But when we clearly asked John if the mortgage broker would ever die out, he basically said, “There's no chance.” People can start looking online, but most people want to talk to someone about the right loan product, especially for first-time homebuyers. Undoubtedly, the line drew applause and spontaneous applause from the audience. Amidst a series of speakers throughout the annual meeting, McKay had to urge members to donate to the group's political action committee with an easy-to-remember acronym: BACPAC, which stands for Political Action Committee of the Broker Action Coalition. The PAC was launched in July, in another sign of the group's growing influence in the industry.
It came immediately after the hiring of lobbying firm Forbes Tate Partners, another step taken to safeguard the association's interests in Washington, DC. But uncertainty is always around the corner, he suggested. The AIME PAC was created to prevent such scapegoats in the future and to protect the corridor channel, he suggested. That's why it's so important to strengthen their coffers, he insinuated.
With that, he opened his jacket to reveal the lining of the garment emblazoned with the acronym AIME that flowed throughout the fabric. Judging by his fiery presentation, it's clear that McKay wears his AIME pride close to his chest, both literally and figuratively. Banks argue that the decline in brokers reflects more conservative business practices. The most recent example is Chase, who announced last month that it would no longer process broker loans.
Given the huge penalties for errors, many lenders preferred to rely on in-house loan officers rather than mortgage brokers. This has been another interesting thread that continues to support what I already knew about the typical mortgage broker. The one who reports to everyone who has rated mortgage brokers as worse than the scum in the pond, and says goodbye. The consumer benefit came when the mortgage broker was able to obtain better financing than borrowers couldn't find on their own.
Who really cares, whether it's 60, 65, or 70%, the bottom line is that brokers originate and finance a huge percentage of home loans every year in the United States. And while the abuse is systemic, I found that the main culprits are the originators of the loans, and to reduce it even further, the main offenders are mortgage brokers. I think the positive thing for us, as brokers, is that the originators of large mortgage companies spend all their time qualifying buyers for the purchase of their REOs. As proof, let's return to the Great Recession, when brokers were chosen as antagonists in a complex real-life drama in which other people grouped and sold subprime mortgages as securities.
While there is a lot of blame everywhere (government mandates, the Federal Reserve's monetary policy, real estate agents, builders, urban planners who only wanted to increase revenues through greater ceilings, and mortgage brokers), what needs to be addressed is life without the broker. Some less progressive thinkers (who must be living under a rock) continue to believe that mortgage brokers who granted subprime loans are at the root of the entire economic crisis. The reason mortgage brokers are good for consumers is because they increase access to programs and encourage competition among borrowers, two things that drive down prices.
