Slideshow 8 opportunities and challenges for mortgage brokers on the rebound

Published
  • October 12 2017, 7:05am EDT

Mortgage brokers and wholesale lenders have risen from the depths of despair as a result of the shift to a purchase market and greater consumer demand for a more informed and seamless borrowing experience. But to keep that momentum going, brokers must effectively manage the challenges that come with a growing business and capitalize on emerging opportunities better than their retail lending peers.

"Consumers are starting to recognize the value of going to a broker again," said Irene Amato, the owner and CEO of A.S.A.P. Mortgage, a mortgage brokerage based in Cortlandt Manor, N.Y. "The media and everything that happened in the meltdown put a stigma on the brokers that in my opinion wasn't accurate."

The value proposition is the product options that mortgage brokers can give to consumers that bank and retail mortgage lenders can't.

"All a mortgage broker does all day, every day is mortgages. So the main focus of our daily job description is getting these mortgages done in a way that is as most transparent as possible. The consumers are starting to realize that. I think there is a big opportunity for brokers to grow their shop," Amato said.

Employment has reached levels last seen in December 2007, when the housing crisis took hold and nearly wiped out the industry.

There were 99,700 people working as mortgage and nonmortgage loan brokers in August, a gain of 9,000 from one year prior, according to the Bureau of Labor Statistics. Since January 2015, nearly 25,000 mortgage broker jobs have been added.

The broker business is taking people away from other parts of the mortgage industry.

"Loan officers leaving retail lenders and banks to become mortgage brokers has been a big trend in 2017, and will continue in 2018, 2019 and beyond," said United Wholesale Mortgage President and CEO Mat Ishbia. "A growing number of loan officers are seeing that mortgage broker shops are the best place for them to work, with all the product, pricing and service options."

From recruitment strategies to leveraging technology without losing the personal touch, here's a look at four challenges and opportunities for the resurgent mortgage broker channel.

Recruiting younger loan officers

The challenge in hiring millennials is not just about having a technology-forward office. It is also the more basic concern for them of having a steady pay check; most broker loan officers are paid on commission, said Valerie Saunders, the vice president of Jacksonville, Fla.-based mortgage brokerage RE Financial Services Inc.

Not having that regular salary is "a scary thing for people who are in that phase of their lives where they're starting to have a family and everything. So that's always a challenge."

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A long-term job

The recruitment opportunity is that mortgage brokering can be a job someone can have throughout his or her lifetime.

As a mortgage originator, "if you had enough gumption to get your license when you're 18, you could still be working in the field when you're 88," said Saunders, who is also the new CEO of the industry trade group NAMB.

Working in a small mortgage broker business gives the flexibility one doesn't get in a corporate environment.

"If I need to go to something at my kid's school, I go to whatever it is at my kid's school and then go back to work," she said.

Experience helps

Mortgage brokers have an opportunity to bring in experienced loan officers that are tiring of the corporate environment.

"The mortgage loan originators that work for the banks and the larger institutions are looking to come over to the mortgage broker side" said Amato. "They feel a sense of stability again and if done the right way, we can build back the broker side to better than where it was before."

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Retaining customers

When it comes to getting the borrower's next loan, the mortgage broker is in a tug of war against their wholesale lender, Ishbia said. "It's a challenge because it's so hard to get that first loan from a borrower. Their goal should be to get that customer for life. It's not the lender's loan, it's the borrower's loan."

Winning the marketing battle

Then there are "the dollar amounts these larger institutions spend on advertising," Amato said, adding that makes it extremely hard for brokers to compete.

Brokers need to market on service, not price.

"If you are working with a true professional, that has experience in the industry and is dedicated to the industry and the consumers, hands down [the borrower is] going to get the best interest rate choice on product and a transparent transaction," Amato said.

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Having an online presence

Brokers have a technology challenge because they can't afford to have huge development teams, said Ishbia. They should work with lenders and vendors to figure out how to offer borrowers' various online and mobile options.

Mortgage brokers have "got to be forward-thinking and willing to jump into new technology to make sure they're capable of helping a wide range of borrowers that has different preferences for how they want to get a mortgage."

Relationships over technology

Bringing that hands-on personal touch creates the opportunity to compete not only against large lenders but digital ones as well, said Amato, who added most of her customers are millennials.

"Our consumers are our friends, our consumers are our neighbors and our consumers are part of our community. We see them in the supermarket, we see them in the delicatessen and we see them in the park. So they're people we bond with on so many different levels," she said.

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Into the breach

The high-profile security breach at Equifax created an opportunity for mortgage brokers to connect with consumers and pick up business that might have gone to digital lenders.

While people of all generations, including millennials, want to use technology to make their lives easier, they have become leery about sharing information with someone they haven't met, said Amato.

"We can say websites are secure, but with the breach in some large companies' security systems, more and more borrowers want to do their transaction in a face-to-face appointment where they know the person and get that one-on-one attention," she said.