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- Clay Branch, "Georgia Loans"
- Contributions:7856
shhhh
Except for 1 crazy person, I have no problem quoting with the banks.
- George DeVine, "George DeVine"
- Contributions:857
Hey Clay, who is the crazy person?
- Clay Branch, "Georgia Loans"
- Contributions:7856
- Barry Dalton, "Barry Dalton"
- Contributions:492
Afternoon George,
I am not sure most brokers would have access to correspondent pricing on a daily basis from there investors. I have seen spreads fluctuate over the years from an eighth to a quarter for best effort. Some bulk and mandantory delivery will pay a little more. All delivery channels have their positives and negatives. Correspondnets have a pricing incentive are also faced with potentially higher P&L cost, depending on their cost of funds, closing and post closing efficiency. To pass on all the pricing incentive from the investor, down to street price, would seem to be less profitable?
In my opinion, these are the reasons I believe the subject does not get more attention or discussion.
- Dave Mason, "DebtFreeDave"
- Contributions:1315
George cmon man...
- George DeVine, "George DeVine"
- Contributions:857
Before the first of the year, wholesale rates were as good as correspondent rates. Now, the rates are consistently .5-.75 off in ysp. This corresponds with lenders shutting down their wholesale channels, not accepting third party originations, etc. Come on Dave. Are you suggesting that brokers aren't seeing themselves rapidly getting squeezed out of the market? PMI just announced they will not insure any TPO loans. Chase, the largest TPO purchaser pulled out of the market. How long do you think Wells, Citi, and Countrywide are going to suck up that vaccume?
- Barry Dalton, "Barry Dalton"
- Contributions:492
What is your definition of "TPO"?
- George DeVine, "George DeVine"
- Contributions:857
I loan at the point of origination that has three parties; the borrower, the broker, and the lender.
- Barry Dalton, "Barry Dalton"
- Contributions:492
Origination - Seller Servicer- Agency
3 2 1
- George DeVine, "George DeVine"
- Contributions:857
Barry,
Candidly, I thought that was the definition, and was told last week that it was defined as I stated above. Previously, I thought it was as you stated, and this does have me confused. The confusion for me is when a direct lender sells to a TBW, for instance, who in turn sells to Wells Fargo, who in turn sells to an agency. Regardless, for the purposes of this discussion, a broker originated loan is a TPO.
Candidly, I thought that was the definition, and was told last week that it was defined as I stated above. Previously, I thought it was as you stated, and this does have me confused. The confusion for me is when a direct lender sells to a TBW, for instance, who in turn sells to Wells Fargo, who in turn sells to an agency. Regardless, for the purposes of this discussion, a broker originated loan is a TPO.
- Barry Dalton, "Barry Dalton"
- Contributions:492
The edit button has issues!!
It is considered from the agency, Lender/broker (being 3rd), Seller/Servicer (having relationship with the agency being 2nd) Agency (Fannie/Freddie being 1st position).
Sorry for the confusing post.
It is considered from the agency, Lender/broker (being 3rd), Seller/Servicer (having relationship with the agency being 2nd) Agency (Fannie/Freddie being 1st position).
Sorry for the confusing post.
- Barry Dalton, "Barry Dalton"
- Contributions:492
A broker originated loan could be a 4th party. If a Seller servicer were to allow a correspondent lender to sell them paper originated by another broker.
Seller servicers can sell between each other, this should not change the position as they each have agreements with reps and warrants with the respective agency.
The term "Direct Lender" keeps coming up from time to time on quotes and some times in the boards. It is mis-leading in my opinion, when stated by a correspondent lender who is selling to a wholesale lender(seller/servicer).
Chase pulled out of the "wholesale" or Broker channel. PMI pulling out of the TPO channel - in my opinion means they are only insuring loans originated by retail channels of seller servicers? I have not received clarification, just how the memo reads to me. I would hope that I am wrong on that one!
Seller servicers can sell between each other, this should not change the position as they each have agreements with reps and warrants with the respective agency.
The term "Direct Lender" keeps coming up from time to time on quotes and some times in the boards. It is mis-leading in my opinion, when stated by a correspondent lender who is selling to a wholesale lender(seller/servicer).
Chase pulled out of the "wholesale" or Broker channel. PMI pulling out of the TPO channel - in my opinion means they are only insuring loans originated by retail channels of seller servicers? I have not received clarification, just how the memo reads to me. I would hope that I am wrong on that one!
- George DeVine, "George DeVine"
- Contributions:857
Maybe the question should be more broad. I haven't seen any discussions related to recent industry changes that are negatively impacting mortgage brokers. I look for this with interest, because I chose to give up significant control of my company in the fall to become a lender, and I guess it would be gratifying to see if I made the correct move.
