Mortgage Brokers: Extinction or Purification?

It is simply human nature to assign blame when something goes wrong. I am not one who usually complains about human nature, I normally leave that to the philosophers and the anthropologists, but I feel as if this case is different. This case should make us all raise our eyebrows as to what is going on. When the tides of recession began to hit every shore in 2008, the blame assignments were being passed out. What surprised me and what should have surprised many more was who got the brunt of the blame.

What emerged was a lot of blame on the mortgage broker. Many more should pause and realize that banks created these loan programs. Banks did the underwriting, the due diligence, and the approving. Banks handled the investing and the hedging. Mortgage Brokers simply submitted the files and they take home the blame while banks get a bailout and a mere slap on the wrist.

What isn't surprising is the fact that this has led to a severe drop in the number of mortgage brokers in the industry. Market analysts are predicting that by the end of the 2009, the number of mortgage brokers will have dropped 72% since 2006. Many are calling it a purification, that only the 'creme of the crop' will be around by the beginning of the next year but others are worried that banks and a gullible federal government will not rest until there is an extinction of the mortgage broker as we know it. Only time will tell.