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Brokers prepare to shake up mortgage lending

Here's why

Times are tough for mortgage lenders, as evidenced by the multiple layoffs seen across the mortgage industry.

In fact, the nation's small and mid-size mortgage lenders are closing up shop at a record pace, according to this article in The Wall Street Journal.

HousingWire Editor-in-Chief Jacob Gaffney explained that the takeaway on this one is two-fold. No. 1: blame rising interest rates for crushing home lending, and No. 2: The strong will survive.

But one type of lender is doing fine, even excelling, as others continue to eliminate hundreds of mortgage jobs – mortgage brokers.

United Wholesale Mortgage announced it saw a 52% annual increase in volume in the third quarter. This increase was significant, especially when numbers from Inside Mortgage Finance show the majority of lenders saw either negative growth or growth less than 10% in 2018.

But why is it excelling when all other lenders seem to be struggling? UWM’s business channel is based mainly on mortgage brokers, who saw an increase of 19% in their business over the past nine months even as its retail originations decreased by 6%.

And not only are brokers seeing an increase in volume, but the company also continues to hire more amidst layoffs in other parts of the mortgage market.

“This is more of a mortgage broker story than a UWM story,” UWM President and CEO Mat Ishbia said. “UWM is growing loan production so quickly and we’re hiring over 600 people a year, even while so many companies are slowing down and laying people off, because mortgage brokers are growing so fast.”

“Realtors and consumers recognize that mortgage brokers are the best place to get a loan, and loan officers understand that a mortgage broker is the best place to work,” Ishbia said. “UWM is growing on the back of mortgage brokers and we are proud to be part of this change.”

Earlier this year, Ishbia explained that rising interest rates hurt brokers less than other mortgage lenders as they typically do less refinances. Ishbia said that while rising rates aren’t good for anyone, they hurt brokers the least.

The shift to brokers is also occurring because they are able to provide a more personal touch and more product options, both key factors in a highly competitive environment.

“Realtors prefer working with a local mortgage broker who does a great job, instead of someone at a call center or national bank,” Ishbia told HousingWire. “So many retail loan officers are converting back to mortgage brokers because they realize they can give consumers better rates, they have more product options, and they can hold lenders accountable to fantastic service standards that they’ve come to expect.”

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