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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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

                          Recent Developments

                          Mar 9, 2023 - Decreasing Home Sales Prompt Staff Reductions
                          • Companies have let go a combined thousands of mortgage professionals, according to National Mortgage News. Drivers of staffing cuts include near 30-year-high interest rates, declining origination and refinance activity, and general economic uncertainty anticipated in the next year-and-a-half. The industry-wide shakeup is the first since 2018, when firms cut jobs in response to a cycle of reduced homebuying demand.
                          • Mortgage giants Fannie Mae and Freddie Mac raised the limits of government-backed loans to a record level for 2023, with the maximum loan limit reaching more than $1 million for high-cost areas. Home prices are still climbing despite soaring mortgage rates, with prices up 12.21% year over year in the third quarter of 2022, according to the Federal Housing Finance Agency. The baseline conforming loan limit for 2023 will be $726,200, up $79,000 from 2022’s limit of $647,200. The increase for 2022, which was up $98,950 from $548,250 in 2021, was the largest percentage increase and dollar increase going back to 1980. Higher-cost areas will have a new loan limit of $1,089,300, or up to 150% of the baseline loan limit. The loan limit for high-cost areas is $970,800 in 2022. Mortgages above these loan limits are considered “non-conforming” or “jumbo” mortgages, and typically come with higher interest rates.
                          • Home builders stuck with more houses and land than they can sell are contacting investors in an attempt to sell homes in bulk to reduce inventory, according to The Wall Street Journal. Bruce McNeilage, co-founder of rental-home investment company Kinloch Partners, says that he is being cold-called by builders offering to sell him thousands of completed or planned homes at discounts of up to 20% off what they would likely charge prospective home buyers. Experts say that landlords who can pick up large bundles of homes are the most eligible customers remaining with mortgage interest rates pushing 7%, and traditional buyers disappearing from model home showrooms across the country. September 2022 was the worst month for new construction buyer traffic since 2012, according to the NAHB/Wells Fargo Housing Market Index.
                          • A Biden administration program is providing 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 but they have since declined amid support from government and mortgage industry programs and the recovery of the US economy, according to property data firm ATTOM.
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