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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.