Can a Mortgage Originator Offer a Fiduciary Relationship?

There is a difference between mortgage brokerage firms and direct lenders.  Our firm has the capacity to operate as both a principal (lender) or agent (broker) in our loan product offerings to customers.  Inasmuch, I’m afforded the luxury of both worlds.

Which relationship is better for the customer?

The answer is, whichever product offering best suits their particular needs.  There is a lot of talk about defining the mortgage originator relationship to the customer as a fiduciary; I think that’s a fine idea.  My definition of fiduciary extends beyond the scope of the regulators’ defintion of suitable recommendations for borrowers, though.  My standards require a demonstration of consumer education and care unseen in this industry, to date.

I don’t see that education and care being offered by America’s mortgage banks. Naturally, I see this as an opportunity for mortgage brokers.  It is my opinion that only fighting chance a borrower has for a true fiduciary relationship comes from an independent mortgage broker.  Banks are ill-equipped to offer that relationship because they compensate their originators more money to place a borrower in a proprietary loan product than if they brokered the loan to another financial institution. Inasmuch, the borrower is denied the opportunity for the “best terms available” because of that skewed relationship.

I want the National Association of Mortgage Brokers to start talking about this rather than to complain about the skewed licensing standards.  I don’t want fairness in licensing. If mortgage brokers are being held to higher standards than the banks’ sales representatives, so be it.  Mortgage brokers offer a superior relationship to borrowers than direct lenders do.  It’s time for us, as an industry, to embrace and promote that superiority rather than to fight for equality.

There IS a difference.