It looks like everyones has the target on brokers

With all of the regulations and reforms taking place around the country from the HVCC, to the Mortgage Bankers reform act and various state laws to limit influence, increase licensing requirements or increase in accountabilty. One thing is coming very aparent the concept of a mortgage broker is going to become a thing of the past.

The most obvious is the Home Valuation Code of Conduct which basically eliminates the broker from the transaction in regards to the appraisal process which is most important aspect of a mortgage loan. I can even see in the near future the lender requiring a specfic title company or even a streamlined non-infulence application that the borrower must take only only. It is eventually going to come to a point where the broker is more of a referer to the lender as opposed to a service provider.

Secondly national licensing which has recieved little attention but will require that all mortgage origantors be licensed in all 50 states with minimal reserves, backround checks, and requirements that put them in the same class as a lender or correspondent.

Fannie Mae and Freedie Mac have made it clear that they want to do business with people who have a vested interest in the transaction or "skin in the game" as they refer to it. They have lost so much money and have such a bad taste in there mouth that they are putting all the blame on the lonely broker. Not to say that they do not have a valid point in that the broker is a major cause in the reason for the financial crisis.

But is the broker to really blame?

Lets look deeper into that question: What can a broker really do? ..What the lender tells them they can do. They are at 100% mercy of the lenders. The broker wasnt the person who actually lent the money, the lender was. The broker just facilitated the transaction. The lender set all the guidelines, underwriten the file, came up with the programs and approved the file. So really how does the broker get blammed?

The lender found the one thing the broker had control over......drum roll..... THE APPRAISAL PROCESS.... which in reality they dont have much control (within reason, excluding the less than 1% of actual fraud). So by blaming everything on the appraiser the lender has someone to blame. The truth of the matter is that it really doesnt matter what the appraiser appraises the house for if the borrower cant pay the mortgage. And if the borrower can pay it really doesnt matter what the appraiser appraisese the house for because the borrower is good for the money. Secondly, the lender approved all of these files so if a lender approves 100,000's of bad appraisals or bad loans is that the brokers fault? NO! but this will not change the fact that the lender will blame the broker 100% of the time for this? NO With all due respect it is extremely aparent that the lender should take responibilty for the loan programs they offer and the underwriting problems they created on there own.

HOWEVER!!!

The lender does still have a point in regards to wainting control of the appraisal. With such a high dollar transaction everyone should have a vested interest in the quality and be accountable to some extent to their profession.

What is a reasonable solution?

- Make brokers accountable for the loan file, so they do care about file. If everyone was accountable then there wouldnt be as much of an issue because the principals of the company would ensure that the appraisal, income, and credit is solid before any type of loan is made through there channel.