President John F. Kennedy once said, “Life wasn’t fair”.

Words of wisdom for mortgage brokers today. Mortgage brokers, fairly or unfairly, were assigned a good deal of blame for the relaxed standards in the mortgage industry that led to millions of financially unqualified borrowers to get home loans back in the middle of the decade.

When the stuff hit the fan, and scores of U.S. homes went into foreclosure, the mortgage brokerage industry took a bit public relations hit. It’s not that many brokers did not deserve the criticism; in Florida alone, 10,000 mortgage brokers were found to have criminal records in 2008, according to the Miami Herald. And few doubt that third-party home loans were at the vortex of the lending industry’s balance sheet problems.

But that doesn’t mean all, or even most mortgage brokers are unethical, or more importantly, unhelpful. On the contrary, mortgage brokers can help a home borrower in many ways.

But you have to be cautious and you have to be careful. If you opt to work with a mortgage broker, keep the above themes in mind – and keep these tips in mind as well.

Waning influence - To start, know that the home borrowing landscape has shifted, and it’s shifted against mortgage brokers. The New York Times (Stock Symbol: NYT) reports that some of the largest mortgage industry players flat out won’t work with a mortgage broker. The Times cites The PMI Group (Stock Symbol: PMI), one of the biggest firms in the mortgage insurance market, as refusing to “underwrite any policies on loans that started with a broker.” In addition, JP Morgan Chase (Stock Symbol: JPM) has decided not to work with the clients of mortgage brokers. So, if you do want to work with a mortgage broker, find out first whether or not that can shut you out of a good deal on a loan or on homeowner’s insurance. A good real estate agent should help in that regard.

What’s in it for the broker? Always know what skin a potential mortgage broker has in the game. Historically, mortgage brokers act a sort of a middleman between lenders and borrowers. They have access (the good ones, anyway) to dozens of good lenders with deals on loans and interest rates. They help lenders by bringing customers directly to their doorstep. But in the end, a mortgage broker’s interest is strictly self-interest. If they think they can get you a loan, don’t think that your welfare is their primary interest. It may not be, and you might feel the impact in your wallet. As an example, according to a study by the U.S. Dept. of Housing and Urban Development, of over 7,500 Federal Housing Administration loans made in 2001, borrowers shelled out, on average, up to $425 more in fees when dealing with a mortgage broker.

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