Sunday, February 1, 2009
Banks kicking out mortgage brokers
By Xavier Guerrero
Ever since the financial crisis started, brokers are starting to see a decline in the mortgages they are lending out to their clients. The problem has been an increase of banks seeing a decrease in their mortgages given out by their own retail locations and online sales. Hence a new trend begun in the this market. Banks like JPMorgan Chase will no longer accept loan applications processed by mortgage brokers.
The reason banks are doing this, is because they are taking actions opposite of what they did before. Banks are now making decisions about the best way to make loans that will be better for the borrowers in the long run. Also, the default rate on mortgages made directly through retail stores have a lower default rate that the ones made by mortgage brokers, mainly because some some brokers may persuade borrowers to apply for loans that may be beyond their ability to pay.
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