Did Mortgage Brokers Cause This Crisis?
Unfortunately, mortgage brokers have gotten a very bad reputation. There were many involved that caused this, borrowers, mortgage brokers, title companies, realtors, lender, and Wall Street . There is a great book that I have mentioned before called “Chain of Blame: How Wall Street Created The Credit Crisis.” Provident Funding whose business model is based around mortgage brokers has the lowest default rate in the industry. Lower than any retail bank so this goes to show that it is the policies that lenders and banks put in place.
Below is a great article that talks about mortgage brokers. “The Associated Press recently ran a story about how the mortgage crisis was leading the federal government and states to tighten licensing and other requirements for operating as a mortgage broker. Will this have a material effect in curbing the abuses that led to the crisis?”
No, because mortgage brokers played only an incidental role in the crisis. Blaming the crisis on brokers makes as little sense as blaming it on greed. Brokers have been with us for decades, greed has been with us forever, and neither suddenly caused a financial crisis. “