RealTown's RealTalk

There is a very important point in here, the idea that under federal rules there is no fiduciary obligation to a borrower.

 

The lending industry is absolutely adamant about this.

Some have proposed, says Harry Dinham, president of the National Association of Mortgage Brokers, that a fiduciary duty standard should be implemented and mortgage originators and their loan officers should act in the best interests of the consumer. NAMB remains opposed to any proposed law, regulation or other measure that attempts to impose a fiduciary duty, in any fashion, upon a mortgage broker or any other originator.

Simply put, a mortgage broker should not, and cannot, owe a fiduciary duty to a borrower. The consumer is the decision maker, not the mortgage broker, according to Dinham.

John Robbins, chairman of the Mortgage Bankers Association�said�during June 2007 congressional testimony that notably, MBA does not believe that a disclosure of function and fees is warranted for mortgage lenders. Unlike a broker whose role may be uncertain  agent or loan provider  a lender's role is clear. A lender underwrites, approves and funds the loan. The lender does not hold himself out as an agent of the borrower. While a lender must serve its customers fairly, and the industry has done much to assure high professional standards, a lender owes a duty to its shareholders and investors. A borrower knows a lender offers its own products and does not offer to shop for borrowers.

Whatever debates real estate licensees have about licensure, at least in real estate there is agency.

The point made by Deede is one of many reasons we need real lending regulation.

All the best,

Peter G. Miller