Kimber White (pictured top), president of the National Association of Mortgage Brokers, shared his thoughts on Tuesday. He is appreciative of the continuing dialogue but unsure whether this solution is really the best idea.
“I applaud people looking for solutions,” White told Mortgage Professional America. “But how are we helping the consumer? How is it helping the industry? Without any uniformity and guidelines, there is potential manipulation of the system, potential harm that could be caused, and the potential lack of pricing competition.
“If a broker says, ‘Susie, your credit score with Experian is 800, but the company that Bill has you with is a 700, so I can give you a better price than Bill’s company can give you.’ Do we need to add more confusion to the consumer?”
Early payment default buybacks
One major concern White had was that mortgage brokers have early payment default buyback clauses in place. This means that if a borrower stops making payments soon after the loan funds are disbursed, the risk is shifted back to the originator. This could cost the broker compensation or even require them to cover the loan’s losses.
“My concern is that you’re not getting a true picture,” White said. “My concern with these types of things is that we have buybacks. Brokers have buybacks within a certain period and early-payment default buybacks, too. Are we really getting true pictures of their credit history? That’s like going in and pulling Credit Karma. You’re not getting the borrower’s true credit score.”
