IndyMac tightens broker requirements for new and existing wholesale mortgage brokers

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Thanks to a friend for the tip. IndyMac Bank is changing its broker approval process and re-certification process for existing brokers. The move is an effort to improve the quality of their wholesale originator partners. Here are the details:

In an effort to promote the highest quality of business, IMB is changing approval and re-instatement standards.

All new and re-activated broker applications begininning (sic) November 15th, 2007.

IMB will now require $250 non-refundable application fee to sign up as a broker.

IMB will now require $250 non-refundable application\review fee to be re-instated if suspended for inactivity

Minimum Fico standard for all approved or re-instated brokers will be 620

Brokers will have to have a minimum 25% ownership in company AND be involved in day-to-day operations

Most of you are probably expecting me to lob another comment in as to how this is just another step down the path of broker elimination; but I’m going with a different theory on this one. If IndyMac is tightening up standards on its wholesale partners it is most likely in response to conversations had with investors on the securitization side about pricing and quality. If investors are asking for more stable wholesale originators with a few areas tightened up in terms of who sends loans via wholesale it means they are still willing to buy wholesale loans at a price point profitable for IndyMac.

This could be excellent news for those brokers who meet the above qualifications. On the other hand, if IndyMac is getting killed on its loan pools from wholesale originators and are going hat in hand to investors trying to persuade them that they have cleaned up their wholesale channel with the above changes it could spell trouble for brokers. Investors could come back with tighter restrictions or requests that are infeasible to support through oversight of a wholesale channel. This could put pressure on IndyMac to consider shuttering the wholesale side or reducing it to a minimal size to be able to manage investor requirements in a cost-effective manner.

What do you think?