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Brokering a Better Loan


Who should decide if you can afford your mortgage?

When I was searching for my first home in Southern California I began by naively contacting a mortgage broker to determine what I could afford. He made some calls and crunched some numbers and came back with a figure that was four times my rent. It would have been extraordinarily high for me at the very beginning, and when the loan was refinanced in a few year’s time I would never have been able to afford the monthly payments without a timely — and huge — raise. Might a foreclosure have been in my future?

So who should decide if you can afford your mortgage? Your broker? the state? You? This is one of a few mortgage-related questions being debated in the Oregon House and Senate this week. Consumer advocates say they’ve had enough of mortgage companies offering loans that lenders can only afford for a couple of years. Mortgage brokers say it is not their responsibility to determine whether an individual can make a payment or not. Should mortgage brokers be treated like any other salesperson or should they be held to a higher standard because the repercussions can be so terrible if their client purchases something they can’t afford? What role should the state have in managing this business?

Photo credit: Woodleywonderworks / Flickr / Creative Commons

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