Wholesale Lenders, Home Loan Brokers Complain of Red Tape

By Hornblass, Jonathan S. | American Banker, January 6, 1994 | Go to article overview

Wholesale Lenders, Home Loan Brokers Complain of Red Tape


Hornblass, Jonathan S., American Banker


Down with lending regulations!

That's the cry from many wholesale lenders and mortgage brokers, according to a survey by the Mortgage Guaranty Insurance Corp., Milwaukee.

Outlook for '94

Responses to a survey of wholesalers and brokers by Mortgage Guaranty Insurance Corp.

Lenders plan to:

Expand geographically or
open new offices             47%
Add brokers or increase
retail presence              21%
Add new products and/or
increase market share        21%

[CHART OMITTED]

Brokers believe declining originations will:

Have little impact on them     36%
Force them to reduce staff     28%
Require new focus on
purchases                      10%
Simply return them to
normal business                10%

The survey also showed an industry in flux, and more critically, unsure of the best strategy for the future.

Of 49 wholesalers surveyed, including banks, thrifts, and mortgage bankers, 46% would cut back on regulation and paperwork. So would 31% of the 63 mortgage brokers surveyed.

But an increase in regulations for mortgage brokers was favored by 11% of wholesalers.

Both wholesalers and brokers suggested standardized accounting and limits to rate locks and to competition as ways to improve the mortgage lending industry, according to the survey.

Fears of Computer Lending

Some brokers want a reversal of the Department of Housing and Urban Development's decision to allow real estate agents to bypass mortgage brokers and use lenders' computers for loan origination.

Mary J. Burt, director of government relations for the National Association of Mortgage Brokers, fears computerized loan origination could mean the demise of mortgage brokers.

Brokers suggested other ways to improve correspondent lending: mandatory lock-in fees, elimination of points, and implementation of once-a-day price quotes by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp.

Real Estate Settlement Practices Act regulations are still a sore spot for mortgage brokers. …

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