SOURCE: Wall Street Journal

In an article titled "Credit Crisis Hits Small Lenders" today, the Wall Street Journal details many of the ingredients of just why so many lenders are either suffering or out of business. One of the more interesting aspects of this article is where the topic shifts slightly to address the crunch being felt by mortgage brokers as well.

"Brokers are suffering too as lenders rapidly change their guidelines and rely more on their own employees to originate loans."

Other evidence is offered, such as WaMu sending a note to brokers Friday saying it was reducing the amount of money they can be paid by the lender -- a fee known as yield-spread premium. While this primarily addresses the residential market, their point remains that there are a lot of brokers, both commercial and residential, who have been specializing in products that may no longer even exist.

And to emphasize their point they offered this graph of the increase in mortgage brokers, perhaps suggesting the fallout may be part of a natural cycle in the industry.

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