Competition at the point of sale

There has been a 50% increase in real estate brokerage firms entering into mortgage lending. The desire to follow the market leaders was a major factor cited in the leap into lending by realtors last year. The major trigger behind the recent surge in point of sale (POS) lending is that more than a dozen large brokerage firms are now boasting success with these ventures. Homebuyers are largely continuing to follow the advice of their real estate agent about which lender to use. Gratuities from lenders, and particularly from mortgage brokers, in an effort to attract business was found to be very common in spite of these being a violation of the Real Estate Settlement Procedures Act's (RESPA) prohibition against paying a thing of value for the mere referral of business. Running lean with high quality, most POS operations were profitable in 1994, and management was deeply committed. Typically, only the largest broker/owners have set up wholly-owned mortgage companies. Successful in-house lending operations produce mortgages of above-average quality.