AgentMortgage

Real estate settlement services take bite out of borrowers

Part 1: How do we fix our mortgage system?
Published on Sep 6, 2005

(This is Part 1 of a four-part series. See Part 2: Eliminating mortgage lender fee surprises; Part 3: Mortgage brokers struggle with consumer distrust and Part 4: Cost consolidation improves real estate loan shopping.) "The impression I get from reading your articles is that our mortgage system doesn't work well for borrowers...Isn't there any way to fix it?" In some respects, the United States housing finance system is the best in the world. In other respects, it is unworthy of a banana republic. Our housing finance system has a primary market and a secondary market. The primary market is the market the borrower sees, where loans are executed. The secondary market is where the loans originated in the primary market are sold to investors, the ultimate source of funds. Our secondary market is the envy of the world. Investors acquire mortgage-backed securities at the smallest possible margins over U.S. government securities. However, much of the benefit stemming from our efficient ...

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