Spoke to a mortgage broker last night. He says business is down but not too bad. Apparently he specialized in sub-prime loans and it wasn’t uncommon for him to make 6 points off a loan. thats $24,000 commission off a $300,000 loan. If that isn’t obscene profiteering I don’t know what is.
WSJ online ran an article that shows how much money some brokers make. $120,000 is average, $1 million is possible and $10 million isn’t unheard of. All this money to do computerised loan processing and underwritting which doesn’t take too long. They predict that this business will do the way off the discount real estate broker offering fixed price servics regardless of the size of the loan. Here’s a snippet from the article.
Mortgage Brokers Benefit From a Refinancing Boom
By JOHN HECHINGER
Staff Reporter of The Wall Street Journal
From The Wall Street Journal Online
WALPOLE, Mass. — Tom Digan doesn’t have to make a hard sell these days to cash in on the mortgage boom. He just needs to pick up the phone.
In his small office, overlooking an auto-repair shop, the 44-year-old mortgage broker returns a call from a customer who wants a $240,000 loan — one of 50 to 150 daily calls that jam his voice mail. Mr. Digan checks a sheet on his desk, calls up an online credit report and offers a great rate: 5.5% on a 15-year mortgage. “I’ll write it up right now,” he says, scribbling financial information on an application.
Once the loan closes, Mr. Digan and his employer will split a fee that might make a corporate lawyer do a double take: $2,800. “I know what you’re thinking,” Mr. Digan says. “He made $1,400 in 15 minutes.”