Mortgage Brokers Are Dead Men Walking

This week, I had the pleasure of a really productive week. One where I felt fairly caught up and able to get stuff done, close a few loans, and meet with some of the mortgage industries finest people. One of the conversations I had that added the most value covered a ton of topics, and was with one of the mortgage industry's biggest names. This person is well known, has been around forever, and knows their stuff - and they shall remain nameless in this article because I didn't discuss creating an article from the conversation with them.

But among the many, many things we talked about (technology, the industry, the past year, and where things are headed), one really big point was brought up - mortgage brokers. More specifically, the recent exodus of many mortgage professionals into the world of brokering.

The quote that stuck the biggest chord with me was this "Mortgage brokers are 2 distinct groups -

• Entrepreneurial spirits - people that love running their own business, doing things their own way, with complete freedom and accountability for success and failure.
• Dead Men Walking - people who can't hack the business, can't figure it out, couldn't stay afloat with a different model, and are diving into the world of the mortgage broker in hope that slightly lower rates (in some cases) can save their career

The reality of this discussion brought me back to the days before the "great recession", an event blamed largely on mortgage brokers (I'd argue, that blame is rightfully placed - and I was broker at the time, so spare me the arguments against that fact - there aren't any good ones). At the time, mortgage brokers offered some pretty crazy products that the larger banks couldn't offer. Rates were a little better than the larger banks could offer. One major difference is service at a broker shop used to be really easy to pull off - that was a tremendous advantage to an office with a great operations team and leadership. Today, it's a little tougher to offer that level of service at a boutique level due to regulatory constraints and the many extra steps in a loan process today that a broker cannot generally handle on their own.

At that time, a lot of poor salespeople that probably shouldn't have been in the mortgage industry landed at broker shops. They offered poor advice, did a lot of things they shouldn't in the name of a paycheck (many of which I witnessed first hand), and eventually, followed the dinosaurs to extinction once the market cut their finance stream off.

Today, the products aren't as risky. The marketplace isn't as fragile. But the droves of people heading to the broker world are generally not the entrepreneurial spirits - the entrepreneurs have BEEN brokers for years. Many of them never stopped being brokers through the tough years. The people making moves today are the dead men walking. That term shouldn't be taken as an insult, if it is in fact a reality. But if you're a dead man walking, my advice is to take a long, hard look in the mirror - and FAST. The market's not getting easier. .125 lower in rate isn't going to expand your pipeline, and any volume you DO get from the lower rate will be balanced out with the fact that now you're responsible for more moving parts on every loan, and your clients are mostly now rate shoppers who will leave you, too, for the next .125 lower.

So for the DMW - take a look in the mirror. If you're not cutting it and you've burned through 5 companies in the past 5 years, consider this - maybe you're not cut out to be a professional loan officer....yet. For now, get some help. Work in an assistant role. Get a mentor. Participate in coaching. Instead of seeking out a path to make things easier, find a way to get better.

There are professionals doing a lot of business and making a lot of money as brokers. And bankers. And correspondents. It's not the business channel - it's the professional. Be a great one, and if you're not, don't look for an easier way. Look for a way to get better.