In its decision last week to exit the wholesale market for mortgages, Wells Fargo essentially slighted mortgage brokers whom the company had previously partnered with and those who had sold loans to the lending giant.
The company said it could not sufficiently control the loan origination process through its broker channel and cited those loans in part as having resulted in a $125 million settlement relating to sub-prime loans for minority borrowers.
The National Association of Mortgage Professionals, in a statement following the Wells Fargo decision, asserted that the problem was not broker-specific.
“It would be interesting to see how many of these loans were completed by the same loan originator and how many were involved in this display of abuse,” said Donald J. Frommeyer, president of NAMB. “In fact, we would have to believe that these practices were not just conducted by independent mortgage brokers, but included those companies that chose to broker loans and not close the loans in their name.”
Most, if not all, of the responsible originators have left the business since, he said, noting the improvement in education and professionalism of today’s brokers. Consumer education has also impacted the lending environment toward one where borrowers are more aware of their available options.
Written by Elizabeth Ecker