Mortgage

An Influx of Loan Originators to the Mortgage Broker Channel

July 13, 2022

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An Influx of Loan Originators to the Mortgage Broker Channel

Mortgage broker or retail lender? With millions of marketing dollars to their advantage, retail companies often win the client's attention and business, but the numbers prove that retail isn't the best option for the customer – a mortgage broker is. The Home Mortgage Disclosure Act (HMDA) found that in Q4 of 2021, the presence of active brokerages rose by 7% while there was a 15% increase in the number of active brokerages in the United States. More and more loan officers are seeing the advantage that the broker world offers, but what caused this sudden industry shift?

It's no secret that mortgage brokers have a pricing and product advantage over their retail counterparts, but with recent market volatility, the refi-boom behind us, and inflation on the rise, consumers feel pressured to be more cautious with their money, making them more apt to choose a mortgage broker for their home loan. Working directly with a retail lender eliminates homebuyers' ability to choose the right mortgage, pressuring them to settle for the sole mortgage plan that they’re offered. The lack of flexibility and critical thinking prevents customers from receiving a tailored, high quality solution, which can be financially damaging, especially in today’s economy. 

Retail Loan Officers have recently started to acknowledge this, and they're being drawn to the broker side at an accelerating pace. UMortgage Loan Originators see the difference: Sean Grapevine, Branch Manager of ATL Mortgage Powered by UMortgage says, “Assuming a level playing field, we expect the number of active mortgage brokers to escalate as margin compression impacts less efficient retail lenders – similar to 2019.” 

Having access to industry partners allows UMortgage LOs to help clients who cannot fulfill the traditional mortgage requirements that retail companies mandate. UMortgage LOs have the advantage of choosing from 19 approved lender partners to offer the borrower the lowest possible rate and get them a loan that fits their unique needs by matching their credit score and down payment requirements. Not to mention, the approach that provides a variety of loan options doesn't come with a higher cost to consumers; there are no differences in default rates between retail and wholesale lenders, according to HMDA data. 

Rising numbers in minority homeownership, especially within Hispanic communities, has been a win in the mortgage market over the last few years. The Washington Post published information from The National Association of Hispanic Real Estate Professionals (NAHREP) confirming that from 2019 to 2021, there was nearly a 1% increase in Latinx homeownership (from 47.5% to 48.4%). This is the highest the growth rate has been since the mid-2000s and it is forecasted to continue increasing through 2040. 

Now that we are aware of these recent changes in trends, it is important to recognize that for minorities at all income levels in 2020, borrower lifetime savings was more than $8,000 by using a wholesale lender over a retail lender, as reported by HMDA. In other words, wholesale lending is colorblind, while retail companies often charge more for this group of homebuyers.

In accordance with current economic conditions, the smartest option for consumers is to choose a mortgage broker originating through wholesale lenders who will safely provide broader access to credit at a lower expense. UMortgage has the capability to connect consumers with a network of lenders that have access to the lowest industry rates from our network of more than 18 partners. The company prides itself on clearing applications to close in 2 weeks or less while providing a client centric operations team which` contributes to a best in class client experience. One of UMortgage’s core values is Relationships Not Transactions, a commitment to the long-term relationships built with clients and loyalty that’s established over the course of their loan process. Learn more about why top retail Loan Originators are making the transition to UMortgage when you sign up for the weekly Discovery Call, every Thursday at 2pm EDT.

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