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3431
Agree with Barry because the pricing benefit is not passed on to the borrower since it is needed to cover a multitude of other expenses that the broker does not incur.
Not sure though why a correspondent "direct lender" is misleading? True, you don't service the loan, but this method to originate does offer some distinct advantages to the borrower mostly in the areas of speed and avoiding extra conditions.
- George DeVine, "George DeVine"
- Contributions:857
I am still receiving wholesale rates, and in the fourth quarter, the rates were the same as the correspondent rates I was getting. Starting in January, I started to see a significant difference of up to .75 ysp. I haven't looked at PF rates, so they may be closer to the corres. rates, but as far as others, such as, Wells, Flagstar, Countrywide, TBW; they are all significantly higher for brokers. Believe me, when I first made the move to a lender, I saw the same rates, and began to question the advantages of being a lender.
- Barry Dalton, "Barry Dalton"
- Contributions:492
Congrats on making the transition!
The industry changes regarding negative positions and references to "TPO" is a concern to both broker and correspondent channels. The broker channel may see the playing field become more "un-level" over the course of the year as the SAFE act and MI company's potentential new policy's are implemented. You mentioned seeing spreads widen for correspondent delivery, this is interesting. Servicing is ultimately worth the same no matter if organic, bulk or purchased from a TPO. This is what makes it tough for a Seller/Servicer to pay up for the correspondent funded loan. I have always felt the spread should be much better. But, when you have mini-wholesalers who purchases primarily from the "broker" channel and can deliver to the "cash-window" for the same or better price as the operation securitizing their delivery. This in the past has kept the spreads compressed as to not lose market share.
You now have to balance post closing overhead, funding cost, on-time delivery and line capacity into the equation. Fun stuff! I think you will be happy with your decision. It's a long term outlook! Good luck!
The industry changes regarding negative positions and references to "TPO" is a concern to both broker and correspondent channels. The broker channel may see the playing field become more "un-level" over the course of the year as the SAFE act and MI company's potentential new policy's are implemented. You mentioned seeing spreads widen for correspondent delivery, this is interesting. Servicing is ultimately worth the same no matter if organic, bulk or purchased from a TPO. This is what makes it tough for a Seller/Servicer to pay up for the correspondent funded loan. I have always felt the spread should be much better. But, when you have mini-wholesalers who purchases primarily from the "broker" channel and can deliver to the "cash-window" for the same or better price as the operation securitizing their delivery. This in the past has kept the spreads compressed as to not lose market share.
You now have to balance post closing overhead, funding cost, on-time delivery and line capacity into the equation. Fun stuff! I think you will be happy with your decision. It's a long term outlook! Good luck!
- George DeVine, "George DeVine"
- Contributions:857
Thanks Barry.
But, when you have mini-wholesalers who purchases primarily from the "broker" channel and can deliver to the "cash-window" for the same or better price as the operation securitizing their delivery.
That is my point; it doesn't seem that these wholesalers are getting the same pricing any longer, and the major money center banks don't have the appetite for wholesale business. This is a major shift in the business that no one seems to be talking about.
But, when you have mini-wholesalers who purchases primarily from the "broker" channel and can deliver to the "cash-window" for the same or better price as the operation securitizing their delivery.
That is my point; it doesn't seem that these wholesalers are getting the same pricing any longer, and the major money center banks don't have the appetite for wholesale business. This is a major shift in the business that no one seems to be talking about.
- Barry Dalton, "Barry Dalton"
- Contributions:492
Justin-
No big deal - I just see some promoting the "Direct Lender" as having a quarter point advantage over most of their competition. Seems to indicate the Broker is a "middleman" with higher cost for the consumer.
I think we would all agree the origination process is much the same for retail, broker and lender. Some brokers can control their closing doc's, by closing in their name and move funds as fast as a correspondent or bank. Most correspondents take on the underwriting, funding and closing as to have better control of turn times. In heavy volume cycles this can seperate them from the competition - until their resources max out as well. Each have their respective advantages and dis-advantages. Risk, fixed overhead, technology, efficientcy and capacity have to be balanced. Higher volume will make the spread look pretty attractive $$ on an annual basis. Just create an emergency fund for added reps and warrants or a delivery which gets re-priced.
For lower volume, table funding, having the right wholesale relationships, and managing expectations become key components.
No big deal - I just see some promoting the "Direct Lender" as having a quarter point advantage over most of their competition. Seems to indicate the Broker is a "middleman" with higher cost for the consumer.
