As the crisis unfolded, many lenders either saddled broker-originated loans with onerous restrictions or, like JPMorgan Chase and Citigroup, stopped lending through brokers altogether. Over the last few years, several state associations have taken the ‘broker’ out of their names, substituting the word ‘professional.’
But while the stigma on the word ‘broker’ might have had something to do with those changes, Marc Savitt, president of the National Association of Independent Mortgage Professionals, says it was hardly the only reason.
“I’m sure that played a part in the name changes, but what a lot of the groups did – especially the state associations – is they evolved into groups that included other mortgage originators,” he says.
“If you’re an appraiser or a mortgage banker, you may not want to join a group that says ‘mortgage broker’ because you’re not a broker.”
Savitt feels that others in the industry – among them some of the big banks – tried to tar brokers with the blame for the financial meltdown, and that for a time “the term ‘mortgage broker’ was not seen within the industry as a favorable term – not by consumers, but by some within the industry,” he says.
“I think those that were pointing the fingers and painting brokers as the bad guys tried to create that image. The bad rap was being pushed by people who were painting the brokers as bad actors ... Every crisis needs a scapegoat, and mortgage ‘brokers’ were the scapegoat in this crisis.”
Some brokers recognize that the word has negative connotations for some. Michael Deery, president of Citywide Financial Corp in San Diego, calls himself a ‘mortgage planner.’ He believes there’s still some lingering stigma from the financial crisis.
“It’s easy to jump on the bandwagon. That stigma will carry. It’s just the way it is in society,” he says. “I hear it every now and then: ‘Oh you’re a broker.’ Well, what does that mean?”
But Deery feels that most consumers ultimately don’t make fine distinctions between titles. “I call myself a mortgage planner, mortgage specialist, mortgage advisor – but at the end of the day, I don’t think these consumers really care,” he says. “Maybe two out of 10 might say, ‘Are you a broker?’ ” he says. “I have absolutely no qualms calling myself a mortgage broker.”
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The aftermath of the housing meltdown saw scorn heaped on mortgage ‘brokers,’ who shouldered blame in the public’s perception out of all proportion to their actual responsibility.