Grapevine: The End?(Internet)(Column)

Vinnie The Leg Breaker: So I have a theory and I am looking for holes in it. From what I have been reading lately it appears as if there may be a secondary market opening up. Recently there was a trade in jumbos with Redwood Trust and today Flagstar came out with a new program called "Advantage" which is not Fannie, Freddie, or government of any kind.

My theory is that the latest beat-down of brokers (new comp guidelines) is to enable the opening of the secondary market. It could be for a few reasons such as get rid of the brokers as investors are convinced we are the devil.

Or they want to push broker comp down to the point that the "salesmen" move to more profitable pastures and LOs are just order takers who are much easier to control since they cannot think outside the box.

For whatever reason I think the death of the broker, which is coming soon, is all tied to the opening of the secondary market.

The reason I say true brokers are done is due to the new safe harbor requirements. It will be impossible to ensure that each of your customers gets the best deal you can offer on any given day if you have more then two or three lenders. And if all you have are two or three lenders are you really a broker?

REBroker:I would ask if you work with more than three banks, are you a serious broker?

The Voice of Reason: It's a relationship business not a commodity business.

Sfranny: Give me a break; the state doesn't have the money or will the Fed with CFPB to look at every broker's loan files. Please. If the banks and Fed wanted brokers gone, we'd be gone by now.

Vinnie The Leg Breaker: True they cannot look at all broker files, but all they need is to look at enough and declare those loans in violation of Reg Z and therefore unforeclosable. What is the minimum net worth they will require to cover those potential buybacks?

It is a relationship business, but so was insurance until Progressive, GEICO, SAFECO, etc., came into play. Sure State Farm, Allstate, Nationwide, MetLife still have a huge piece of that pie, but they lose a little bit every year to the commodity companies.