Mortgage brokers are not obsolete

Real Estate

Mortgage brokers have apparently reclaimed both their reputations and their market share in recent years according to Archana Pradhan, a risk management analyst for CoreLogic. She writes in the company's blog that brokers' share of the conventional conforming mortgage market hit 16 percent earlier this year. While this is only half its share before the housing crisis when it accounted for about one-third of originations, it has doubled since 2011.

Mortgage brokers' reputation for loan quality took a substantial hit during and immediately after the crisis as foreclosure rates jumped. Their market share began to slip in 2008 as some lenders stopped offering credit through this channel. It had fallen to 7 percent by 2011. Now that their business is returning, Pradhan says their loans are performing well.

According to CoreLogic's Loan Performance Insights Report, the serious delinquency rate nationally, that is loans that are 90 or more days past due or in foreclosure, was 1.3 percent in July. This is down 0.6 point since the prior July. By comparison, that portion of loans originated by mortgage brokers had substantially lower rates, at least for those with loan to value ratios between 70 to 80 percent and debt-to-income ratios of 30 to 40 percent. That rate in July was 0.8 percent, down from 1.0 percent a year earlier. The rates are a 12-year low.

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