After the years of the mortgage crisis, regulatory reform tended to disfavor independent mortgage broker and small mortgage companies. Everything from the Good Faith Estimate, anti-steering regulations, the loan-originator compensation rule, QM or qualified mortgage, points-and-fees limits, home-assessment code of conduct and the requirements for businesses that are small to continue compliance-management systems with all of these putting more pressure on originators who are independent.
In addition to these pressures, many lenders and big banks left wholesale lending altogether; making it easy to appreciate why mortgage originators are started looking for different business models to follow in the outcome of the mortgage meltdown. Driven by many factors, two types of business emerged: non-delegated correspondents and mortgage branches.
Adapting to uncertainty
As the industry of mortgages adapts to uncertainty in the marketplace and more regulatory changes have occurred over the past ten years, some trends that are major have developed. These trends are still evolving today. To have a better understanding of these trends and the way they affect how mortgage originators accomplish their business operations, we first need to take a small look at the history of the business models that appeared post-2008.
NDCs and branches
In some areas of this country, mortgage originators combine large lenders through program branching and became operators of branches. Hosting lenders shared their compliance-management platforms systems; provided already traditional appraisal panels; and shared human resources, information tech support, and marketing.
Branch of a large lender
Becoming a branch of a lender that is larger allowed banking procedures to be practical to disclosures and the QM test for points-and-fees, giving independent originators some equality with bankers in the marketplace. Additionally, joining larger lenders also shielded small-business owners from a regulatory environment that is unfriendly.
In exchange for these services and benefits, mortgage originators/owners forfeited most of their independence. There are cases where they also lost the ability to control their own marketing, branding, pricing, choice of wholesalers and, most important, their control over their processes, workflows, and businesses. If you need more information and live in Florida, you can contact mortgage broker Tampa.
Other parts of the country
In other areas of the country, originators of mortgage take out warehouse lines of credit and restructure themselves as correspondent lenders on-delegated, or NDCs. This means the lenders do not endorse their own loans.