Republican Seeks More Broker Accountability

A key Republican lawmaker has given his approval to the Obama Administration's proposal to require mortgage brokers and funding lenders, which sell their loans on the secondary mortgage market, to maintain a certain ownership level in their products. "Keeping some skin in the game has a wonderful cleaning effect," Sen. Kit Bond, R-Mo., said at the National Association of Real Estate Editors' Annual Real Estate Journalism Conference in Washington. The White House plan for the Consumer Finance Protection Agency would require brokers to be paid, in part, over time based on the performance of the loans they originate, and compel lenders to retain an interest in the loans that are packaged into securities and sold to investors. But Marc Savitt, the West Virginia broker who is president of the National Association of Mortgage Brokers, said the idea would never fly, if only because the accounting necessary to follow loans as they are sold and resold would be a nightmare. Mr. Savitt also reiterated NAMB's long-standing argument that brokers do not underwrite mortgages and, therefore, should not be responsible for their failure. If brokers have any part in fraudulent loan applications, he told Mortgage Wire, they can and should be prosecuted under existing federal law.