MBA Calls for Improved Transparency and Accountability for Residential Mortgage Brokers

The Mortgage Bankers Association`s Residential Board of Governors (RESBOG) today approved a resolution calling for more transparency and accountability, as well as increased net worth and bonding requirements for residential mortgage brokers.

'This resolution is another step in MBA`s call for better disclosures and more transparency in the mortgage transaction,' said MBA`s Chairman Kieran P. Quinn, CMB.  'The borrower is best served when he or she has a clear understanding of who their mortgage broker is working for and how their broker is compensated.'  

The resolution calls for legislative and regulatory action requiring mortgage brokers to:

·         Maintain a financial net worth consistent with FHA requirements (currently $63,000 plus $25,000 for each branch office).

·         Where available carry bonding worth $75,000 or an amount equal to ten percent of the broker`s annual loan volume (whichever is higher).

·         Provide timely and improved disclosures regarding the services to be performed by the mortgage broker.

·         Disclose the total compensation at the quoted rate before the borrower commits to the mortgage broker, including how much of the compensation will be derived from the lender based on the loan terms and how much will be paid by the borrower in direct fees.

·         Disclose to borrowers whether or not the broker is acting as the borrower`s agent, and if the broker is acting as the borrower`s agent, the mortgage broker ought to be treated as an agent under the law.

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 400,000 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 3,000 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.

John Mechem       202) 557-2924     jmechem@mortgagebankers.org