Mutual Finger-Pointing

As Lisa Lerer wrote in The Politico last week, mortgage lenders and mortgage brokers are fingering each other as the culprit in the recent rise of home foreclosures.  In her article Lawmakers Seek to Protect Borrowers, Lerer reports on Mortgage Bank Association Chairman John Robbins’ speech at the National Press Club, where Robbins blamed brokers for steering consumers into risky subprime loans. 

The National Association of Mortgage Brokers did not take these charges lying down.  The association’s president, Harry Dinham, responded in an email that, “It is truly unfortunate that the president of the Mortgage Bankers Association has attempted to shift blame away from Wall Street, federally chartered banks, state-chartered lenders and underwriters for the subprime situation we find ourselves in today.”  The brokers are even going so far as to lobby for more regulation . . . of the mortgage lending industry, naturally.  They are seeking national standards for continuing education and criminal background checks for banks and other lenders.  Such requirements might improve the quality of brokers as well, but who’s counting?

What’s positive about this inter-industry lobbying squabble is that it means both groups are worried.  If lenders and brokers did not think that consumer-protection bills such as those introduced by Senators Charles Schumer and Jack Reed had some chance of passing, they might have shown more restraint in attacking each other. 

Finally, here’s a war where consumers benefit no matter who wins.