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Mortgage Origination Regulation: The Broker Disadvantage

David Lykken
Nov 21, 2014

I've been thinking a lot about the state of mortgage brokers lately. I've seen a great resurgence of the sheer number of brokers within the past several months. Rumors of their death are just that—rumors. I assure you: The mortgage broker is alive and well.

The broker provides a distinct advantage to consumers in the level of personal service they are able to provide. That, I suspect, is why I've seen so many brokers come out of the woodwork and reclaim their space in the industry. But there is an area in which I think brokers are facing a sever disadvantage—at least in today's climate.

Regulation, particularly that involving origination, seems to be more in favor of the banker than the broker. For example, bankers have greater liberty in crossing state lines to originate loans than do bankers. Brokers are also more heavily monitored as far as the new compensation laws go. And then there are the educational requirements—brokers tend to be given stricter requirements in regards to their necessary certifications and qualifications than do bankers.

If the brokers are going to stake their claim in the future of the industry, theirs may be one battle that is won in Washington. At least on some level, the success of brokers will depend on their ability to lobby for equity and a level playing field in the industry. I think the odds are good that they have the drive and the interest to change things. We'll just have to wait and see what happens ...

David Lykken is 40-year mortgage industry veteran who has been an owner operator in three mortgage banking companies and a software company. As a former business owner/operator, today David loves helping C-Level executives and business owners achieve extraordinary results via consulting, coaching and communications, with the objective of eliminating corporate dysfunction, establishing and communicating a clear corporate strategy while focusing on process improvement and operational efficiencies resulting in increased profitability. David has been a regular contributor on CNBC and Fox Business News and currently hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He produces a daily one-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites across America. He may be reached by phone at (512) 501-2810 or by e-mail at [email protected]


Nov 21, 2014