Mortgage Banks Bracing for Consolidation

By Berry, Kate | American Banker, January 14, 2016 | Go to article overview

Mortgage Banks Bracing for Consolidation


Berry, Kate, American Banker


Byline: Kate Berry

Independent mortgage lenders are bracing for a wave of consolidation prompted by heavy compliance costs and a tepid housing recovery.

The Consumer Financial Protection Bureau's promise to increase scrutiny of independent lenders tops their list of worries because any fines would hit the top dogs directly in their wallets.

Many of these lenders are actively raising capital, searching for equity partners or considering whether to sell out to larger firms. As many as 20% to 25% of independent mortgage companies could change hands or simply shut down in the next 12 to 18 months, according to one estimate.

Bill Dallas, the CEO of Skyline Home Loans in Calabasas, Calif., said competitive and regulatory pressures have created a growing angst among independents.

"We do home loans but we spend more time doing things that don't matter and very little time doing things that were fun, which is why we got into the business in the first place -- to help people buy homes," he said.

Dallas, whose Ownit Mortgage Solutions Inc. was the first high-profile casualty of the financial crisis when its funding was cut off by Merrill Lynch in 2007, and other lenders fear they may not have enough stable backing to cope with the new challenges. Many of them are nearing retirement and worry their net worth could be drained by

a large CFPB fine, or the investments necessary to please tech-savvy consumers seeking a better loan-application experience.

"A lot of lenders are long in the tooth, and have all their capital invested in the business and they just want to get the heck out," said Dallas. "They aren't capitalized or structured to deal with the new regulatory platform. It's time for a new generation of lenders to take over."

CFPB officials have said examiners will be spending a lot of time looking at loan-officer compensation and fair lending violations in the next year. Several lenders cited the $20 million fine that the CFPB levied last year against RPM Mortgage and its CEO Rob Hirt for loan-officer compensation violations as a wake-up call.

Hirt said that because the loan-officer-compensation rules are unclear, and not all mortgage lenders have interpreted and executed the rules in the same manner, more enforcement actions will likely occur.

"This will fix or eliminate some bad actors, but it will also strain many great brokers and bankers who are responsibly serving their communities, and they will look to [or be forced to] sell," Hirt said in an email. RPM is among the larger nonbank lenders shopping for takeover targets, he said.

Rick Roque, a mortgage consultant who is managing director of retail originations at MiMutual, a unit of Michigan Mutual Mortgage in Southfield, Mich., estimates that $25 billion in annual home loan production will change hands or simply be eliminated in the next 12 to 18 months. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Mortgage Banks Bracing for Consolidation
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.