C-Suite Financial Services Review: The Return of the Wholesale Mortgage Broker
Buckley C-Suite Financial Services ReviewClinton R. Rockwell, Kathryn L. Ryan, Andrew P. Pennacchia
The prevalence of wholesale mortgage brokers has fluctuated dramatically in the past two decades, peaking in the mid-to-late 2000s due to high homebuyer demand and a comparatively lax regulatory environment, and crashing with the housing market and subsequent financial crisis. The massive overhaul of the financial system, including the Dodd-Frank Act, imposed costly and complicated new requirements on an industry that was already struggling. Among these requirements were loan originator compensation rules that eliminated yield spread premiums, the lifeblood of brokers. The changes came as many banks were already shifting their focus from wholesale channels to direct lending.