The National Association of Mortgage Brokers was disappointed with comments made by JPMorgan Chase Chairman and CEO Jamie Dimon today regarding the mortgage broker business. In a speech before the U.S Chamber of Commerce 3rd Annual Capital Markets Summit, Dimon stated that his failure to terminate the company's mortgage broker business was the "biggest mistake" of his career. NAMB President, Marc Savitt, CRMS, has issued the following statement in response to these comments:
"It is disappointing to once again refute senseless attacks on the mortgage brokerage industry based on misinformation. Mr. Dimon's comments clearly reflect his poor understanding of the mortgage industry and the role of the mortgage broker. NAMB urges Mr. Dimon to recognize that mortgage brokers do not create loan products, do not determine the automated underwriting systems used to qualify borrowers, do not underwrite the loans, and do not approve borrowers for those loans--Wall Street investment banks 'who are now out of business' did that."
Furthermore, Mr. Dimons remarks on U.S. economic outlook to the Economic Club of Washington acknowledges the real problem was a failure of management saying, "Bad underwriting was totally to blame, however we didn't see the results because the housing market was so good and we didnt see any losses." Underwriting is the fundamental role of his bank and his management and any bad underwriting is due to their poor judgment.
"I understand the need to blame someone outside the financial institutions for the failures of leadership and accountability to their respective Boards of Directors," Savitt said, "but Mr. Dimon should admit to the world that they created mortgage products and sold them through all origination channels--banks, lenders, credit unions, homebuilders, mortgage brokers based on Wall Street's determination that they could be securitized and sold to investors across the globe. Most Wall Street investment banks owned the largest of the sub-prime lenders, a fact Mr. Dimon failed to disclose in his remarks."
Mortgage brokers work with consumers to help them through the complex mortgage origination process. We add value to the process for both consumers and lenders by serving areas that are typically underserved by banks and other lending institutions. Mortgage brokers also add value by providing goods, facilities, and services with quantifiable value, including a customer base and goodwill.
Separately, NAMB would like to commend the Union Bank of California in its due diligence in approving mortgage brokers as a reliable delivery channel for mortgage loans. Union Bank Senior Vice President Craig Cole stated to The Orange County Register, "Most lenders mismanage the broker channel by not being disciplined about who they work with and offering products indiscriminately through that channel." The careful monitoring of all loans funded by banks is a critical component of prudent lending.
For more information, visit www.namb.org.