I received an interesting inquiry this morning, which I would like to post for all to see. The person that asked the question shall remain anonomyous, but I think the response and your feedback/input as California Mortgage Brokers and consumers is important to bring light to the topic in a time of dissaray and finger pointing on the woes of defaults and foreclosures within our state.
Here's the big question...
In California, mortgage brokers technically have a fiduciary duty to borrowers, but it is not enforced.
Could you please clarify that?
Thanks!
~Anonomyous
Here is my response...
Hello XYZ,
Per the Department of Real Estate website, found at http://www.dre.ca.gov/
"A person who provides brokerage services to a borrower in a covered loan transaction by soliciting lenders or otherwise negotiating a consumer loan secured by real property, is the fiduciary of the consumer, and any violation of the person's fiduciary duties is a violation of this law."
"A broker who arranges a covered loan owes this fiduciary duty to the consumer regardless of whom else the broker may be acting as an agent for in the course of the loan transaction."
Are you asking for clarification on why you believe fiduciary responsibilities are not enforced?
I believe they are..if...the borrower calls the broker on it and it stands before the courts to rule on. If the broker doesn't get called on something they did that wasn't in the best interests of their client, it's typically greed and self-fulfilling. I stress the importance of this to my clients, when working on their behalf. We do what is in my clients best interests, not mine...
If you are asking specifically what our fiduciary responsibilities are, that is open to interpretation in the courts, based on the description I gave you above.
Here is a great article I ran across on the topic.
Does that answer your question?
Scott Gormley
Broker/Owner
Oak Valley Mortgage
Direct: 530.592.8362
Email: Scott@OakValleyMortgage.com
Website: http://www.oakvalleymortgage.com/
"You Find the Perfect Home, We'll Find the Perfect Loan!"
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Yea, but in the recent run up in prices the fiduciary duty was squandered, I don't believe that many lenders said to people that the banks will lend them more than they should ever get and that if they can not afford the fully adjusted and amortized loan they should not buy at those prices. Face it greed got them all.
Take care!
RJH