Wilton Manors Realtor | Fort Lauderdale Real Estate Mortgage News
After Wells Fargo & Co forked over a $175 million settlement for claims of discriminatory lending in July, independant mortgage brokers have been taking the blame for being the sellers of the loans. This has really shaken up the wholesale mortgage process as a whole.
Mortgage brokers who depend on revenue from linking lenders with loan borrowers can kiss this lucrative method goodbye. Wells Fargo & Co is recognized as the largest wholesaler in the United States as was one of the last remaining large banks to do so.
One representative from Capital Finance Inc. states how sudden this decision was made and also predicts the huge impact that this will have on brokers nationwide. This situation is the nail in the coffin for many mortgage brokers who were already suffering due to the fact that economic conditions has pushed many other lenders eliminate wholesale lending completely. A mortgage industry analyst based out of California notes that the last three to four years has already been difficult for mortgage brokers and this will only worsen conditions.
Information from the National Mortgage News shows that mortgage brokers accounted for 27% of loans in 2008. This percentage has fallen to 10% and locations such as Minnesota have been hit the hardest. The amount of mortgage brokers in Minnesota has dropped from 4,074 in the of 2007 to a mere 325 in 2012. This decline is partly attributed to the fact that licensing eligibility has become more difficult and has squeezed out many independent brokers.
Many analysts predict that more brokers will drop out now that Wells Fargo is no longer in the wholesale mortgage business. Wells Fargo & Co. accounted for $7.4 billion in wholesale loans in the first 3 months of 2012 alone. Data from National Mortgage News indicates that Wells Fargo was responsible for 14.5% of all lending derived from brokers.
Many mortgage brokers will now be forced to deal with smaller lenders that may not be able to manage the large amount of mortgage applications that were once handled by Wells Fargo. Studies show that some buyers would rather deal with mortgage brokers verses dealing with lenders directly due to the fact that mortgage brokers can provide numerous loan options at rates lower than retail lenders.
The amount of mortgage brokers in the industry that once thrived in the peak of the housing market has declined drastically. Wells Fargo blames this large amount of independent mortgage brokers for the near-prime mortgage predicament. A spokesperson from Wells Fargo stated that by getting rid of wholesale mortgage loans they can better help to influence censurable lending.
Wells Fargo faced federal accusations of influencing Hispanic and African American loan borrowers into near-prime mortgage loans and making them pay higher premiums and fees than Caucasian borrowers with the same qualifications. Over 75% of Capital Finance loans were carried out through Wells Fargo over the last few years. One broker noted that Wells Fargo provided affordable pricing, excellent services, and were very dependable lenders. One broker stated that he wasn’t worried about finding new lenders or increasing the amount of loans with his current network of lenders but is worried that he won’t find anyone as reliable as Wells Fargo.
Another broker stated that not having the ability to deal with Wells Fargo will increase the amount of time required to complete a loan and may drive up costs for loan borrowers as well. Other brokers have noted that they’ve never offered Wells Fargo’s services and they wouldn’t be affected by the recent change. Even brokers who didn’t deal directly with Wells Fargo are noticing the effects as their primary lenders have been hit with more loan applications than ever.
Loan borrowers have been predicted to be affected the most as many of the smaller lenders will become overwhelmed which may lengthen or eliminate the ability to close loans. Many brokers indicate that longer processing periods are the least of their worries and are concerned that Wells Fargo will eliminate affiliations with correspondent lenders.
These correspondent lenders validate and buy mortgages under their company’s name and turn around and sell the loans to lenders. These correspondent lenders accumulate all of the risks which is why Wells Fargo may continue to purchase loans from them. Wells Fargo has been the leader in the correspondent avenue and brokers may still be able to provide borrowers with Wells Fargo loans through these lenders. If Wells Fargo decides to end these relationships, many mortgage brokers would be forced to leave the industry since these loans attributed to $60.3 billion in loans in the first 3 months of 2012 alone.
A spokesperson from Wells Fargo stated that they will keep working with correspondent lenders. After the federal accusations brought on by the Justice Department, many lenders may be a bit weary of legal actions down the road.
Lynn Whitefall of Goldstar Financial in the southeast region of Florida is the mortgage originator that the Henri Frank Group of Remax Preferred works closely to provide information to its clients about mortgages and all there is to offer.
Gold Star Financial Branch Manager
(866) 938-0550 x 3877
The Henri Frank Group at Remax Preferred is located at 2810 E Oakland Park Boulevard, Fort Lauderdale, Florida. Also, offices at 2166 Wilton Drive in Wilton Manors, Florida and 2 University Drive in Plantation, Florida and on Ocean Drive at the Hillsboro Inlet to the Hillsboro Mile in Hillsboro Shores, Florida.
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