Comments on: Fiduciary Duty & the Mortgage Marketplace http://www.fhaloanpros.com/2008/04/fiduciary-duty-the-mortgage-marketplace/ The Unofficial Guide to FHA Loans & Mortgages Sat, 21 Nov 2009 06:59:54 +0000 http://wordpress.org/?v=2.6 By: Tom Clark http://www.fhaloanpros.com/2008/04/fiduciary-duty-the-mortgage-marketplace/#comment-32100 Tom Clark Tue, 16 Dec 2008 22:33:07 +0000 http://www.fhaloanpros.com/2008/04/fiduciary-duty-the-mortgage-marketplace/#comment-32100 As I understand it, mortgage brokers have a fiduciary duty, but lenders do not. What about businesses, like Financial Freedom, for example, who are in the business of selling "reverse mortgages," usually to seniors. Along with selling the reverse mortgage,they also sometimes sell annuities or other insurance products as part of the package. Do these people owe a fiduciary duty to the homeowers who take the reverse mortgage? As I understand it, mortgage brokers have a fiduciary duty, but lenders do not. What about businesses, like Financial Freedom, for example, who are in the business of selling “reverse mortgages,” usually to seniors. Along with selling the reverse mortgage,they also sometimes sell annuities or other insurance products as part of the package. Do these people owe a fiduciary duty to the homeowers who take the reverse mortgage?

]]> By: Krista Railey http://www.fhaloanpros.com/2008/04/fiduciary-duty-the-mortgage-marketplace/#comment-11165 Krista Railey Thu, 22 May 2008 15:01:48 +0000 http://www.fhaloanpros.com/2008/04/fiduciary-duty-the-mortgage-marketplace/#comment-11165 You did not mention that in California, and a few other states, mortgage brokers owe borrowers a fiduciary duty. In California, mortgage brokers that are licensed by the Department of Real Estate are agents. While lenders are principals in a mortgage transaction, mortgage brokers are intermediaries or agents. Furthermore, mortgage brokers often hold themselves out as consultants, advisors, or other title that implies that the mortgage broker is working in an agency capacity. In regard to FHA and VA loans, the mortgage broker is always the agent of lender, and always owes the lender a fiduciary duty. Unfortunately, on government transactions, the mortgage broker is usually acting as an intermediary only to the borrower and as a fiduciary to the lender. I wonder why relationship disclosures are not required for mortgage brokers and why the mortgage industry seems to be oblivious to agency concepts. Even in California, where agency applies, industry practice does not generally recognize or comply with agency principals. I agree that the industry would be better off if fiduciary duties were properly imposed. You did not mention that in California, and a few other states, mortgage brokers owe borrowers a fiduciary duty. In California, mortgage brokers that are licensed by the Department of Real Estate are agents. While lenders are principals in a mortgage transaction, mortgage brokers are intermediaries or agents.

Furthermore, mortgage brokers often hold themselves out as consultants, advisors, or other title that implies that the mortgage broker is working in an agency capacity.

In regard to FHA and VA loans, the mortgage broker is always the agent of lender, and always owes the lender a fiduciary duty.

Unfortunately, on government transactions, the mortgage broker is usually acting as an intermediary only to the borrower and as a fiduciary to the lender.

I wonder why relationship disclosures are not required for mortgage brokers and why the mortgage industry seems to be oblivious to agency concepts.

Even in California, where agency applies, industry practice does not generally recognize or comply with agency principals.

I agree that the industry would be better off if fiduciary duties were properly imposed.

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