An offhand, deleterious comment about mortgage brokers by President Obama has raised the ire of the National Association of Mortgage Brokers – and brought a strong rebuke from trade group president Donald Frommeyer.
Earlier this month, when the President was talking about the Consumer Financial Protection Bureau, he said: “And a key component of that was making sure that we have a watchdog in place who can police what mortgage brokers and payday lenders and other non-bank financial entities are able to do when it comes to consumers.”
It wasn't the first time Mr. Obama has singled out brokers as the main culprit in the collapse of the housing market. And this time, Frommeyer didn't let the remark pass unanswered.
“You consistently use the term 'mortgage broker' to relay (negative) information having to do with the housing industry and that is not fair,” the Indianapolis broker wrote in a letter to the White House.
Frommeyer used this analogy to makes his point: “When a drug creates a problem in the medical industry, the FDA goes and contacts the maker of the drug and deals with the company. They don't go to Walgreens or CVS and shut them down and make them the scapegoat for selling the drug. The same is true with the mortgage business. We only sell what is available from the banks and wholesale lenders. We have never developed or created any of these products. We do not underwrite them or approve them. Yet it seems that every time something negative comes out about the mortgage industry, it is a mortgage broker that is the scapegoat.”
Among other things, the NAMB president pointed out that the NAMB not only supported the SAFE Act, which requires all loan originators to be licensed, it “helped craft” the legislation. He also pointed out that major differences between independent mortgage brokers and loan representatives working directly for funding lenders:
“Mortgage brokers are licensed by their state through the (Nationwide Mortgage Licensing System), take continuing education, take a national and state test to be able to be licensed, have a criminal background check with fingerprints and have their credit checked. Mortgage Originators (who) work for a depository bank are only registered with the NMLS. And a lot of those that work for these banks failed to pass some of these items, tests, background checks, etc.”
Frommeyer said that thousands of mortgage brokers “never participated in subprime loans or have used any of the exotic products that Wall Street or the mega banks created...Most of the companies that did these loans were not mortgage brokers.”
Noting that a Georgetown University showed that brokers saves borrowers thousands of dollars when it came to their mortgage needs, the NAMB president offered to sit down with White House staffers “to educate them in the differences in the mortgage origination business, be it the what, who, where and how a mortgage broker operates and who they serve.”
