“Right now the residential lending industry is a dog that continues to be beaten after the bad behavior has stopped and doesn’t know why.”
The above quote and today’s info is from Rob Chrisman’s excellent commentary.
A few quick stats: It now costs a mortgage company almost $8,000 to close a loan in our post TRID environment. Profits per mortgage loan were less than $500 per loan in Q4 of 2015, down from $1,238 in Q3.
Running a profitable mortgage company now days is extremely expensive, risky and difficult, as the slate of recent mortgage company closings might indicate.
The primary reason is the massive web of regulations imposed on the industry since 2008.The industry brought on the reg’s itself but the mere requirement of legitimate “income documentation” solved most problems. Regulators have gone way too far with restrictions, arbitrary rules and disclosure requirements.
This all translates to the complete lack of “make sense” lending, and much higher costs and more work for the borrowers that regulators are supposed to protect.
On the lender side, we too have to work much harder, and most painful, we have to incur massive costs whether a loan closes or not.
One take-away is to be leery of politicians and regulators who want to solve all problems (that no longer exist) in an industry they do not fully understand with heavy-handed regulations.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646