Many recent publications that I've received have addressed the issue of mortgage fraud, but it keeps bringing me back to the same question: Why are lawyers continually held responsible and mortgage agents and brokers are given a pass?

If you think about it, mortgage brokers present banks and lenders with all relevant information to determine risk, along with current identification. The mortgage broker will have met with the borrower before any pre-approval is given by the lender, and mortgage brokers are often privy to much more information about the borrower than the lawyer. However, when a mortgage goes into default, it is always the lawyer that is examined first and the broker a non-factor. Lawyers may be held liable in some situations, but the broker is given a pass, despite their very heavy involvement in the deal.

If banks and lenders care about protecting themselves from fraud, why are they not stopping it at the earliest possible stage, the mortgage brokers? The answer is really more political than practical.

I had a conversation with a colleague about how there should be some rule that if a mortgage falls into default in the first year that brokers should be forced to return their commissions. However, if one bank did that, all brokers would pull their business from that bank, leading to a lower quality and quantity of borrowers dealing with that particular bank.

The system isn't fair, but life isn't either, and it's clear where our society places it's priority; in making sales no matter what the cost.

Sent from my BlackBerry device on the Rogers Wireless Network

        

 

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