I just read this letter from the National Association of Mortgage Brokers which, for the most part, I find spot on. This industry is in jeopardy of ceasing to exist with the latest actions of some private mortgage insurance companies and banks. I work for a Correspondent Lender which is treated slightly better than a classic Mortgage Broker because we have "more skin in the game"…correspondents take the credit risk for the file. However, I do not want to see my mortgage broker brothers and sisters ran out of this industry. Competition is good for consumers. It helps to keep your rates and costs down. If we wind up with just a couple mega banks for mortgages, you can bet that the consumer will suffer.
Mortgage brokers have been wrongly blamed by banks and the media either intentionally or by misuse of words ("mortgage originator" would be more correct than mortgage broker).
Here are some points from Marc Savitt's letter:
- Mortgage brokers have never developed one single loan product or program. However, some lenders and banks did, aided by Fannie Mae, Freddie Mac and Wall Street.
- Yield Spread Premium (YSP) has been vilified when it actually pays for closing costs. Mortgage brokers are the only originators who have to disclose what funds are being received as rebate. Mortgage bankers, correspondent lenders and credit unions do not.
- Mortgage brokers are currently highly regulated. Over the past two years, DFI has regulated mortgage brokers and correspondent lenders. Mortgage bankers are not nearly as scrutinized in Washington State. Consumers are probably safer working with a mortgage broker or correspondent lender that is regulated by DFI.
If you have ever had a mortgage and a mortgage broker or correspondent lender help you–please contact your elected officials in "the other Washington" and let them know. YOU might save a crucial industry at a critical time.
SAVE OUR MORTGAGE BROKERS!