Vermont's Mortgage Law-Fiduciary Responsibility

Gary Fields writes about Vermont’s mortgage laws, in an article dated August 18, 2009 titled,  Vermont Mortgage Laws Shut the Door on Bust — and Boom

In laws passed between 1996 and 1998, and in what officials believe is the first state law of its kind, Vermont declared that mortgage brokers’ fiduciary responsibility was to borrowers, not lenders.  This left Vermont brokers partly on the hook for loans gone sour.

Vermont bankers also typically serviced their own loans, state officials say.  In other states, lenders often sold the loans they originated to investors, giving them little stake in their success or failure.

The concept of fiduciary responsibility does not make common sense.  Why would a mortgage broker have fiduciary responsibility towards the borrower, if source of the money is the lender?  The only party that can represent the borrower’s best interests is the borrower, irrespective of what the laws may state.

Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends.  Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrument per se.  Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility- Encyclical letter caritas in veritate of the supreme pontiff Benedict XVI.