An article by James Hagerty "Mortgage Brokers: Are They Friends or Foes for Borrowers?" appeared in the May 24, 2007 edition of The Wall Street Journal. You may read the full article by clicking HERE. 

As a mortgage broker who started in the business in 1980, I have had a front row seat on the recent history of mortgage industry. 

Many mortgage brokers who have built successful careers helping clients and treating them like friends.  But a common 21st century business model has been to hire young "ex-hamburger flippers," re-train them to read scripted answers, and put them to work at the other end of an 800 number.

Add to this a lack of regulation and the potential to make egregious commissions and you end up with a lot of pigs feeding at the trough. The result is the sub-prime implosion with a lot of damaged families.

At the heart of this problem is the issue of agency.  No one has any problem figuring out who the real estate broker works for.  Most states actually require agents to state in writing who has a duty to whom.  Why should mortgage brokers be different?  Our agreements with our lenders specifically state that we are not THEIR agents. Who&39;s left?

People can become easily educated shoppers at the grocery store, but borrowers are not knowledgeable about mortgages. They need intelligent help and they ought to be able to get advice from someone they can trust.  It&39;s hard to see how you can trust someone who specifically states, "I am an Independent Contractor and I’m not acting as your agent."

The mortgage groups fight agency because they do not want to be held to a higher standard of ethics.  They all feel, probably correctly, that their incomes would suffer if they always had to tell the truth to their clients.

It&39;s time the regulators got this issue out on the table and settled it once and for all.