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." (Read more subprime mortgages stories.)