Mortgage Brokers React to Subprime Critics

Mortgage brokers are firing back against accusations by politicians and consumer advocates that they are largely responsible for the recent meltdown in the home loan industry.

Reacting to strong criticism, particularly from New York Sen. Charles E. Schumer, mortgage brokers across the U.S. say it is unfair to paint the entire industry with the same brush because of the actions of a few bad players.

“Don’t label mortgage brokers as the bad apples,” Nancy B. Gascoyne, a mortgage broker at MultiSource Funding in Cheektowaga, N.Y., and past president of the New York Association of Mortgage Brokers, said.

“There are things wrong in our industry, just the same way there are wrong things in our government. You’ve got to try to fix them as you go along.”

In many ways, Florida mortgage broker groups say, they are misunderstood.

They seem to be taking the brunt of the ire, over the current crisis, yet many practitioners are local business people who rely on referrals and reputation - believing they’re what’s right about the business.

Some mortgage broker groups say they’re already subject to stringent regulation, but are willing to accept more scrutiny if necessary. However, they want it equally applied across the industry, to include all Florida mortgage sources - banks, finance companies and other firms.

“In every industry, there are bad actors, and it’s the reason we support the licensing of everybody at this point, whether it’s a broker, mortgage lender or a bank,” Harry H. Dinham, president of the National Association of Mortgage Brokers, said.

“These people need to be weeded out of the industry.”

Florida mortgage brokers, as well as lenders, have come under heavy fire in recent weeks, due in large part to soaring home loan defaults and foreclosures.

More than 13 percent of subprime [bad credit Florida mortgage] home loans are delinquent — the highest in years — and losses and foreclosures overall have spiked to record levels.

Higher interest rates and falling home values are leaving borrowers unable to make payments or qualify for Florida mortgage refinancing and sell their homes.

Banking regulators estimate that 1.8 million U.S. homeowners could lose their home in the next two years as mortgage rates reprice upwards.

Brokers are responsible for more than half of U.S. mortgages. They don’t actually lend money, but act as middlemen between the customers and banks or mortgage finance companies.

In exchange, Florida mortgage lenders pay brokers fees that depend on the interest rate or other terms of the loan.

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