Unlike in past downturns, mortgage lenders are trying to hold mortgage brokers responsible for buybacks, but there are ways that brokers can protect themselves, according to Douglas Lowell Davies, an attorney with Lane Powell Attorneys and Counselors.Speaking at the National Association of Mortgage Brokers annual conference in Seattle, Mr. Davies said he has successfully represented several mortgage brokers that have been sued by lenders to pay for buybacks that investors have pushed back to the lender. He predicted that this is a trend that is likely to escalate and force brokers out of business if they are held liable in some cases. Mr. Davies advised brokers to come up with a short, one-page disclosure detailing all of the pertinent loan terms in plain English for each of their borrowers to sign. For stated-income loans, Mr. Davies added that brokers should have borrowers sign a document swearing, under penalty of law, that the income provided in the application is accurate.
