Released: July 06, 2008

Mortgage brokers as naysayers in NY

Source: Bob Tedeschi, New York Times (Free Registration)

New York’s borrowers could notice a different tone in their discussions with mortgage brokers in coming months, as brokers adjust to a new state law that seeks to stem foreclosures.

The legislation, which was passed by the New York Legislature in June and is expected to be signed by Gov. David A. Paterson, aims to curb the current surge in foreclosures, but it also includes provisions meant to prevent borrowers from taking out loans they cannot repay.

Among other things, it says that brokers have a “duty of care” to offer appropriate loans to subprime borrowers — those with poor credit.

Brokers are asking, however, what constitutes an appropriate loan, and what happens if a borrower disagrees with a broker’s recommendation.

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