“Thanks to overbearing post-crisis government mortgage regulation, not only can’t many get the mortgage they want and deserve (costing 2 million jobs per JPMorgan’s Jamie Dimon), but as I pointed out recently, it costs roughly double ($4,000 pre-crisis vs. $8,000 today) for a lender to make a home loan. And now, on top of that, because of reduced competition caused by the crisis and government regulation (which acts as a barrier to entry), mortgage lenders today make almost 2.75 (60.5 bps divided by 16.2 bps) times the profit margin they did pre-crisis…
…This is Elizabeth Warren’s record…great for the surviving lenders and not so great for the American home borrower and prospective homebuyer.”, Mike Perry, former Chairman and CEO, IndyMac Bank
Excerpt from mortgage industry newsletter:
June 4, 2017
To Our Clients, Colleagues, and Friends:
• In the five years ending in 2016, the average profit per loan for mortgage bankers was 60.5 bps. Now go back to the five years ending in 2008, before the financial crisis led to the Fed lowering rates, and the average profit per loan was 16.2 bps. Would you be willing to go five years earning just 16.5 bps per loan?