Competition in Lending Good News for Borrowers


While Homewood Mortgage, the Mike Clover Group has been offering low loan origination fees in Texas and Washington for many years, lenders across the country have now started following suit.

In fact, reports that in the 12 months ending in June, the average mortgage origination fee fell by 22% nationwide.

Why? In a word: Competition.

Traditional banks are experiencing more and more competition from non-traditional lenders. Borrowers now have more options, so they don’t have to say yes to high fees.

Average costs vary from state to state, and ranged from $874 in Wyoming to $1,208 in Arizona. Our average fee at the Mike Clover Group is lower than the Wyoming average, at $855.

Banks are seeing smaller profits

The competition that drives fees down is coming at a time when banks are facing higher and higher mortgage-lending costs due to the provisions contained in the 1,800 pages of the 2010 Dodd-Frank Act that deal with lending. As each new regulation is implemented, lender’s costs rise and profits fall.

For example: In the first quarter of 2014, banks reported an average profit of $1,654 per loan. By first quarter 2015, that figure had dropped to an average of $1,447.

Even as banks grant more loans, their profits are dropping. Wells Fargo & Co. reported a 1% drop in revenue after a 32% increase in loan originations. JPMorgan Chase & Co. claim a 39% drop in revenue from making and servicing home loans, even as lending increased by 74%.

Non-traditional lenders are taking a bigger share

In June, non-traditional firms accounted for 55% of all mortgage lending in the U.S. – double the share they enjoyed at the end of 2012. In 2006, at the height of the housing boom, the nonbank share was 30%. Stephen Oliner, a resident scholar at the American Enterprise Institute in Washington, appears to be placing blame for the financial crisis on these non-banks, stating that they dominated the market for the sub-prime mortgages and other risky loans.

Now he warns that while these lenders are saving borrowers some money, they create a risk for the taxpayer. He believes that when the next recession hits and some stop paying their mortgages, taxpayers will be on the hook.

Who are these lenders? The list includes peer-to-peer lenders, online firms, and closely held originators such as Quicken Loans, Inc.

Does this mean you’re SURE to get a loan with lower costs?

Absolutely not. What it means is that when you shop around you’ll get a loan with lower costs. Not all lenders have cut their fees, assuming instead that consumers simply won’t ask.

So get in touch

When you want low loan origination fees combined with fast and friendly service, look to the Mike Clover Group at Homewood Mortgage.

Remember, you’ll increase your chances of having your offer accepted when you’ve been pre-approved for a home mortgage loan before you shop. The Mike Clover Group at Homewood Mortgage will be happy to help, so give us a call at 800-223-7409 or visit us at

Mike Clover

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 23477



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