The latest issue of Consumer Reports magazine recommends that consumers avoid mortgage brokers when seeking home loan financing.
As a result, the publication, which prides itself on neutrality and fairness, just angered a very large group of mortgage industry workers.
So much so that the president of the National Association of Mortgage Brokers (NAMB) fired off a letter to Consumer Reports calling it simply bad mortgage advice.
The original article says, “We don’t recommend that you hire a mortgage broker to do that because he may be more focused on selling you a mortgage than getting you the best deal.”
At least, that’s how NAMB president John L. Councilman put it in his letter. The article on the Consumer Reports website includes the word “generally,” which may or may not have existed before NAMB got involved.
I don’t know if it was there or not, but that changes thing a bit. In any case, it is a pretty bold statement to make, not to mention blatant generalizing.
Is It Okay to Generalize?
When it comes down to it, mortgage brokers are individuals, so to say that they will ALL just focus on getting you a mortgage regardless of the value it offers is a bit ridiculous, especially for a publication that is all about impartiality.
At the same time, I can’t sit here and tell you that every single mortgage broker out there is a great person with your best interests in mind.
That’s obvious; nobody can do that because results can and will vary when dealing with a large swath of individuals.
The same is true about lenders, banks, and credit unions, which Consumer Reports says to focus on instead.
At least they tell consumers to look beyond their “regular bank,” which is good advice. When shopping for something as important (and costly) as a mortgage, you should certainly comparison shop.
But singling out an entire group is silly, even if there are some bad eggs in the group.
As Councilman aptly pointed out in his letter, “bank originators are not licensed, tested, or required to have the same education, as non-bank originators. They even have less stringent criminal background standards.”
Again, this doesn’t mean you can’t encounter a good or a bad loan originator from either group, but it doesn’t give consumers a reason to completely shut out one channel.
He also notes that there are anti-steering measures in place for brokers these days, requiring that they get paid the same compensation regardless of loan product or rate.
And let’s be honest, everyone’s pretty much going with a 30-year fixed mortgage these days. The exotic stuff is largely gone, and borrowers will generally only go with FHA if they have to, or if it’s significantly cheaper.
Councilman closed his letter by inviting the editors of Consumer Reports to do a ride along at some broker shops and attend a NAMB conference. And even challenged the magazine to post his letter in its publication.
That seems doubtful, but they may have already slightly edited their article to include the word “generally.”