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WASHINGTON, DC-Executives from two associations that represent factions in the mortgage industry–the Mortgage Bankers Association and the National Association of Mortgage Brokers–have exchanged words over the causes and remedies of the current woes in the subprime market. It began with a speech John Robbins, chairman of the MBA, delivered on Tuesday at the National Press Club’s Newsmakers Lunch, where among other things he called for greater oversight of brokers. Later that day, NAMB president Harry Dinham issued a statement condemning MBA’s attempt to shift blame away from Wall Street for the subprime situation.

If the argument sounds familiar that is because it is illustrative of a greater public discourse happening in Congress, in state legislatures and in the media on the same subject: Who, at bottom, is to blame for the record defaults among subprime borrowers: Brokers eager to close as many deals as possible or originators, spurred on by Wall Street, who have stretched underwriting and risk perimeters to the breaking point? Most of the borrowers that are defaulting are single-family home owners. However, anecdotal evidence is accumulating that the problems are affecting condo communities, with reports of delinquent fees increasing.

During his speech Robbins extolled the capital markets’ developments over the past 15 years that have allowed banks to package and sell risk, thus resulting in more cost-effective loans for borrowers. The market is efficient in weeding out predatory lending, he said, pointing to the number of such companies that have gone out of business lately.

The mortgage brokers, though, he continued, should bear some of the blame. “Frankly, it’s too easy to hang a shingle and call yourself an expert in mortgages,” he said in his speech. “We need licensing of brokers, with a threshold that will weed out those unwilling to be responsible, to be held accountable. Some cross the line into pure fraud, and for them we have laws. But as long as there are scam artists willing to look someone in the eye and say “I’m going to get you something for nothing,” people will be hurt.”

Dinham, in response, tells GlobeSt.com that, “Banks and originators need to look at themselves before they start pointing fingers at everyone else. There have been many, many institutions that have been fined for predatory situations. We have been advocating licensing for all originators. In the meantime, Congress should consider interim standards. The states could raise those standards if they wanted. We believe for the sake of the consumer there should be at least such as minimum standard.”

“In John’s speech at the National Press Club, he clearly acknowledged that responsibility for the current subprime troubles lie in the unethical actors throughout the mortgage lending industry,” Kurt Pfotenhauer, MBA’s Senior VP of government affairs, tells GlobeSt.com.

“That is one of the reasons we have long supported a uniform national standard to prevent predatory lending that puts everyone who originates a loan on a level playing field. It is also a driving force behind our push for greater transparency in the mortgage process.”

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