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Mortgage brokers' share of home loans on the rise
By Jeff Lazerson
What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.
Rate news summary
From Freddie Mac’s weekly survey: The 30-year fixed averaged 4.41 percent, up six basis points from last week. It’s the first increase in five weeks. The 15-year fixed rate averaged 3.83 percent, also up six basis points from last week.
The Mortgage Bankers Association reported a 2.5 percent decrease in loan application volume from the previous week.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $484,350 loan, last year’s payment was $15 higher than this week’s payment of $2,428.
What I see: Locally, well-qualified borrowers can get the following fixed rate mortgages at a zero point cost: A 15-year FHA (up to $431,250 in the Inland Empire, up to $484,350 in Los Angeles and Orange Counties) at 3.50 percent, a 30-year FHA at 3.75 percent, a 15-year conventional at 3.625 percent, a 30-year conventional at 4.25 percent, 30-year FHA high-balance (from $484,351 to $726,525 in L.A. and Orange counties) at 4.0 percent, a 15-year conventional high-balance (also $484,351 to $726,525) at 3.875 percent, a 30-year conventional high-balance at 4.375 percent, a15-year jumbo (over $726,525) at 4.0 percent and a 30-year jumbo at 4.75 percent.
What I think: Mortgage brokers are back in a big way, not just with mortgage shopper gains but also because institutionally based mortgage loan officers are transforming themselves into brokers.
Mortgage broker market share is rapidly rebounding from a low of about 5 percent market share that I recall after the mortgage meltdown.
“The current broker share of originations is 11.9 percent — the highest level in eight years, but a far cry from the more than 30 percent market share seen between 2003 and 2007,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance.
Membership and attendance figures from the Association of Independent Mortgage Experts show the number of brokers is rising.
Forty thousand mortgage brokers are members of AIME (not affiliated with National Association of Mortgage Brokers), and 1,000 from across the country converged on Irvine to attend its energetic, excellent and educational second annual conference in Irvine, according to its chairman, Anthony Casa.
Mortgage brokers are the lowest cost providers of mortgages, typically efficient small armies, always with the widest menu of loan programs. Mortgage brokers are the most nimble way that this growing wave of investor mortgage entrées can reach mortgage shoppers.
California holds the highest testing and background check standards in the country when it comes to licensing mortgage brokers. In addition to the National Mortgage Licensing process, which requires both a federal and state mortgage loan originator license, California mortgage brokers also must be licensed by the California Department of Real Estate.
As of March 1, there are 17,517 licensed mortgage brokers in the state and 5,880 licensed mortgage companies, according to Chika Sunquist of the California Department of Real Estate. That is an average of less than three licensed brokers per shop.
The department encourages consumers to make sure they are working with licensed mortgage companies by using the Verify a License function at www.dre.ca.gov, wrote Sunquist. You are encouraged to file a complaint if you’ve been solicited by an unlicensed person or harmed by a licensee.
At the AIME conference, an investor was offering a renovation loan as part of a Veterans Affairs Department purchase or refinance loan. So veterans can get in with zero down and fix-up funds to boot.
The total loan amount cannot exceed the projected increased appraised value after the improvements are completed. For example, you pay $600,000 for a tired property that requires $50,000 of cosmetic improvements. The VA appraisal projects the post-improved property to be worth at least $650,000.
Another great new program I came across was a very aggressively priced home equity line-of-credit that allows non-occupant co-borrowers to help you to qualify on a purchase, refinance or even a stand-alone cash-out second lien on your primary residence or a second home.
Generally speaking, loan amounts can go to $500,000 with middle FICO credit scores as low as 680.
Jeff Lazerson - Mortgage Columnist since 2011