Stop pointing the finger at brokers

by Kelli Rogers21 Jun 2013
Brokers are tired of acting as scapegoats for the financial meltdown and shoddy lending practices, an industry leader has said.
Following a recent MPA interview with JPMorgan Chase mortgage banking national sales executive Joe Cartellone, National Association of Independent Housing Professionals (NAIHP) president Marc Savitt has told MPA that brokers remain under scrutiny and increasingly tight regulation, while unfairly getting the blame for much of the housing crisis.
“When it all happened, when everything came crashing down, some of the big guys decided they would find the scapegoat and go after the little guys that they deemed couldn’t defend themselves,” Savitt said. 
He urged those in and outside the industry to consider that mortgage brokers did not and still do not create loan products, determine the automated underwriting systems used to approve borrowers, underwrite the loan or approve borrowers for the loans.  
"It’s called the Dodd-Frank Wall Street Reform and Consumer Protection Act,” Savitt said. “It’s not called The Dodd Frank Mortgage Broker Act.”
During the course of the MPA interview with Cartellone, he stated that JPMorgan had no intention of using brokers in the future, and urged the finance industry to “set the bar high for the lending officers you employ.” But Savitt said the comments, the tenor of the conversation and JPMorgan's stance bely the real root of the financial crisis.
Savitt cites studies by Georgetown University and Harvard, which have stated it wasn’t the mortgage broker or banker that caused problems, it was a combination of securitizations, rating agencies, regulators and a lack of proper underwriting that all played a major role in the crisis. 
Investors had an obligation to quality control those loans, Savitt said. They didn’t because they could sell them and no one questioned it.
“You blame the brokers, but think: when the consumer comes in and meets with a loan originator, they provide the originator with certain documents and information, the originator has no way of quality controlling that,” he said. “The only one who had that availably to them was the lenders or creditors, the underwriters.”
Brokers of today have weathered four plus of the worst years of their careers. Those who are practicing brokers today are licensed, go through extensive testing, background investigation, credit checks and many other requirements, Savitt said.


  • by Griff | 6/21/2013 9:06:53 AM

    Good article!

  • by Shali Sheth | 6/21/2013 9:27:02 AM

    Thanks a lot for understanding pain in behalf of all brokers and wish this issue can be take to white house.

  • by Sam Hobbs | 6/21/2013 9:36:16 AM

    It has been clear to anyone who wanted to hear the facts and not point fingers who played a part in the mortgage meltdown.

    Brokers, Loan officers Direct Bank or Mortgage company mortgage officers, Big banks, smaller lenders, Wall Street, Investors reaching for high yields all pushing limited verification products, many many actual borrowers, Appraisers, Politicians pushing lenders and the agencies to make mortgages all played a big part in the meltdown.
    Certainly not all of any of the groups are to blame but none of them are completely innocent either.
    IF ANY ONE GROUP of them had done completely the right thing 80% to 90% of the problems would have been avoided. If TWO groups had done the right thing it would hard to imagine how we would have ever had an issue.
    Trying to assign a percentage of blame is hard. But there is no such thing as a "little bit honest" but the next guy was worse so it's okay what our group did.
    I have been a broker for over 20 years, previously with a large lender for 15 years and a consumer for at least all of my adult life. It was easy to see this coming but greed by some or many in each group listed above caused the meltdown. For any of them to deny or try to defend all of their groups is just plain garbage.


Should CFPB have more supervision over credit agencies?