Maine Mortgage Broker: Source of Problem More Complex

We’ve talked at great length about the surge in bad credit home loan lending over the past five years and the problems coming home to roost now.

But Ed Jurenas, president of the Maine Association of Mortgage Brokers, is taking issue with the recent media coverage in the state insinuating that mortgage brokers are the prime perpetrators of abusive lending practices in Maine. This is not the case, he urges.

The predominance of predatory lending in Maine, he says, has been conducted by out-of-state, non-bank telemarketers - not mortgage brokers.

Lawsuits against Household and Beneficial Finance entered into by various states resulted in the return of $1.6 million to Maine consumers in 2003.

A settlement of $295 million in 2006, again with Maine participating, was garnered from Ameriquest, the nation’s largest direct subprime, or bad credit mortgage lender.

Both of these companies are based outside of our state and have no ties to any Maine mortgage brokers. Yet, a Portland Press Herald editorial cited “predatory mortgage brokers” as the source of predatory lending in Maine.

Is this to say that no Maine mortgage broker has ever participated in abusive practices? Not likely. However, the exceptions hardly prove the rule.

The ranks of U.S. mortgage brokers have grown dramatically in the past 20 years. Today, over half of all residential mortgages annually originated in the nation are from home mortgage brokers, because they generally offer a greater number of mortgage products and services than are available at local banks.

Maine’s mortgage brokers comprise a statewide community of over 150 small businesses comprising an effective, competitive delivery channel for residential and commercial mortgage products.

Their efforts are in no small way a contributing factor to Maine having one of the highest rates of home ownership in the nation.

These organizations have long backed efforts to curb abusive lending practices through both federal legislation and consumer education, and continue to do so with current legislative initiatives before Congress.

The problem of predatory lending must be attacked with precision. Predators need to be driven from the mortgage industry, but what is done to protect some consumers should not prevent other home loan borrowers from full and ready access to credit.

Legislation that disproportionately affects one delivery channel (home mortgage brokers), and not others (retail banks, credit unions and non-bank lenders) in effect creates an slanted playing field with the unintended consequence of limiting consumer access to credit.

It is unfair to both mortgage brokers and to the homeowners they serve that any mischaracterization should arise from the predatory lending debate.

In particular, the unintended consequences of legislation should not make getting a Maine mortgage even more expensive for the consumer.

SOURCE: MaineToday.com