Brokers Faulted in Subprime Mortgage Mess

Key sellers are poorly supervised, often unethical
By Jonas Oransky,  Newser Staff
Posted Jul 5, 2007 3:28 PM CDT
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(Newser) – With the mortgage industry in full scandal mode, the Wall Street Journal takes a look at the role of brokers. Contractors for the large lenders, brokers stand accused of issuing loans that borrowers “didn’t understand, couldn’t afford or were otherwise ill-suited for.” They issue about three-quarters of the subprime mortgages that go to borrowers with sketchy credit.

Lenders use contractors to avoid the expenses of in-house sales personnel, and they operate largely in low-income neighborhoods where full branches aren’t cost-efficient. They're the “Wild West of mortgage finance,” Sen. Chuck Schumer tells the Journal, adding that it's time to "bring a sheriff to town."