A desire to own their own businesses led many loan officers to become mortgage brokers during the industry's growth period. As brokering regains its footing, that entrepreneurial spirit is making a comeback.
"Everyone's saying 'gosh, the brokers are still thriving; I got to get back in it, and that's what's happening right now," said Mat Ishbia, president and CEO of United Wholesale Mortgage. Compliance worries is what held people back, he said.
With the post-crisis lending rules now in place for several years, the adjustment period is over for both brokers and wholesalers.
Even though "all the different lenders still have different views on how to be in compliance, it's becoming a little bit less worrisome to originate loans. There is not as much fear" in being a broker from a compliance standpoint, said Rocke Andrews, the immediate past president of the National Association of Mortgage Brokers Andrews.
Plus, the wholesale channel is more competitive now. Immediately after the crisis, there were only a handful of active wholesale purchasers and they were pricing loans similarly.
"Those days are gone and the cost advantage of being a broker is back. By going to four or five different lenders [to shop a loan package] the broker has all the products available and it makes it much easier to compete," Andrews said.
And that is bringing people back to mortgage brokering. "I think a lot of the people that went to the banks…they're all leaving and coming back and starting their own broker shops. They're entrepreneurs," said Ishbia.
NAMB and UWM teamed up to offer retail loan officers up to $10,000 in seed money so they can open their own mortgage broker companies. NAMB has invited other wholesalers to participate.
The newly minted brokers do not have to repay the funds. Approximately 70% of the loan officers in a NAMB survey want to own their business but start-up money was cited by 44% as the main barrier preventing that.