A growing share of loans originated by banks are coming through their wholesale/correspondent channel, according to the American Bankers Association’s annual real estate lending survey.

While the wholesale/correspondent channel is responsible for a marked increase in production – up from 11.3% of all origination’s in 2009 to 13.6% last year – the retail channel has faltered, the survey found.

Although retail still originates the lions’ share of loans made by the 178 institutions which took part in the latest study, its share dipped from 81.3% in 2009 to 77.6% in 2010.

Comergence Commentary:

For those of us who are veterans of this business, this survey really comes as no surprise. In all of our years, we’ve yet to witness a retail-only origination channel that can sustain profitability for any length of time. Bricks and mortar costs are just too expense. This is why the TPO origination channel has always made the most sense  for wholesale lenders.

In comparison to the sheer number of available TPOs from which to source loans, a bank or mortgage banker who originates retail loans only and has no wholesale component, simply cannot originate as inexpensively as an independent mortgage broker can.

Read the rest of the article here

Technorati Tags: Banks, Mortgage, mortgage applications, mortgage broker, Mortgage Brokers, mortgage lenders, Wholesale Lending