How might mortgage turmoil affect you?

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To all the agents in the house,

There was a moment in Compass's first-quarter earnings call that turned my face into a slightly smiling emoji.

CEO Robert Reffkin noted Compass had "just begun to build" its adjacent services of title and mortgage (it announced a mortgage joint venture with Guaranteed Rate last July) and that, "it represents a small fraction of our revenue today, just 1%."

Therefore, Reffkin reasoned, "The recent sharp downturn of the refi business that others are having to contend with, is not having a material impact on our financials."

So, Compass not developing a mortgage division is a good thing because that division is now not in trouble.

The logic seemed far-fetched at the time, but I was wondering earlier this week if Reffkin had a point. As my colleague Connie Kim reported, Keller Mortgage, which is separate from Keller Williams Realty but part of the KWx holding company, seems to be undergoing a major material loss.

At the very least, the company is laying off a majority of its employees. One worker, who spoke on the condition of anonymity, told Connie that "after the restructuring" Keller Mortgage's 50 mortgage teams were reduced to about 10. Each team has about 15 employees, meaning if you do the math, about 600 people were laid off (Keller Williams declined to comment on the number of layoffs).

During the refinance boom, brokerages including Realogy and HomeServices of America rode their investment in mortgage to profitable quarters. In fact, the joint venture, typically a 50-50 partnership with a lender, was something of an elixir to an increasingly low-margin real estate business.

Based on what's happening at Keller Mortgage, plus layoffs at other mortgage lenders with real estate divisions, such as Knock, it seems mortgage is no longer the solution to brokerages' cash flow and profitability issues.

Agents, some of you are already feeling the pinch of modestly declining existing home-sales (and even declining new home sales). Have troubles with mortgage affected your brokerage? Are brokerages, for example, less likely to raise your commission split or expense account?

Please let me know if you have thoughts on how the declining fortune of some mortgage lenders affects you. I can be reached anonymously at mblake@hwmedia.com.

Sincerely,

Matthew Blake

Senior Real Estate Reporter