What Does the Future Hold for Independent Mortgage Brokers?

Market analysts have been speculating about the imminent death of the mortgage broker for a while. Many banks suffered huge losses when the markets crashed in 2008. They also had to deal with low interest rates and a slow economy. As a result, many of them quickly left the marketplace. At least some of them have started working directly with the homebuyer.

Does that mean that the days of the mortgage broker are numbered? Yes and no.

There has been a gradual decline in the number of mortgage brokers over the last few years. Their numbers may drop even further during the coming years. This, however, doesn't mean that all independent brokers will have to quit the market soon. That is unlikely to happen.

What does the mortgage broker do?

Mortgage brokers act as the middlemen between lenders and home buyers. However, the new rules issued by the Consumer Financial Protection Bureau may force many independent brokers to quit the business.

The new rules prohibit mortgage brokers from placing homebuyers in costlier mortgages with the sole objective of earning a higher commission. They will also prevent the broker from receiving commission from both the lender and the borrower. While brokers are not exactly happy with this development, consumers will definitely welcome this move because it makes working with the broker safer.

However, this many force many brokers to quit the business. And if that happens, the consumer may find it difficult to shop for a mortgage. Brokers make the whole business of getting a mortgage easier. They understand the market and know the best deals and rates. They have access to banks.

If there are no brokers, homebuyers will have to go from lender to lender until they find the best deal. Getting a home loan is already difficult because it requires a lot of documentation. And if the broker vanishes from the scene, the process makes even longer. This will affect the borrower in many ways.

It is true that they can log on to the mortgage shopping sites. However, most of these websites only provide referrals. They don't provide enough information for the borrower to compare rates.

Working with a mortgage broker is risky. Many unscrupulous brokers place borrowers in risky mortgages. They are only concerned with their commission. In fact, these brokers have even been blamed for the crash of the housing sector.

However, now that many of these greedy brokers have quit the sector, the new rules eliminate most of the risks associated with working as a broker. Now for the borrower the biggest challenge is finding a mortgage broker who has access to a huge number of lenders.

Over the last few years, several big banks in the US and Canada announced that they would no longer work with independent brokers. Some of these banks even went to the extent of saying that loans originated by their loan officers performed much better.

Numbers don't lie
 

Independent brokers have been quitting the industry for a while. That was mainly due to the crash of the housing sector.

While in 2006, The National Association of Mortgage Brokers had around 25,000 members, their number fell to nearly 5,000 in 2013. This drop in their number has also reduced their market share. During the last 2 years, independent brokers originated only about 10% mortgages. They accounted for nearly 30% of the mortgage originations during the period between 2004 and 2006.

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How Walkability Helps in Selling Real Estate

Walkability has suddenly become a buzzword. It is a broad topic that involves health, economics, community, demographics, and the environment. It might seem complicated, but it is just common sense.

Homes that have easy access to shops, services, and offices by foot tend to sell for a price premium but that is hardly surprising. When people have convenient access to service areas, they get to save a lot of money on transportation. They also get to save time. And when they walk their health improves. When more people walk there will be fewer vehicles on the road. As you can see, this is good for the environment as well.

In other words, walkability makes a community more livable and eco-friendly. Developers are keen to provide walkability. When they build communities where people don't have to drive, they can charge a higher price.

People now want to walk to work. They also want to live in bustling townships that have everything they need within walking distance. Walk score, a new metric that developers now use to sell their properties, is a measure of services available within a certain distance. Homes that are close to food stores, transit and government offices tend to have a walk score of 90 percent or above. Unfortunately, this metric doesn't consider the quality of the walk. A short walk along a dark underpass is much less pleasant than a relatively longer walk along a tree-lined street with beautiful homes and shops.

Here are a few things builders need to take into account when they build homes that boast of walkability.

Future proof the homes

When walkable homes are built with care and craft, their value will continue to appreciate. The key is building communities where people want to live and spend time.

Be street smart

The sidewalks should be at least 5 feet wide. If they are narrower, they won't let couples stroll.

Builders interested in creating long time value now even consider building streets that are lined on either side by trees. If budget permits go for it and when choosing trees mix them up.

Encourage interaction

When you build public spaces, you need to look at them as outdoor living spaces that provide a sense of privacy and enclosure. They must be configured in such a way that stores should face each other. Also include large porches in the front so that families can interact with their neighbors. Porches that are too close to sidewalks need to be built with special care. These kinds of porches should be elevated so that homeowners feel comfortable.

Choose tenants wisely

While choosing tenants for the stores, make sure that they complement each other. For example, a bookstore, a clothes store, a restaurant and a coffee shop contribute to one another and add to the amenities.

The growth of the walk to work culture

In cities that have a well-defined work culture, more and more people are looking for properties that are within walking distance of their workplace. These properties command a price premium and their value tend to appreciate over time.

While trying to develop walkability, real estate professionals and builders must not compromise on aesthetics. Simply put, walkability helps sell homes.

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