Don’t Hang the Mortgage Brokers

Mortgage brokers are easy targets these days.  Everyone blames us for the mortgage mess. With the political season heating up all the major (and minor) presidential candidates piled on us last week. Below is a sampling (from CNNMoney).

Last week, Sen. Hillary Clinton came out with a plan to address lending abuses. One of its main policy planks was to “crack down on unscrupulous brokers.”

As head of the Senate Banking Committee, Dodd has been more out front of the issue than other candidates, leading several hearings to investigate the subprime mortgage crisis.

Sen. Barack Obama has introduced legislation targeting fraud and predatory lending.

The best response to the attacks is from Brad Inman:

Brad Inman, publisher of Inman News, an on-line chronicler of the real estate industry, said, “I find it odd that mortgage brokers would carry the weight of blame for this entire web of sins.”

According to Inman, the loans originated by brokers wouldn’t have been offered to consumers if Wall Street wasn’t ready to buy them to sell on the secondary markets.

Who are we kidding here? The greed cycle started on Wall Street and it should end there. I may be doing home loans but I’m not the one setting the rates and making credit easy. The Fed made that choice after 9/11. Back then Alan Greenspan himself conceded that he didn’t know what the consequence of easy credit would be.  Well the wreckage is all around isn’t it Mr. Genius?

From a mortgage brokers perspective it was dizzying how many wholesale reps used to come by our offices offering stated income 100% with 560 FICO scores.  I mean girls in tight skirts and lots of makeup with multiple lunch offers. All they wanted was a name, address and social security number. The rest didn’t matter. I’m serious. (Some didn’t even require a social security number.)

Now, who benefited from all this? The mortgage broker had a heck of a few years but that is peanuts compared to the money passed around on Wall Street. I’m sure lots of bonuses were paid and many in management bought boats and luxury apartments. Where are these people? Who are these people? If this is such an injustice then why are they still walking free? What did they know and when did they know it?

Don’t get me wrong, the industry is not innocent, but the people most responsible for the mess are wearing suits in New York and Washington. We the little guy just got caught up in the euphoria.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.