NAMB Questions Veracity of Private Study Regarding Subprime Loans
Apr 8, 2008
McLean, Va. – April 8, 2008 – The National Association of Mortgage Brokers (NAMB) today urged caution in reviewing the findings of a new study released today regarding mortgage brokers and subprime loans.
“The study was released by an organization that has been notorious in over simplifying very complex issues and appointing blame before they fully understand the facts,” said NAMB President George Hanzimanolis.
“While we continue to review the document, we are greatly concerned by its misrepresentations of the broker compensation structure, the competitive nature of the mortgage business, and the over simplification of this complex industry. The researchers’ use of conjecture regarding broker behavior is ill-founded and unsupported, and raises questions about the methodology they employed to arrive at their conclusions,” Hanzimanolis said.
The NAMB President said the report, sponsored by a private group, contradicts an impartial government-sponsored study released by the Government Accounting Office, in October 2007, which stressed that the easing of underwriting standards and the wider use of loan features such as low- and no-documentation loans and higher loan-to-value ratios contributed to default and foreclosure increases by making loans available to borrowers who could not keep up with their payments.
Hanzimanolis also underscored the fact that mortgage brokers do not create loans, do not set the underwriting guidelines, or approve loans. These are all within the purview of lenders, not brokers.
“We believe it is a disservice to the public to assign blame for the subprime crisis on mortgage brokers when we know of so many systemic problems which Congress itself has identified, such as lender risk layering, lax underwriting, credit default swaps, and credit rating agency mistakes, to name a few. Minimizing the importance of these critical aspects is not in the public interest.”
NAMB leaders said they would continue to evaluate the study, but the strong bias against mortgage brokers should be a red flag to anyone looking for reliable information about the mortgage industry.
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