Articles on Stock markets

Mortgage suitability is a standard that does not technically exist in a regulatory way at this point, even though some legislators and consumer protection groups have sought such a standard.

Some financial services representatives, for instance, operate under a suitability standard that takes the financial situation and goals of the individual into account when making investment recommendations. This protects consumers to the extent that it deters some professionals from taking advantage of the consumer and being possibly subject to fines, sanctions, and suspension or loss of license due to violations of the standard.

There is no such standard in the mortgage lending industry. There is, of course, criminal fraud and other charges which might be brought against a lender.

A suitability standard has been advocated by various consumer lobbying groups and legislators, but it does not currently exist. In the investment industry where representatives are licensed with a Series 63 but not a 65, the suitability standard applies.

This means that recommendations must be suitable for the financial resources and goals of the client, after taking the entire financial situation of the client into account, with documentation. Violations of this standard can result in arbitration hearings, fines, and suspension, and loss of license.

The mortgage industry has argued that it would be impossible to know what is best for a consumer, or all of the consumer’s situation, in every case, where information is widely available to the consumer and they have many resources and competitors at their disposal.

What is the Suitability Standard?
What Does it Mean to have a "Duty of Best Execution"?