Saw a story on National Mortgage News, which was based on this press release from the National Association of Mortgage Brokers. The broker-led association is claiming that — shock of all shocks — “The home mortgage market may be returning to more traditional products in 2007.” Much more interesting to me was how the organization, in a very subtle way, tried to position brokers as those responsible for leading the charge into more responsible lending amid the subprime credit crunch:
“The research shows that mortgage brokers react quickly to changes in the market place,” said David Olson, President of Wholesale Access, “and have moved away from the high-risk subprime mortgages toward more fixed rate loans requiring higher down payments and higher FICO scores.”
I don’t think I’d characterize the move a a “quick reaction.” More than a few wholesalers got caught with their pants down on this, and many would still be pushing their pipelines with subprime junk if the secondary market hadn’t decided it could no longer make money securitizing the stuff. If anything, the brokers are merely funding whatever loans are made available to them by the secondary markets — not to say theirs isn’t a vital job (it is), but to characterize mortgage brokers as the ones moving away from high-risk mortgages is wholly incorrect. After all, you’d expect a broker-led organization to understand what it is that a broker does.