It's time the market drew a bright line between the roles of mortgage bankers and mortgage brokers, according to a policy paper released Tuesday by the Mortgage Bankers Association; in it, the banker's group said more clarity is needed around the roles and responsibilities of mortgage bankers and mortgage brokers. "Mortgage bankers and brokers are both central players in the effort to provide the opportunity of homeownership to millions of Americans," said David G. Kittle, CMB, MBA’s Chairman-elect. "Bankers and brokers, however, serve different functions in the mortgage process that demand different regulatory oversight." The MBA paper essentially suggests that any legislation of a fiduciary relationship tied to borrowers should extend only to brokers and not to bankers, because brokers are an intermediary working with bankers on borrowers' behalf; it also suggests that fee-level disclosures and limits on some forms of broker compensation, including yield spread premiums, need not apply to bankers' own origination activities, because bankers are subject to greater supervision and regulation than brokers. "Because broker compensation is directly tied to a loan’s interest rate and brokers lack an ongoing financial stake in loan performance, brokers have a high incentive to get loans closed, maximize fees for origination, and move on to their next transaction," the report states. "[M]ortgage bankers have a greater interest in ensuring that borrowers choose products that will give them long-term financial success." The MBA's desire to separate the mortgage banking function from that of brokers comes as legislators at both the state and Federal levels are looking to clamp down on lax oversight of mortgage brokers; the policy paper clearly attempts to segment bankers out as distinct from the broker crowd. According to the paper, efforts to reform the origination process need to take the distinct differences between mortgage brokers and bankers into account. "As Congress and state and federal regulators look at reforming how mortgages are originated, we want to make sure they understand how bankers and brokers differ and how new regulations ought to reflect those differences," Kittle said. For more information, visit