I think we would all agree the origination process is much the same for retail, broker and lender. Some brokers can control their closing doc's, by closing in their name and move funds as fast as a correspondent or bank. Most correspondents take on the underwriting, funding and closing as to have better control of turn times. In heavy volume cycles this can seperate them from the competition - until their resources max out as well. Each have their respective advantages and dis-advantages. Risk, fixed overhead, technology, efficientcy and capacity have to be balanced. Higher volume will make the spread look pretty attractive $$ on an annual basis. Just create an emergency fund for added reps and warrants or a delivery which gets re-priced.
For lower volume, table funding, having the right wholesale relationships, and managing expectations become key components.
- Barry Dalton, "Barry Dalton"
- Contributions:492
Again- I am not aware, but I really have not made an effort to check correspondent pricing. If you are correct and it last any length of time - the "light at the end of the tunnel" for brokers maybe a freight train!
I understand what you are saying now! Sorry - the terminology and translation got in the way!
- George DeVine, "George DeVine"
- Contributions:857
I should clarify. I know brokers can still compete with banks/lenders, and do a good service to the client. They have always done this by having a tighter profit margin, but if the market continues the way it is, that profit margin won't be sustainable. It is one thing when you are earning an avg. of 1.25 ysp, but that is now being squeezed to less than a point. This might be OK for the net branch, but believe me, a small broker shop who splits the revenue with the loan officer, cannot stay profitable at these margins.
- Clay Branch, "Georgia Loans"
- Contributions:7856
George, do you have pricing to meet the quote i linked above? Just curious if you think it's crazy too.
- Barry Dalton, "Barry Dalton"
- Contributions:492
Clay, I think that has to be a mistake. I do not see any coupons on a 30 year fixed - even off-sheet that go that low. Granted I do not look at that many! Could he have meant to change the amortization to 15 year and left off the fees? Either way it's very mis-leading. On Friday - a 15 year 4.375% Fixed would have had at least .875% discount with me - depending on loan amount!! I do not look at PF - so that does not count.
Clay, I actually emailed him in regards to his quotes, and he said 'thank you'. Great sense of humor, he has.
George, nice to see you. I was just thinking about you and wondering where you'd gone- and now you're here! I think you made the right move. Pricing issues aside, they are pushing the 'broker' out of the business.
George, nice to see you. I was just thinking about you and wondering where you'd gone- and now you're here! I think you made the right move. Pricing issues aside, they are pushing the 'broker' out of the business.
- George DeVine, "George DeVine"
- Contributions:857
Hey Jennifer,
I've been lurking around. I guess I lost my all star status for lack of posts. Glad to see you're doing well.
I've been lurking around. I guess I lost my all star status for lack of posts. Glad to see you're doing well.
- Clay Branch, "Georgia Loans"
- Contributions:7856
George, Richard Branson is getting into Wholesale and he has a few bucks. I think you will see a couple more fill the void created by Chase and others. It may not be as bleak for Brokers as it appears to be at the moment.
Barry, that rate of 4.375% is not a mistake, he has quoted it multiple times this past weekend.
Barry, that rate of 4.375% is not a mistake, he has quoted it multiple times this past weekend.
- Nic Netherton, "Colorado Lender"
- Contributions:7219
Countrywide has magic pricing Clay. He throws in a box of Girl Scout cookies too!!
- Barry Dalton, "Barry Dalton"
- Contributions:492
George-
I spoke with one of my wholesale reps today regarding the PMI memo and the reference to TPO business. For their "definition" it applies mostly to the broker channel. If a correspondent is underwriting, funding and obtaining the MI cert, they would still be eligible for PMI's, MI cert.
So if you are a correspondent shop with delegated underwriting, it would appear you may be more insulated from some of the industry changes.
I spoke with one of my wholesale reps today regarding the PMI memo and the reference to TPO business. For their "definition" it applies mostly to the broker channel. If a correspondent is underwriting, funding and obtaining the MI cert, they would still be eligible for PMI's, MI cert.
So if you are a correspondent shop with delegated underwriting, it would appear you may be more insulated from some of the industry changes.
- Ken Kopper
- Contributions:1578
George, there you are an All-Star!!
- Paul McFadden, "pmcfadden"
- Contributions:143
I think the brokers day is done for now. Perhaps when the market strengthens we'll see a return. Until then, the banks are squeezing the brokers out. If you still work for a broker either line up those correspondent lines or make the switch. It' s getting pretty dire right now!
- Barry Dalton, "Barry Dalton"
- Contributions:492
George - it is not just the Broker channel, a Correspondent will need the net worth to become delegated for underwriting as well. The definition being used considers the "seller" having underwritten the loan and able to provide the MI cert as well.
Broker vs. Banker Mortgage Rates
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