[Op-Ed] A movement is happening in the mortgage origination business. Over a thousand loan officers have left the retail lending space to become independent mortgage brokers.
And thousands more will soon follow. There are many reasons for this, but some of the overarching facts are that going through a broker is the best way for a borrower to get a mortgage and independent brokers are the best place for a loan originator to work.
Independent mortgage brokers aren’t just succeeding, they’re thriving. I believe all LOs want to take great care of their clients. They can do that by offering great service and rates to all their borrowers while wowing their real estate and referral partners. They can do all of that by being independent – by being an independent mortgage broker instead of a captive retail LO. Independence is the key that makes this easier to accomplish.
For loan originators who are working for retail lenders, the time has never been better to join the wholesale channel – whether it’s following the other LOs who are leaving in droves to join broker shops or to independently start their own company.
Better rates, better options
Independent mortgage brokers have access to lower rates than retail loan officers because they can shop around on behalf of their borrowers. They have lower fees because the cost-structure of wholesale is cheaper. Mortgage brokers can pass those savings on to consumers and still make the same amount of money, and potentially more. That’s why so many LOs are leaving retail to join the wholesale channel.
Then there’s the issue of options. Whether you’re shopping for a house, an airline ticket or groceries, it’s always better to have options. Imagine what life would be like if you were limited to only one choice for everything. It’s the same thing when it comes to mortgages.
Loan originators on the retail side are captive to one set of programs, one set of rates and one set of turn times. They’re limited to the products, pricing and programs that they have in-house. On the other hand, brokers have access to numerous lenders, which ensures they have far more options when it comes to products, pricing, guidelines, and turn times, which in turn means better solutions for clients.
A customer instead of an employee
Being an independent mortgage broker means you have ultimate independence. You get treated like a customer instead of an employee because wholesale lenders want to earn your business every day. The benefit is you can hold your lender accountable to great pricing, great turn times and great service. If not, you can choose to not use them on the next loan. In retail, you don’t have that ability. Retail loan originators are company first. Independent mortgage brokers are customers first.
If a mortgage broker disagrees with an underwriter on an income calculation or thinks an overlay is unfair, they have other lenders they can work with and still take care of the client. In retail, you have to fight, scratch and claw – and it still might be a dead deal. The accountability factor in wholesale is a big win for independent mortgage brokers.
The best fit for consumers
In 2019, consumers are savvier – when they shop for a mortgage, they want someone who can explain the process, someone who offers a personalized human touch and someone who can get them the best deal for their individual situation. Many LOs are local and do a fantastic job with this. But only mortgage brokers check all those boxes. They are personal mortgage shoppers, licensed experts and true advisors that can help guide borrowers through the biggest financial transaction of their lives.
Some people think if you go through a middleman, you’re going to get charged more. It’s actually the opposite in mortgages. If a borrower goes to a broker, they’re going to get a better deal than they would if they went directly to the lender. There’s a huge opportunity here for brokers to educate consumers and prove to them that they offer the best deal.
Independent mortgage brokers can provide the options, service and efficient process that consumers want when getting a mortgage. And at the end of the day, what is best for each consumer always wins out.
Flexibility through technology
Mortgage brokers have access to the technology of multiple lenders. Retail loan originators are restricted by technology because they’re told what they have to use. Wholesale lenders are more nimble and so are the brokers who partner with them.
In an industry where change is inevitable, the flexibility to adapt is a huge advantage. Brokers have the upper hand when they work with wholesale lenders who have great technology because they reap all the benefits of an efficient process without having to build the tools themselves.
It’s important for loan originators to be able to adapt while continuing to deliver elite service to clients, especially as the industry shifts more toward an all-digital mortgage. The best way to accomplish that is through a fast and smooth process. Independent mortgage brokers deliver the fastest, smoothest process.
Confidence to make the switch
There’s uncertainty that comes with change – whether you’re joining a business or starting your own. Change is scary. But for loan originators who become independent mortgage brokers, there is a lot of support out there for those looking to switch, and there is power in knowing that so many others are joining the broker channel because it’s better.
Becoming an independent mortgage broker means having the opportunity to work for yourself and control your own destiny. You don’t have to worry about having unrealistic demands placed on you. This type of independence is something that doesn’t exist for loan originators in the retail world.
It hasn’t been this easy to join the broker channel in a long time and you’re truly not doing it alone. There are wholesale lenders, industry organizations and websites out there to support loan originators while making the switch and then make sure they succeed once they’re up and running. This is already happening. There’s a whole community of independent mortgage brokers who have made the move, rally around each other and want to help others join them.
That being said, not everyone has to start their own broker shop – there is also plenty of opportunity to join an existing shop, be a part of a team and figure out where you can provide the best service to clients, including real estate agent partners. People on the fence have to figure out what’s best for them. But for the hundreds of people who made the transition from retail to wholesale last year, it’s been a home run.
Broker market share is back up to 17%, the highest it’s been since 2010. I believe it will double in the next couple of years. More and more consumers are educated that they can get a great deal through an independent mortgage broker who can shop around on their behalf and deliver them a smooth and easy experience.
At the same time, more LOs are realizing that they can offer their consumers better deals and they can serve their real estate agent partners better if they work at an independent broker shop. The combination of those things is making the broker channel really grow, and grow fast. The movement is just getting started.
