Are Mortgage Brokers Vanishing?

I caught this quote over on LeadCritic.com (a blog about mortgage lead generation):

we have slowed for 2 reasons – the first is that all the leads we had purchased in the past are finding us again – or we are finding them – so no need for “new” leads, but more importantly is that our funding source (warehouse banks) options have constricted. I would think this is the same for many lenders – even the banks (some – cant speak for all of course) who you would think would not have this limitation are internally slowing down real estate lender to maintain capital ratios required of regulated banks.

A bit of background–the discussion was on the slowing demand for mortgage leads in the market and the commenter was Owen Raun a principle at RMC Vanguard.

Although the comment and the “slowing” referes to the purchase of mortgage leads, I think there is an important thread to be followed about the overall mortgage market.

We have heard about large banks tightening or eliminating correspondent and wholesale (mortgage broker) programs. This capacity, being eliminated from the mortgage market was 80 percent of the loan origiantions. Certainly lending has declined during the mortgage crisis, but if we eliminate a whole class of loan originators who is going to work-out the 3.5-6.5 million foreclosures on the horizon?

The more and longer bank credit constriction continues the harder it is going to be to have the ability to implement any broad loan modification or refinance strategy–regardless of the rates and terms.

What do you think?

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