In January and February our average class size was 13 students; very, very low.

Many of these folks were LOs who knew they had missed the Dec 31st deadline and were very nonchalant about it.

Many were people who had been working as an LO part time and had another full time job. Jobs varied: auto mechanic, nurse, pilot, fireman, stay at home mom or dad. They told us that inquiries for refinances drove them into the classroom to renew their license instead of just letting it lapse.

I will guess that another couple of thousand renewed which would still leave LO attrition somewhere at 2/3rds: astonishing.

Let's say that I was up past midnight every night this week processing last minute students.

There was a mortgage broker commission meeting this past week. Their tech guy will upload a podcast in a week or so. I'll listen and report back.

Meanwhile, brokers have more to worry about. Two bills seem to be at a point where they will surely pass. One will mandate fiduciary duties for brokers and LOs and the other will mandate that any additional YSP earned and not disclosed will have to be refunded to the consumer at closing. This closes a predatory lending loophole.

Brokers and LOs who operate above board welcome the change.

Many many many many many many many many many many many many many many many brokers and LOs are worried.

[Rhonda P]

It's a tougher market. There was a burst (or burp) of business and rates are back near 6%. If the burp was more of a burst, LO's on a fence about their career might have decided to stay in. Since it's looking like a burp, and it's questionable if the temporary conforming loan limit increase to probably $493k (1) isnt' as much as many LO's had hoped (dreaming of a jumbo refi boom with $700k loan amounts) and (2) the new temporary conforming loan limit rates may not be as sweet as hoped for.

Factoring in the new legislation, tougher guidelines, reduced loan to values, shrinking pmi...a few LO's are not coming back. Gee...and we might have fiduciary responsibilities to borrowers? That's it I QUIT (NOT).

[perfectfire]

Jillayne, Rhonda,

Thanks for the updates. Out of curiosity, what would you say to someone that graduated last year, wasn't able to find a job in their chosen field and then this year decided to become a mortgage broker?

[RottedOak]

One implication of the reduction in the number of people in RE-related professions (in this case mortgage brokers, but the volume decline in RE affects others as well) is that it provides some extra context for anecdotal stories from individual professionals about their own volume of work. Occasionally I see comments from brokers, RE agents, escrow people, etc., proclaiming that they are seeing an increase in their business. Then a few weeks later the monthly stats come out, and once again the total volumes are down. Some people interpret this as "boosterism" by individuals trying to portray business as better than it is, but my take is different. I figure that with people starting to exit the RE business in droves, it is natural that those left behind will get some of the business that would have gone to the "departed." So you can simultaneously have individual brokers, etc., getting increased business, while the overall volume is still dropping.

In short, there is an extra grain of salt to take whenever an RE professional declares that business is picking up.

[mike2]

With 66% of the mortgage brokers not renewing, it seems like no exaggeration to say that the RE industry in Washington State is in nothing short of a depression.

Anyone know what % of the state economy RE and construction make up? Whatever it is, it's safe to say that about 30% of recent job growth is in the process of reversing course. Even if everything else stays healthy, this is still huge.

[jillayne]

[Rhonda P]

Jillayne, Just today I had two people contact me because their mortgage originator is out of the biz... I think we're going to continue to see people exiting which is actually causing me to be pretty busy in this market. I'm planning on sticking it out even though it's getting tougher and tougher with tightening guidelines and fewer programs.

So to answer your question: what would you say to someone that graduated last year, wasn't able to find a job in their chosen field and then this year decided to become a mortgage broker....

Here is some advice:

1. Do not enter this field unless you have enough savings you can live off of for at least 12 months.
2. Take every opportunity to learn and stay on top of programs. This could be as simple as attending sales/training meetings at your office or could be taking classes from Jillayne.
3. Before you originate mortgages, I would recommend spending a few weeks "processing"...glued to your processor's side. Learn the "inside" before you venture out.
4. Develop a business plan. Where are you going to get business? Do you have friends, family or a social network who would refer business to you? Does your employer do "up calls"? (I don't recommend buying leads or taking leads from your employer that have been bought).

This is probably tmi... Jillayne, what type of mortgage institution do you think is best for someone who would want to get in?

[perfectfire]

Thanks for the replies. Unfortunately the relative I have that recently go into brokering doesn't meet any of those criteria. Really he just wanted to quit his current job and move out to be with family because his previous situation, including his job, was undesirable. So on one hand if he finds himself out of a job in the next year (highly probable) he isn't really any worse off than he was before. On the other hand it would be a real downer to graduate, not be able to get into the post-grad school he wanted, not be able to find a job in your chosen field, get a crappy job with a terrible boss, quit after a year and move to another job only to lose that in less than a year.

[Rhonda P]

How about credit counseling? I think a lot of people are going to need that.

[jillayne]

LOL. Well now I know why I've been getting calls this week from people wanting to get into the loan origination business.

I say start at a lending institution that offer initial and continuous education and training.