NAMB President touts professionalism and education of today’s mortgage professional
JULY 13, 2012—Wells Fargo has announced that as of July 13, 2012, the company is no longer going to accept mortgage loans from independent mortgage brokers. According to an official statement from Wells Fargo, the company’s decision to discontinue funding mortgages originated, priced and sold by independent mortgage brokers through its wholesale channel is not related to a discrimination lawsuit filed by the U.S. Department of Justice (DOJ) against Wells Fargo. The two sides agreed on a $125 million settlement related to accusations that Wells Fargo Home Mortgage sold sub-prime loans to minority borrowers between 2004-2009. In their official announcement on the settlement, Wells Fargo stated that the problem was due to loans closed by independent mortgage brokers.
NAMB—The Association of Mortgage Professionals feels that, even though the study seemed to be slighted toward the mortgage broker, it is a problem that, in reality, reached across the U.S. with all loan originators who did sub-prime business and placed their loans with Wells Fargo.
“It would be interesting to see how many of these loans were completed by the same loan originator and how many were involved in this display of abuse,” said Donald J. Frommeyer, president of NAMB. “In fact, we would have to believe that these practices were not just conducted by independent mortgage brokers, but included those companies that chose to broker loans and not close the loans in their name. The additional question has to do with loan originators that were part of Wells Fargo’s sub-prime division. Were these originators considered to be brokers by the Department of Justice? It also did not take into consideration, and the disparity, concerning credit scores, time on the job, reason for the loan and any other situation that the customer may have had to be given a sub-prime loan or wanted a loan in the sub-prime market.”
These instances documented by the DOJ took place from 2004-2009, after which the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) came into play.
“I would suggest that most, if not all, of these originators are no longer in the business,” said Frommeyer. “The one item missing is the fact that the DOJ has failed to take into account the regulatory and legislative changes which currently prevent these abuses by originators. Licensed mortgage brokers are more professional and educated today. Each mortgage broker must be licensed, pass a background check, attain 20 hours of initial education with at least eight hours of continuing education per year, and pass a federal and state test in order to originate loans.”
NAMB does recognize and appreciates Wells Fargo’s strong support of mortgage brokers in the past and in the future. Wells Fargo is going to continue to do mortgages, only each loan will now go through the correspondent channel and not directly from the broker.
“This should truly give the medium and large wholesalers, especially the regional ones, a chance to expand and grow, doing more business by picking up the volume that were going through Wells Fargo in the first place,” said Frommeyer.
In the past few years, enhanced consumer education has changed the environment from one of an uninformed customer, to one who is more knowledgeable about the variety of options available to the prospective homebuying public.
“NAMB is truly committed to serving the 116,000-plus mortgage originators across the U.S. who serve consumers through industry professionalism, high ethical standards and the preservation and promotion of small business and the American dream of homeownership,” said Frommeyer.
The National Association of Mortgage Brokers (NAMB)—The Association of Mortgage Professionals, is a trade association of mortgage professionals with membership in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage industry. For more information, visit NAMB.org.