First is was the lenders. Then mortgage brokers. Then the ratings agencies. Now, real estate agents have joined the growing list of those accused of being responsible for the nation's credit crisis.
Millions of borrowers face possible payment resets they may not be able to afford. And since many subprime lenders have gone out of business -- leading to mortgage industry layoffs that may exceed 100,000, those borrowers will likely have no refinance options. And falling home prices are only exacerbating the problem.
The National Association of Realtors recently called for tighter underwriting standards and supported legislation that would expand FHA options, a new report from the Wharton School of the University of Pennsylvania said.
But real estate agents, who present themselves as indispensable guides for home buying transactions, did not prevent borrowers from getting into mortgages they may not be able to afford, the report suggested.
"Realtors care about only one thing -- making the sale," added Kenneth Thomas, a lecturer on finance at Wharton.
Realtors are motivated by their 5 percent to 6 percent commissions to keep quiet about loans that may be bad for borrowers. And some even riskier programs that enabled a higher purchase price only provided more incentive to get the borrower into the loan.
"I think the greed factor works with agents as well as loan originators," Shanna Smith, president of the National Fair Housing Alliance, was quoted as saying in the paper.
Smith cited one couple that was pressured by their agent to go with a bigger loan because "he could get the same payment, or even lower payment, for them for a more expensive home."
"The broker, 99% of the time, is the agent of the seller, so the broker doesn't have any duty to the buyer," Wharton real estate professor Georgette Chapman Phillips said in the report.
And many Realtors help buyers find loans by recommending lenders or mortgage brokers.
"A lot of these mortgage companies are captive lenders of the [real estate] brokers," Phillips added.
But the country's chief financial officers place the blame for the credit crisis squarely on mortgage companies.
A survey of 220 CFOs conducted by Financial Executives International and Baruch College's Zicklin School of Business in September found 86 percent identified mortgage brokers and lenders as responsible for subprime mortgage defaults.
Credit rating agencies were cited by 40 percent of the respondents, according to the report, CFO Outlook Survey.
However, the National Association of Mortgage Brokers said its members were not responsible -- pointing to a recent Government Accountability Office report that analyzed rising defaults and foreclosures.
"According to GAO, the problem started with the rise of securitization, resulting in too much liquidity, which led to aggressive practices by banks and other lenders," NAMB President George Hanzimanolis said in an announcement yesterday. "This study vindicates mortgage brokers by confirming what we have been saying all along."
The trade group said a drop-off in home price appreciation and a weakening labor market in some areas contributed to the collapse of the market. In addition, easy underwriting, stated income and low documentation, and higher loan-to-values were also a factor.
"Blaming only mortgage brokers or any other one segment of this industry for this complex meltdown doesn't hold water with the facts," Hanzimanolis said.
A survey last month of 2,500 adults announced Monday by TNS found seven out of 10 Americans blamed subprime lenders for creating the credit crisis, while 60 percent blamed the real estate and housing industries. Subprime borrowers were responsible, according to 58 percent of the people surveyed, and 57 percent blamed investors.