NEW YORK – The credit scores of millions more Americans are sinking to new lows.

Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.

Our most recent post about the future of mortgage brokers struck a nerve with many readers.

As we stated in earlier post, mortgage brokers need to adjust, adapt and find ways to ensure they can effectively compete and thrive.  If they don’t, they may become like the blacksmiths in the early 1900s when cars became the primary source of transportation. 

Regional mortgage bankers (RMB) with a retail and wholesale orientation may be the best partners for mortgage brokers.  We won’t call it what it really is, but the P&L branch concept is a viable way for mortgage brokers to be bolted onto a mortgage bank and still maintain the entrepreneurial spirit and flexibility of a broker.    We see many of our regional wholesaler clients converting some of their broker customers to branches. 

The official announcement by the Federal Government will come today, but the details came out yesterday about funding & requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed. Banks and other lenders would have to reduce the payments to no more than 31% of a borrower's income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether. And for borrowers who owe more than their home is worth, the US government, with its big budget surplus (right?) will be offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners.

A portmanteau means a blend of two or more words and their meanings into one new word.  An example is the word brunch meaning breakfast +lunch.  Another is smog meaning a combination of smoke and fog.  Some would consider a portmanteau a type of word morphing and we agree.  Mortgage lending has had its share of portmanteaus.  

Over the last several years mortgage brokers who were transitioning to mortgage banking were sometimes phrased as Brankers.  Branker is a morph of a mortgage banker and mortgage broker.  A Branker acts and operates as a mortgage broker and doesn’t perform many functions of a mortgage banker – underwriting, doc prep and secondary market --, but does fund and sell loans in their name as a mortgage bankers.