NAIHP Setting Up Legal Defense Fund for Loan Brokers

The National Association of Independent Housing Professionals plans to set up a legal fund to help residential loan brokers defend against buyback claims being filed against them by the Federal Deposit Insurance Corp.

NAIHP president Marc Savitt told National Mortgage News that “We're building a war chest.”

Two weeks ago NMN broke the news that Federal Deposit Insurance Corp., using outside counsel, is now filing claims against certain brokers, seeking to recover damages on mortgages that were table funded by depositories. To date, the actions involve claim letters, or civil suits filed in connection with now-defunct depositories seized by the agency.

“We're starting to see more of these,” said Savitt, who runs a small brokerage operation in West Virginia. NAIHP's members include brokers and other housing professionals. Savitt is a past president of the National Association of Mortgage Brokers. 

Kevin Elmore, an attorney in California, said he is working on at least one case defending a loan broker against buyback claims and has found several others. Elmore's case involves a broker who facilitated loans for IndyMac, one of the largest thrift failures in history.

Elmore said “I'm not sure what the end game is” for the FDIC, “other than making a statement.” Elmore said that brokers generally don't have much money to pay claims.