Whether mortgage brokers have fiduciary duties to borrowers has been the subject of debate for a decade, since the rapid rise of mortgage brokers in the residential home finance industry. Initially, the issue of the duty owed by a broker to his borrower customer was determined on a case-by-case basis, as courts throughout the country considered specific claims of breach of duty in individual cases. However, since the housing and financial crises and the rise of subprime lending, state legislatures have been enacting laws imposing various levels of duty on mortgage brokers. Some of these state laws expressly state that a mortgage broker is a fiduciary and is deemed to be acting in the interest of the borrower (e.g., California), while others are less specific but impose a duty of loyalty and care, or a duty of good faith. With 10 states having adopted statutes imposing duties on mortgage brokers vis-a-vis their representation of borrowers, the authors anticipate that eventually, a mortgage broker's fiduciary duty to the borrower will be the rule, not the exception.

The author's 2007 article on the same subject (see "Mortgage Brokers: What Fiduciary Duties Exist?" in the October 2007 issue of Mortgage Banking magazine) is updated by this 2010 article.