For many years, we’ve seen banks big and small exiting the mortgage market, blaming the overwhelming, over burdensome, and to an extent, unnecessary regulation as the cause. These lenders found it no longer profitable, as the costs to originate and close a residential mortgage loan have skyrocketed.
In his annual letter to shareholders this month, JPMorgan Chase CEO Jamie Dimon stated that our country’s housing system desperately needs mortgage reform. “In the early 2000s, bad mortgage laws helped create the Great Recession of 2008. Today, bad mortgage rules are hindering the healthy growth of the U.S. economy,” Dimon said.
Dimon stated that a conservative analysis of the mortgage market shows the current lending environment has cost at least $1 trillion in mortgages over a five-year period, mortgages that borrowers could have received if reforms had been enacted. He continued, “Reducing onerous and unnecessary origination and servicing requirements (there are 3,000 federal and state requirements today) and opening up the securitization markets for safe loans would add to America’s economic growth, and dramatically improve the cost and availability of mortgages to consumers – particularly the young, the self-employed, the underserved, and those with prior defaults.”
“The cost of originating and holding loans has increased significantly since the housing crisis, making it difficult for some lenders to stay in the mortgage business…Even Chase is not immune,” said Dimon, In past years, Dimon has stated numerous times that originating mortgages was a losing proposition for Chase. “The company is currently reconsidering its place in the mortgage market. “Because of these significant issues, we are intensely reviewing our role in originating, servicing and holding mortgages,” Dimon said. “The odds are increasing that we will need to materially change our mortgage strategy going forward.”
I totally agree with Mr. Dimon’s statements; and I’ve witnessed countless well-known retail banks shut down their mortgage divisions. However, while the mortgage broker industry is every bit as regulated as the mortgage banking industry, over the past five years, mortgage brokers have seen a tremendous increase in business and market share. Why would this be??
While the boiler-room business models of the ‘Big Banks’ promote selling and maximizing profits, local, professional, home-town mortgage brokers value the relationships they’ve built serving the needs of their neighborhoods and their clients. Local Mortgage Brokers often have less overhead than the ‘Big Banks’ and are not limited to the products of only one bank. Mortgage Brokers work with numerous lenders and can deliver a loan that is specifically appropriate for you.
If you’re concerned over whether “your bank” will be there for you when you’re ready to buy a home, you should be!
At Mortgage Wealth Advisors, we have a very different philosophy and approach than traditional mortgage lenders. We pride ourselves on providing our clients with a smooth process, a quick closing, and a concierge experience. Contact Mortgage Wealth Advisors for a No-Cost, No-Obligation Consultation.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.