• Even though mortgage bankers are enjoying the steepest yield curve in years, lenders have seen their average profit per loan fall in the first quarter of this year, as much as a 40% drop from the previous year. The Mortgage Bankers Association blamed the declined on lower origination volume and higher production expenses.
The higher production expenses can be linked to one major move of lender banks: many have ceased their wholesale production models. They no longer underwrite and close loans from the most cost effective source possible: mortgage brokers.
Chase, BB&T, Chevy Chase (now Capital One) and now Bank of America have all closed their wholesale doors and have decided to originate loans in the most costly and inefficient means possible: the salaried originator. “Hey, if your loan doesn’t get done I’m still getting paid.” Bricks and mortar. Overhead. Higher expense for consumers.
Some of the biggest wholesale operations including Washington Mutual (bought by Chase), Chase itself and Bank of America ceased wholesale operations in 2007. Bank of America through its old Countrywide operation ceased their wholesale operation last week. BB&T who anecdotally was making money hand over fist at its Liberty Mortgage subsidiary closed its doors this past July. What were they thinking?
• Your mortgage broker still remains one of the best consumer choices to be made. And if you haven’t taken the time to get a new low rate, call or write me. You owe it to yourself to know how much money you can save yourself and your family.