Another Increase in Market Share for Loan Brokers

Mortgage & Real Estate

Perhaps the future for loan brokers isn’t so bleak after all. Wholesale lenders table funded almost $33 billion of loans in the third quarter, giving the channel a 9.2% market share, according to new figures compiled by National Mortgage News and the Quarterly Data Report.

In the first and second quarters of this year brokers had market shares of 6.8% and 7.9%, respectively.

The 6.8% figure marked an all time low for the industry. Three years ago brokers – which facilitate the closing of loans using table funding – had a 19% share.

Retailers dominated the business in 3Q with a 52% share, NMN/QDR found.

Although the brokerage sector, as a whole, gained ground in 3Q many top ranked wholesalers experienced sizable volume drops compared to the year ago quarter. Wells Fargo Co., the nation’s third largest wholesaler, table funded $3.9 billion of mortgage, a 60% decline from a year ago.

Provident Funding Associates, Burlingame, Calif., once again ranked first ($5.1 billion, down 28%), followed by U.S. Bank Home Mortgage, Bloomington, Minn. ($4.5 billion/down 41%).

Bank of America, which began exiting the wholesale space a year ago, is still in the business — but ever so slightly. In 3Q the bank table funded $60 million compared to $4.6 billion in the third quarter of 2010. B of A is now in the processing of exiting the correspondent channel as well.

The ranks of loan brokers have been decimated during the housing bust with some analysts blaming the industry for generating poor quality loans. However, the nation’s surviving brokers maintain that poor quality loans should’ve been caught in the underwriting and securitization process — a business they have nothing to do with.

Brokers believe they are currently at a competitive disadvantage because of new regulations that crimp how they are paid and testing requirements that bank LOs are exempt from.

Daily Briefing | Friday, December 9, 2011

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