With the tidal wave of subprime loan failures in recent months, it is no doubt every segment of the mortgage process will come under scrutinty. One such area is that of the mortgage broker, who interfaces directly with the borrower when the lender typically does not.

Most lenders require their brokers to sign an agreement to set forth the duties and responsibilities of a broker who will bring deals to the lender. For this service the broker earns a fee. Those agreements typically require the broker to "verify" the information upon which the lender will rely in its underwriting of loans.

During the heyday of real estate in recent years leading up to the subprime crisis, mortgage brokers pushed harder and harder for deals leading to sweet commissions. Brokers who did not do their due diligence, or worse yet, fabricated information such as income and assets of their borrowers, are subject to liability not only for breach of contract, but potential fraud and punitive damages.