|Comments by the top executive at JPMorgan Chase & Co. have mortgage brokers up in arms. A broker trade group released its own statement condemning the comments and blaming failed investment bankers for the industry's woes.
The comments were made by the New York-based company's chairman, president and chief executive officer Jamie Dimon at a conference hosted by the U.S. Chamber of Commerce yesterday in Washington, D.C.
"My biggest mistake, probably of my whole career, was not closing down our mortgage broker business sooner," Dimon was quoted as saying by Bloomberg news.
Coming from one of the nation's most respected banking executives, the statement cut especially deep for the nation's ailing mortgage brokers.
JPMorgan abandoned its broker business in January. An official company statement at the time indicated that retail loans perform better than broker-originated mortgages because borrowers are better informed.
A statement today from National Association of Mortgage Brokers President Marc Savitt called Dimon's statements "senseless attacks on the mortgage brokerage industry based on misinformation" and said the executive has a poor understanding of the role of mortgage brokers.
The trade group leader explained that brokers guide prospective borrowers through the complex origination process -- typically in markets that are underserved by financial institutions. But brokers aren't to blame for the poor performance of loans they originated.
"NAMB urges Mr. Dimon to recognize that mortgage brokers do not create loan products, do not determine the automated underwriting systems used to qualify borrowers, do not underwrite the loans, and do not approve borrowers for those loans," Savitt said in the statement. "Wall Street investment banks 'who are now out of business' did that."
Savitt noted that most investment bankers owned the biggest subprime lenders, "a fact Mr. Dimon failed to disclose in his remarks."