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U.S. Broker Share Collapses

US-Broker-Market-Share In 2006, mortgage brokers originated 65% of U.S. mortgages according to the National Association of Mortgage Brokers (NAMB).

In three short years, U.S. broker share has collapsed to a previously inconceivable 15%.  (Again, a NAMB number.)

We’ve seen other sources estimate an even bigger drop.

The causes of America’s mortgage plight have been widely publicized:

  • Over-borrowing by U.S. homeowners
  • Applicants who weren’t properly qualified
  • Less focus on credit quality due to careless securitization
  • Mortgages with unrealistic rate resets
  • Inaccurate credit rating agencies
  • Lax regulation
  • etc………

U.S. brokers have been blamed for much of the carnage—and the blame is appropriate in many cases. As a result, major U.S. banks, wholesalers, and thrifts, shut down their broker divisions, leaving brokers with drastically fewer choices to fund their loans.

Unfortunately, many honest and responsible U.S. brokers are now paying a severe price, thanks to the bad apples.

Jim Murphy, President of CAAMP, says “The U.S. provides a very important lesson for Canadian mortgage brokers.”  It’s a saga that underscores the value of prudent regulation, licensing requirements, and education requirements–to name a few.  Murphy says “Most, if not all, of these requirements (were) foreign to the U.S. broker market.”

Thankfully, Canadian brokers never followed the American’s lead.  For that reason, Canadian mortgage brokers lead the world in professionalism and we have a fantastic opportunity to script our own future. But, may we never forget what can happen to an entire industry when individuals in that industry take shortcuts to make a buck.