Months after Consumer Reports published an article advising Americans to steer clear of mortgage brokers, NAMB — the Association of Mortgage Professionals — has challenged the article’s accuracy, saying it “shows a total lack of knowledge regarding how the current mortgage industry works.”
NAMB President John L. Councilman sent a letter to the publication in response to its “hapless article,” suggesting that consumers are much safer going through a mortgage broker than dealing directly with lenders and banks, many of which are not licensed, tested or vetted.
In the article, “Home-sale mistakes that cost you money,” Consumer Reports recommends prospective borrowers approach several lenders, including banks and credit unions, when shopping around for a mortgage.
“We don’t recommend that you hire a mortgage broker to do that because he may be more focused on selling you a mortgage than getting you the best deal,” the article, published Jan. 29, states.
However, Councilman argues that NAMB’s previous research shows consumers would have paid many thousands of dollars more by going to large banks instead of a mortgage broker.
“Most lenders pay their branches and originators similarly to mortgage brokers so there is no real saving by going directly to the lender,” he writes. “In fact, many offer corporate benefits and have layers of bureaucracy that make their retail costs higher than taking in a loan from a broker.”
Additionally, it is a violation of federal law for the broker to steer borrowers in any way, Councilman writes. On the other hand, he says there have been severe sanctions and huge fines imposed where lenders have allowed their retail originators to steer clients to more profitable loans.
“Consumers should be aware that bank originators are not licensed, tested, or required to have the same education, as non-bank originators. They even have less stringent criminal background standards,” he writes.
In concluding his letter, Councilman urges Consumer Reports to correct its “erroneous story,” and challenges it to post the letter in its publication.
Consumer Reports did not respond to requests for comment by press time.
Written by Emily Study