Who Can Be Trusted When It Comes to Mortgage Deeds?

I am writing to you in my capacity as executive director and secretary of the Mortgage Brokers Institute of California. MI is the state’s oldest and largest trade association comprised of about 240 mortgage loan brokers who specialize in the funding of home equity loans using private investor and institutional funds.

I read with interest the story “Misdeeds of Trust,” (Oct. 20). The issue of unsophisticated and unwary homeowners being duped into agreeing to loan transactions that are fraudulent and thus losing control over their property is very real and is of great concern to legitimate mortgage loan brokers all over California.

Unfortunately, Goldsmith, one of the quoted attorneys for the Homeowners Outreach Center, falls into the trap of assuming that many of these unfortunate occurrences are the result of activities of “dishonest loan brokers.” The facts are that most fraudulent transactions of this kind are perpetrated by unscrupulous, unlicensed individuals operating beyond the reach of the regulatory authorities.

So concerned has the Mortgage Institute become about these individuals and their activities that we sponsored legislation that will become effective in 1992. It will allow prospective borrowers to identify legitimate mortgage brokers from those who have no license.

Beginning in January, all promotional materials including print and electronic advertising, direct mail brochures and the like that advertise real estate loans, must include the nature of the license under which the individual or company offering the loan is operating. The only exceptions are banks, savings and loans and other specified financial institutions.

Those who have no license will have to say so in their advertising. This will allow borrowers to make sure they are dealing with a legitimate lender or broker and provide them with an opportunity to check with the appropriate regulatory agency in advance of signing any documents.

As was indicated in this story and in other recent studies, many inner-city residents have difficulty in locating sources of financing for their property, even when their equity is significant. The mortgage loan brokers of this state have served a useful and necessary role for over 40 years in assisting these homeowners by providing capital to them in financially stressful situations.

The Mortgage Institute will continue its fight to rid our system of those unscrupulous individuals whose illegal activities tarnish the reputations of these competent and professional mortgage loan brokers.

CLIVE HOFFMAN, Executive Director, Los Angeles