The two (2) major things that have caused the problem we have today.

1. The market allowed itself to get out of hand with mortgage products we as an industry KNEW the borrower would have a hard time paying back over time. And yet a good percentage of brokers and lenders continued to sell the products to make a profit and wall street kept eating it up to keep the liquidity there.
There was an article that stated that Sub-Prime ARM loans made up less than 7% of the countries mortgage loans, but accounts for over 43% of the countries foreclosures. The traditional Sub-Prime products are performing as expected.
RESULT: Now as an industry the liquidity in ALL Sub-Prime loans has pretty much dried up. Agency paper is getting tighter and more costly to the borrower. As of this morning Mortgage Implode has 205 major lenders either closed down or getting out of the business. And it has one of the major causes of the housing market slump.

2. We have not policed ourselves enough which has opened the door for the government to step in.
Be it fruad or unlicensed loan officers. The industry has turned it’s head and looked the other way.
FRAUD.
Many wholesale lenders find blatant fraud in a loan and either slap the company involved on the wrist or “cut them off” from doing business with them as a wholesaler. In most cases, even the offending company does nothing to the Loan Officer/Originator that committed the fraud. So they just move on to the next wholesaler and keep on with business as usual. That is why when you read an article about someone milking the industry for MILLIONS and you think “how did they get away with it for so long?”, this is your answer. Why didn’t the wholesalers not file charges, make a stink, get at least the LO out of the business. FEAR. Fear that when they reviewed all the loans they purchased from this specific lender they would find more fraud. Then they would have to inform the current holder of the note and be held responsible.
UNLICENSED LO’s.
I can’t tell you how many times I run across brokers/lenders that allow Loan Officer/Originators to work even though they can NOT get licensed by the state. They just put another licensed LO’s name on the loan. I have seen companies with several branches, unlicensed, filled with unlicensed LO’s. I have even seen where a member of management charges cash to put his name on the 1003 as the licenses originator.

So, as far as the need for “Transparency”, we have brought it on ourselves as an industry. But again, it has little to do with what a broker gets paid.

We as an industry are responsible for a large portion of this mess. How many of us did a stated deal for a w-2 borrower? We have to police ourselves and get the scum out of our industry. Large or small, its the integrity and ethics of the LO that determines how a client views their transaction and whether they are put into the BEST program for them, regardless of income for the LO.

The market will determine what is a “fair” fee, as it does in every industry.

btw - Sharon - get some sleep!

Why is it that brokers are the scape-goats of the Fed. We already disclose YSP and discount points charged along with origination fees on GFE’s. What more disclosure regarding a broker’s income does the consumer need? Those who hide behind the lender moniker in order to non-disclose their fees, won’t feel discriminated against.

No doubt, there have been many abuses by brokers and lenders alike. But it was the greed of the financial investors that stoked this fire. It goes to prove the validity of the old adage, “be careful what you wish for”.