Fewer Mortgage Originators Are Not Good For Competition or The Consumer

Over-regualtion and over-compliance are causing many small to medium size mortgage lenders and mortgage banks to either consolidate or, pass the higher costs onto borrowers, or close down all together.

I’ll be the first to admit that for years there was too little regulation, or actually the government turned a blind-eye to the enforcement of the exisiting mortgage regulations and laws. So instead of enforcing the laws and putting the big banks executives in jail, they bailed them out and over-regulated the industry driving out many of the smaller mortgage lenders that provided the best customer service.

Here is just a small sampling of this week’s mortgage bank and mortgage company mergers from the Rob Chrisman Report:

Recently in Texas Pilgrim Bank ($386mm) announced it will acquire State National Bank of Texas ($240mm). Up north in Ohio First Citizens Banc Corp. (NASDAQ: FCZA), and TCNB Financial Corp, Dayton, Ohio announced that they have signed a definitive agreement and plan of merger which provides for First Citizens to acquire TCNB, and its wholly-owned subsidiary, The Citizens National Bank of Southwestern Ohio (“Citizens National”), in an all-cash transaction. Cape Bancorp, Inc. (NASDAQ: CBNJ), the holding company for Cape Bank, and Colonial Financial Services, Inc. (NASDAQ: COBK), the holding company for Colonial Bank, FSB, jointly announced they have entered into an agreement and plan of merger. In nearby Kentucky, Town Square Bank ($430mm) will acquire the Commonwealth Bank, FSB ($20mm). In the Great State of Texas First National Bank ($782mm) will sell two branches to AIMBank ($501mm); the branches have about $180mm in deposits. And Community Bank ($3.5B, CA) announced a new private banking division called CH Cook & Co. Private Client Advisors will focus on developing banking relationships with high net worth customers.

Do you really think that fewer mortgage companies and mortgage originators will lead to more competition and better pricing for the consumer?

If you do, I have a bridge I want to sell you.

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