Small brokerages hit by credit crisis
We continue with our series Housing Madness, a look at the fall-out from the sub-prime meltdown. Small privately-run mortgage brokerages are disappearing fast. From WCPN in Cleveland, Mhari Saito reports.
Acquiring a mortgage loan (iStockPhoto.com)
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Scott Jagow: Since 2005, the mortgage industry has shed 125-thousand jobs. And not just at big firms. Many small brokerages have collapsed altogether. From WCPN in Cleveland, Mhari Saito has our story.
Mhari Saito: Mark Fabec opened Parker Mortgage in Rocky River, Ohio, with his wife in 2000. Three people worked there part-time, and his mom did the books.
Mark Fabec: We had a five-year goal to start a business before my 40th birthday, and nine days beforehand, we got the opportunity, and really been able to live our dream in the last eight years.
Fabec was a mortgage broker, a middleman who helps a borrower shop among lenders for the best loan. At its peak, Fabec's company made about 80 loans a year, about 20 percent of them subprime. Then, the real estate market fell apart.
Fabec: Even though we can help people still because we did the good loans and everything, with all the bad publicity out there I think people just sort of felt that, you know, if there was a choice between dealing with us or a bank they were going to a bank right now.
So on Jan. 31, Fabec closed his doors and went to a local bank as a loan officer. Sam Garcia of Mortgage Daily says it's hard to find national numbers on how mortgage brokers are doing, but what he hears is bad.
Sam Garcia: There's hardly any business out there, and the ones that are left are having to compete with the existing lenders.
In Ohio, the number of licensed mortgage-broker companies dropped 30 percent this year. And 2,000 Ohio loan officers have put their licenses on hold, twice as many as six months ago. Dwayne Dawson is trying to ride out the slump with his Northeast Ohio mortgage company. But he says the numbers of deals he's cutting are dropping fast.
Dawson: Percentage-wise my numbers have decreased maybe as much as 75-80 percent. I have to do a lot more cold calling. I'm concentrating on commercial transactions, as well.
But if the real estate industry continues to drag on, Dawson's going to find a new job. Fabec got his in two weeks. He said he believes one door closed, but another was meant to open.
Fabec: It really helped ease the idea of closing. I mean it still hurts when you close your own business, because I poured my heart out into it and spent my last eight years giving everything to it.
In Cleveland, I'm Mhari Saito, for Marketplace
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