houserefinancecenter.com Blog

We Do Not Need Mortgage Brokers

October 6th, 2010

Mortgage brokering might be a job of the past. Major lenders have discontinued accepting business from mortgage brokers. JP Morgan Chase and Bank of America are two banks that have put the stop sign on mortgage brokers. This leaves Wells Fargo as the only large bank that is still using mortgage brokers.

Much blame has been heaped on the heads of mortgage brokers for the rise in defaults and foreclosures. A study by Columbia University has shown that mortgages from mortgage brokers are 50% more likely to default than those originated from the banks.

The “haters” of mortgage brokers have long contended that the brokers generally put borrowers into loans that they can not afford. Some people would go as far as to claim that mortgage brokers submitted applications with inaccurate information.

You really do not need a mortgage broker. With advances in the internet, anyone with a bit of patience can search for a lender and obtain a mortgage. They are some borrowers, because of a busy schedule, or traveling for work, will find it too time consuming to arrange a mortgage by themselves. This is a good argument for hiring a mortgage broker.

Our position is that a mortgage broker should be considered a professional. As such, he should be paid a fee for his services. Like a lawyer, he should get a retainer. And when the task is completed, he should present his invoice and be paid. If he is unsuccessful in placing the loan, then the fee would be reduced. As long as he can prove that he worked the file then he should be paid something.

With major lenders cutting off the broker channel, there will be less avenues for borrowers to turn to. This could lead to higher rates in the long run.

Related articles by House Refinance Center

>> How To Select A Mortgage Broker

>> National Foreclosure Moratorium

Related articles by Zemanta

• Debating the Value of Mortgage Brokers (blogs.wsj.com)
• BofA Quits Wholesale Mortgage-Lending (dealbook.blogs.nytimes.com)

Entry Filed under: foreclosure