Mortgage brokers believe it is the borrower's responsibility to determine whether or not a nontraditional mortgage is an appropriate choice.

That was what George Hanzimanolis, the president-elect of the National Association of Mortgage Brokers, told lawmakers Wednesday.

"No law or regulation should ever require any mortgage originator to supplant the consumer's ability to decide for him or herself what is or is not an appropriate loan product," Hanzimanolis reportedly testified to the Senate's Subcommittee on Housing and Transportation and Subcommittee on Economic Policy. "As the decision-maker, the role of the consumer is to acquire the financial acumen necessary and take advantage of the competitive marketplace, shop, compare, ask questions and expect answers."

Also testifying at the hearings on nontraditional mortgages were Robert Broeksmit of the Mortgage Bankers Association, the Federal Reserve's Sandra F. Braunstein and Orice Williams testified on behalf of the Government Accountability Office.

NAMB's Hanzimanolis attributed the growth in exotic loans to the lack of affordable housing and the lack of affordable financing options. "Today nontraditional mortgage products are effective financing tools -- affording consumers the flexibility to invest, manage their wealth, manage uneven income flows, and lower their monthly payments if necessary."

He called for mortgage originators and borrowers to be better educated about the risks and benefits of nontraditional loans and noted a complicated disclosure structure continues to hinder originators nationwide.

"Regardless of the distribution channel chosen, each consumer should receive the same disclosures in the same format for any particular loan product type or transaction, giving meaning to the ability to 'comparison shop'," Hanzimanolis added.

Government intervention into pricing, compensation or product development will prevent the best response from the marketplace from occurring, he said.


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