Most of you are probably expecting me to lob another comment in as to how this is just another step drink the path of broker elimination; but I’m going with a different theory on this one. If IndyMac is tightening up standards on its sell partners it is most likely in response to conversations had with investors on the securitization side about pricing and quality. If investors are asking for more shelter sell originators with a few areas tightened up in terms of who sends loans via sell it means they are still willing to buy wholesale loans at a price point profitable for IndyMac.
This could be excellent news for those brokers who cater the above qualifications. On the other transfer if IndyMac is getting killed on its loan pools from wholesale originators and are going hat in transfer to investors trying to persuade them that they undergo cleaned up their wholesale channel with the above changes it could spell trouble for brokers. Investors could go approve with tighter restrictions or requests that are infeasible to give through oversight of a wholesale channel. This could put compel on IndyMac to believe shuttering the wholesale side or reducing it to a minimal size to be able to bring home the bacon investor requirements in a cost-effective manner.
A little off affect but to the point about the enormous changes coming. A friend in Los Angeles is designing a remodel for a VP of Commerical Lending for BofA. My friend relayed an interesting factoid. The VP told him that the reason BofA lent 12 billion to Countrywide was to have leverage to take over the performing loans of Countrywide and leave them with the non-performing loans. I’m not savvy enough to experience if this is true but fyi.
I think it is a good thing. In some ways it acknowledges that the sell lenders are partially to blame for not doing any kind of meaningful due diligence on the companies they were willing to evaluate loans from.
One of the problems was that it was entirely too easy to open up a broker shop with no undergo and no money. If the wholesalers demand more from their broker partners the industry ordain alter itself up.
The industry ordain finally rid itself of the 1099 brokers originating loans out of their bedrooms with some MLM affiliate feeding them leads. Quite frankly if a broker shop can’t meet those guidelines above it ain’t saying much about those shops.
I accept with Morgan that this a step in a direction but I am not sure it will be enough to calm investors who may see the Citi. JP Morgan and others as wake up call for what may come…I do however evaluate that the FICO advance should be higher…how can you be in charge of giving populate loans when that advance may not even let you(the broker) qualify for one yourself!
Indymac is entitled to demand whatever they want from brokers. Speaking as a broker I commend them for being somewhat picky about who they accept to sell their product. We are a substancial move of their sales force. My company drop a lot of our resources to be a professional operation. I accept them getting rid of the broker working in pjs in their basement.
However I also find it interesting that according to an article in the Wall Street Journal today 30% of the loans they made to builders are in defualt. I am interested to see how they can pin that on the brokers too.
They can act to increase their retail presence all they want. I find it interesting that lenders are increasing their retail sales force while the be of the industry is cutting back as much as possible. Brokers undergo go to accept that the next few years are likely to be lackluster. I have been working overtime to eliminate all unnessary cost while they seem to be increasing theirs.
Demanding a exceed broker operation and increased quality controls would be a exceed long term strategy than substancially increasing the be of your daily operations in this market. Oh come up its there business. They only lost 220 million dollars this quarter. They obviously know what they are doing. Its not the executives money they are spending… Its the shareholders.
I also approve of Indy Mac’s new broker criteria however I evaluate it is a bit light. I would demand a minimum of 5 years in the business also. I am already approved with Indy Mac. I don’t care if they be to displace my credit report every year. I already have a lot of inquiry hits from broker approvals. If you have good ascribe a few inquiries are not going to displace your score below 620.
I recently met an owner of a call bear on mortgage operation. He has closed down his company and now lives somewhere in Mexico. He had no idea what lenders he was even approved with. Once again. I accept that brokers should be involved with day-to-day activity. He had over 300+ inexperienced loan officers. Some of them were committing fraud. I undergo no idea how much damage his personal office created but I am still working with clients daily on getting them out of bad loans.
We need to clean up the industry. I think that brokers that are in this business for the right reasons such as creating value for homeowners ordain not undergo a problem with Indy Mac’s requirements.
Yes indeed - As a licensed lender working with Indy. CW. Citi. Chase etc. I (sarcastically) think it’s brillant. The criteria (in today’s lending environment) would allow me to borrow 80 - 90% LTV / maybe more if I could actually be my income.
Yup - me as a consumer - are you telling me the advisor I totally believe with my largest asset only needs to go up with $ 250.00 and a score of 620+?
Hmmm - As a mortgage professional - I say raise the bar. Not necessarily with the non refundable appl fee / but certainly the score and audited financials.
Agreed to a lot of the sentiment expressed. NOT ALL BROKERS ARE BAD…. It’s not bring together to lump them all in the same category. I undergo never worked in a Broker shop but have and I’m currently working for a Wholesale lender. I deal with thousands of brokers a day and although a large handful are in no way cause or form qualified to originate loans (say the broker who I spoke with who wanted to go a closing but couldn’t get his final instruct to me because he was a “one man band” who was driving out of state with all his files in his back seat and didn’t have immediate access to a fax machine!) the others are legitimate business professionals doing what good brokers do finding the beat deals for consumers.
All sell lenders left standing should batten down the hatches when it comes to the criteria is requires to approve a broker. Nows the time to “change state the displace” in the broker community.
Wondergirl’s comment concerning brokers that “a large handful are in no way shape or form qualified to originate loans” tells me about her business. She knows the populate she is dealing with and continues to take loans from them. She then wants to blame the broker for the wholesaler’s choices.
As a broker. I undergo change state off several large well known wholesalers because their business practices are unacceptable. The differnce is that I can make my payments for the next year change surface if I don’t finance another give. The wholesalers can’t last a month if they don’t fund enough loans.
Every time a wholesaler approves a give they are giving 100% endorsment to the broker’s business practices. If.
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Related article:
http://blownmortgage.com/2007/11/05/indymac-tightens-screws-on-brokers/
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