We’re not ones to only tell one side of the story (although continually blamed for it, and admitadly a bit bullish). We’re certainly not ones to always point to roses, and we’re definitely not afraid of helpful comments and good articles to keep us thinking, so keep sending them, and please discuss.
At the heart of the matter is the way agents are paid — traditionally through a commission, paid by the seller, of 5% or 6% of the home’s sales price. Nudging buyers toward subprime loans, or keeping mum about the risks, means more sales go through. Also, the low teaser rate on a subprime loan allows the buyer to borrow more, helping to boost sales prices and commissions. “You can’t lie,” Phillips said of the agents. “You cannot intentionally mislead somebody. But you work for the seller.”
“You work for whoever pays you,” Phillips said, adding: “Should a broker tell a buyer, ‘You realize that you’re in completely over your head here?’ — when the mortgage company has already said to the buyer, ‘Sure, you can have the money.’ Why would the broker ever do that?”
“Realtors care about only one thing — making the sale,” added Kenneth Thomas, a lecturer on finance at Wharton, adding that if the buyer needs a subprime loan for the deal to go through, the agent is likely to keep silent about the hazards.
With that said, who is to blame for this mortgage mess?