I apologize for beginning this new year with negative news, but mortgage lending will change after April 1st, 2011. Within the next 3 months, most mortgage companies (brokers & bankers), will reduce their loan originating staff by 40%. The Financial Reform Bill does not allow an originator to be compensated for a closed loan. (brilliant, huh?). All loan originators will be salaried employees. Like those highly accessible loan officers at Bank of America!
Mortgage brokers and bankers are currently in the process of evaluating their originator’s production levels. Say goodbye to part-time or low-volume mortgage originators. I estimate about 30%-40% of mortgage originators will be seeking new employment within the next 30 days, as each Mortgage Broker or Banker net-branch will be operated as a retail business. Low producers will be viewed as dead weight.
The DODD/FRANK Finance Recovery Act was intended to protect the consumer, but it is nothing more than a masked attempt to create a level playing field for retail bankers. B of A and Wells Fargo have been wanting to bring down the “wholesale” mortgage industry since 1992.
I just figured out where Bush’s “MISSION ACCOMPLISHED” banner is hanging.
Open to discussion: Do you think removing commissions will prompt loan officers to work harder?
Will top producing loan originators “cherry pick” their clients?
Will originators be motivated to assist hard-ship (or project) homebuyers?
How many small mortgage brokers or net-branch bankers will fail due to too much over-head?
As the current president of Greater Houston Association of Mortgage Brokers, I have had many opportunities to meet with mortgage brokers, bankers, and lenders to discuss their action plan. The reform bill is a disaster on every conceivable level, but it’s here and we have to deal with it.
On a scarier note, I’ve met with several mortgage broker owners who are absolutely clueless about the DODD/FRANK bill and the monumental change that will occur to our industry within the next several weeks. Education is the key to success in every industry. Realtors understand the importance of joining local, state, and national associations. Only 3% of the mortgage originator lender industry understands. Pretty scary!!
PART 2 (next week). Strategies to succeed! (Hey, even a battery has a positive side!).
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