St. Louis Mortgage Broker Says; "Stop Blaming The Mortgage Broker!"

Since the sub prime mortgage market meltdown began there has been talk about all kinds of laws being put into place to regulate the terrible mortgage brokers out there who have caused this terrible problem.

TIME OUT!  Let's put the blame where it really should be!  

I'm a mortgage banker, so I'm going to preface this.  I'm not excusing any fraudulent behavior on any body's part.  Be they a mortgage broker, a mortgage banker or a bank.  If somebody was mislead or lied to, then the current laws should be strictly enforced.  People should go to jail!

That said, blaming the mortgage broker with causing this problem is like blaming Sears for selling somebody a lawn mower if they go out and stick their hand into the blades.  As long as Sears disclosed any potential hazards with the product and the product was functioning correctly, they are off the hook.

These borrowers were disclosed to multiple times about the programs that they were applying for.  Look at an ARM disclosure, it points out the WORSE CASE SCENARIO.  Chances are that if the loan WAS originated by a mortgage broker (not all of these loans were, by the way) they were disclosed to by the broker, then again by the lender, then again at closing, then again when they signed the note and mortgage/deed of trust.

People and politicians like things to be simple and easy.  The easiest target in this situation is the mortgage broker. Most of us are small businesses and don't have the political clout of the large mortgage banking companies or banks.  It's also more politically correct to not blame the poor home buyer here.  It makes for better political drama to have some politician go to bat for these poor victims rather than point out that they signed all of those disclosures pointing out exactly how their particular loan program worked!

Now, you might be able to make the argument that Toro shouldn't have made the lawn mower in the first place (running with our analogy from above), but even then, the mortgage broker should still not be held liable.  They were selling a legal product and they fully disclosed the hazards.

Maybe a better analogy would be suing the 7/11 for selling you cigarettes when you get lung cancer.  It's no secret that the cigarettes were potentially harmful to you, but if you went into that store and bought them anyway, who's fault is that?  If you started smoking 50 years ago, maybe it's the cigarette companies fault because they kept it secret back then.  But if you picked up the habit in the last 30 years or so, it's on you!

Personal responsibility.  Wow, what a concept!  

So, if any of you reading this are a politician or if you agree with me, put the blame where it really should be.  On the borrowers who took a risk and lost or maybe on the lenders who developed these programs if you must, but not on the mortgage broker.

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc. 

R.B. "Bob" Mitchell is president of ValueList Real Estate Services, a discount real estate company in St. Louis MO.  While offering a flat-fee listing program, ValueList is also a full-service Realtor and a VA approved mortgage broker.