New Wholesaler Attitudes
Continuing on our latest theme Industry Checks & Balances … for those of you who entered our industry since the Fall of 1998 (the beginning of the last industry cycle that just ended), this will be important news for you especially.
Unlike the way things have been during your career to date, traditionally the wholesale lenders always 
would complete their ‘due diligence’ investigation to begin with, when a mortgage broker first asked to submit loans to them for funding. In your experience, if you had a loan, the wholesalers would accept it, and pretty much would care less who was presenting them with the customer’s funding needs. Although this may seem like a small barrier for entry to you, once proper investigation kept a lot of the riff-raft out of the business. A critical check and balance to safeguard the wholesale lender’s future. An essential ingredient which might have kept a hundred or more of them from closing their doors a short time ago.
Recently you may have become aware, many wholesale lenders, like Wells Fargo to name one, are starting to require certain production volume from mortgage brokers, or they will no longer do business with them … those that are ‘cut-off’ and new brokers will have to pay a fee to be reconsidered. This is one way to get rid of the deadwood, and leave a smaller population of producing mortgage brokers, but it doesn’t necessarily address the issue of having only quality mortgage brokers submitting transactions for consideration, it is a step in that direction, but a tiny one. However, this approach is another typical one at this point in the cycle for wholesalers.
All of them, requesting more extensive verifiable documentation from every mortgage broker before they can get approved to do business with wholesale lenders will be next, as they move through this industry cycle. Before long, gone will be the days when if a mortgage broker has a potential loan, then anybody would accept it … the consequence will be fewer mortgage broker shops, better customer/borrower loan portfolios, and a badly needed cleaner stronger more solid industry for everybody. A long overdue return to old-fashioned sound business practices.
