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	Paper Audio

“Mortgage bankers and brokers are both central players in the effort to provide the opportunity of homeownership to millions of Americans,” said David G. Kittle, CMB, MBA’s Chairman-elect.  “Bankers and brokers, however, serve different functions in the mortgage process that demand different regulatory oversight.”

The recent turmoil in the mortgage and housing markets has brought renewed attention to the mortgage origination process.  Several pieces of legislation and regulation under consideration in Congress and the states propose improving consumer protection.  According to the paper, efforts to reform the origination process ought to take the distinct differences between mortgage brokers and bankers into account.

“Lenders and brokers have worked together to expand access to mortgage credit, especially for those who may have been traditionally had a difficult time getting home financing,” continued Kittle.  “As Congress and state and federal regulators look at reforming how mortgages are originated, we want to make sure they understand how bankers and brokers differ and how new regulations ought to reflect those differences.”

MBA’s paper examines the different relationship and expectations that borrowers have with bankers and brokers and the disparate compensation structures and incentives that each have.  It also looks at the separate types and levels of oversight that each faces.

Because improvements to the mortgage origination process can best be achieved through proposals that recognize these differences, MBA is recommending that:

• Borrowers receive clear disclosures of the brokers’ responsibilities and compensation;
• Mortgage brokers who claim to be or act as borrower agents be treated legally as agents;
• Mortgage brokers have sufficient financial resources – through a national minimum net worth requirement – to provide   
  protection to borrowers and mortgage bankers where necessary;
• Mortgage brokers be appropriately bonded to give consumers greater protection; and
• All loan originators, including brokers and bankers, be registered and appropriately licensed in accordance with rigorous
  standards.

A copy of Mortgage Bankers and Mortgage Brokers:  Distinct Businesses Warranting Distinct Regulation can be found at www.mortgagebankers.org.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.