Mortgage & Nonmortgage Loan Brokers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 6,800 mortgage and nonmortgage loan brokers in the US facilitate loans by connecting borrowers and lenders for a fee. Residential mortgage loans account for 75% of industry sales. Other sources of revenue include brokering and dealing services for debt instruments and loans to businesses.

Competition from Alternative Service Providers

Loan brokers compete with a variety of alternative sources, including direct lenders, online-only disruptors, and (for mortgage loan brokers) real estate companies.

Government Regulation

In the wake of the last recession and housing crisis, increased regulation in the mortgage lending industry has led to higher costs and limitations on fees and pricing.

Industry size & Structure

The average mortgage or nonmortgage loan broker operates out of a single location, employs about 14-15 workers, and generates about $1-2 million annually.

    • The mortgage and nonmortgage loan brokerage industry consists of about 6,800 firms that employ over 100,000 workers and generate about $12 billion annually.
    • The industry is concentrated; the top 50 companies account for about 54% of industry revenue.
    • C2 Financial Corporation is one of the largest mortgage broker companies and operates in ten states.
    • According to the Consumer Financial Protection Bureau, mortgage brokers account for 64% of origination volume.
                          Industry Forecast
                          Mortgage & Nonmortgage Loan Brokers Industry Growth
                          Source: Vertical IQ and Inforum

                          Coronavirus Update

                          Apr 27, 2022 - Sharp Drop In Originations Expected
                          • The Mortgage Bankers Association said it expects overall mortgage originations, which include refinancing loans, to decrease 35.5% year over year in 2022. The lowered outlook comes as demand for refinancing sinks. Applications to refinance a home loan were 62% lower in late April than they were a year earlier. Originations for purchases are still forecast to increase to a record $1.72 trillion this year, but the previous forecast was for $1.77 trillion.
                          • Demand for mortgages decreased 7.6% for the week ending April 23, 2022, compared to the prior week, according to the Mortgage Bankers Association (MBA). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) reached 5.37% in late April, the highest rate since 2009.
                          • The number of building permits issued for privately-owned housing units was unchanged month over month but increased 6.7% year over year in March. Housing starts increased 0.3% month over month and 3.9% year over year in March. Housing completions decreased 4.5% month over month and 13% year over year in March.
                          • About 780,000 homeowners remained in active forbearance plans as of January 11, 2022, according to mortgage technology and data firm Black Knight. The number of loans in active forbearance fell by 43,000 – or 8% - compared to the same time a month earlier. The CARES Act allows homeowners with federally backed mortgages to suspend payments for up to a year. However, the US government only backs about half of all US mortgages. There is currently no deadline to apply for initial forbearance for conventional loans. Homeowners can apply for an initial six-month forbearance for FHA and USDA loans if the US remains in the COVID-19 National Emergency. The deadline to request an initial forbearance for VA loans was September 30, 2021. As of January 11, 2022, 89% of single-family homeowners who entered COVID-19-related forbearance plans have since exited them.
                          • Sales of previously-owned homes decreased 2.7% month over month and 4.5% year over year in March, according to the National Association of Realtors (NAR). "The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power," said Lawrence Yun, NAR's chief economist. "Still, homes are selling rapidly, and home price gains remain in the double-digits.”
                          • The Biden administration announced in July 2021, a plan to provide more help to distressed mortgage borrowers, enabling them to avoid foreclosure, according to The Wall Street Journal. The new relief program allows borrowers with loans backed by the Federal Housing Administration (FHA) and other federal agencies to extend the length of their mortgage and reduce monthly payments by up to 25%. The nationwide moratorium on foreclosures expired on July 31, 2021. There was an initial surge in foreclosures after the moratorium expired. Still, they have since declined amid support by government and mortgage industry programs and the recovery of the US economy, according to property data firm ATTOM. In December, foreclosures were down 12% compared to November but were up 55% year-over-year, according to ATTOM. For all of 2021, foreclosures were down 29% from 2020 and were at their lowest levels since tracking began in 2005. While ATTOM says a slight uptick in foreclosures is likely in the first quarter, they probably won’t return to normal levels before the end of 2022.
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