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June 23, 2005

Brokers prove to be the better bet: New study shows consumers pay lower rates with mortgage brokersmortgagepress.comAPR, mortgage brokers, sub-prime mortgages
The National Association of Mortgage Brokers has supported the
findings of Dr. Gregory Elliehausen of the Georgetown University
Credit Research Center. His findings report that customers who use
a mortgage broker have lower annual percentage rates, on average,
than bank customers. Dr. Elliehausen presented his findings to a
Federal Reserve Board conference in early April. In addition to Dr.
Elliehausen, the report was co-authored by Amany El Anshasy of
George Washington University and Yoshiaki Shimazaki of Oklahoma
State University.
"We commend Dr. Elliehausen's detailed research on this very
important topic," said NAMB President Bob Armbruster. "We have
always believed that customers who work with mortgage brokers,
especially NAMB-affiliated mortgage brokers, receive some of the
most favorable terms possible for mortgages. The findings of this
report simply prove what NAMB has known for years."
The conclusions of the report are:
•Estimates indicate that borrowers obtaining sub-prime
mortgages through brokers paid lower APRs than borrowers obtaining
sub-prime mortgages from creditors.
•The results support the hypothesis that, through
competition, brokers tend to pass their origination cost advantages
to the consumer.
•The results challenge the view that loans from brokers are
more expensive because of broker steering.
•Although the report's findings will not apply to every
individual case, there is an overall price benefit to using
brokers.
•The benefits of brokers also appear to hold for vulnerable
market segments.
"For consumers, working with a mortgage broker who is affiliated
with NAMB is a key tool to help protect oneself against fraud or
abusive financial practices," adds Armbruster. "The more consumers
know what resources to use, the better informed they will be in
getting the best mortgage possible."
For a copy of the report, visit
www.chicagofed.org/cedric/files/2005_conf_paper_session1_elliehausen.pdf.

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