Let’s assume you’re similar to one of the following borrowers:
- A first-time buyer is trying to make the jump into home ownership.
- A family is buying a larger property to accommodate your new size and school requirements.
- A retired person seeking additional income through their existing equity with a reverse mortgage or planning to buy a smaller, more senior friendly property.
In all of these cases, lenders do not want you, the borrower to be represented. In some states, notably Virginia, state law precludes the borrower from agency representation.
The model broker disclosure form created by the Mortgage Bankers Association stated that ‘In connection with this mortgage loan we are acting as an independent contractor and not as your agent.’
As long ago as 2003, way before the economic meltdown this form was required to be in all loan packages submitted to lenders. It’s true that it is not currently required. But, this is because of the federal changes to compensation rules and has nothing to do with borrowers being represented.
Ask yourself: why wouldn’t I want to be represented by an agent in negotiations with a potential lender?
If I were a Borrower, I would want Borrower Representation
Attorneys and lawyers do it. Accountants do it. Independent insurance agents do it. Even Realtors do it. Each of these professions is allowed to provide agency representation to their clients.
You as a borrower are precluded statutorily from receiving borrower representation in your search for a new mortgage. What does that say about the legislative influence of the association of bankers?
Borrowers Deserve Representation
What can you as a borrower do? What are your alternatives?
Find a mortgage broker who will at least endeavor to act in your best interests. They may not be able to form legally an agency relationship but, will operate as if they are your agent, regardless of how the law interprets their actions.