Mortgage Broker

A Mortgage Broker is a person who helps consumers or businesses to sell their mortgage products acting as a middle –man. In beginning, Lenders sold their properties in open market with great difficulties but after some time, The role of Mortgage Broker was introduced. and it became popular as the need arose.

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The Mortgage Broker simplify the problems in selling the mortgage products for lenders. Another task is done by the Mortgage Broker is to make compliance with mortgage laws and regulations.

Jobs of Mortgage Broker

A Mortgage Broker has different jobs to do which changes with rules & regulations of the state. Broker gives advice to the borrowers when contacted. and Broker is legally liable if advice goes wrong. Fees will be charged.

Their work depends on the service type which they are providing.

  • Advertising to take clients.
  • Explaining to the borrower what suits him best.
  • Making the Contract for Borrowers and for Lenders.

A study revealed the information that there are more than 400,000 employees are attached with this Brokerage Industry providing 68% of Mortgage Loans in USA. Many Laws are in force in USA.

A Loan Officer

A Loan officer is different from Mortgage Broker. The Broker is required to be registered under concerned law of the state. and A Loan Officer is a government employee. Mortgage Broker is personally liable for any fraud and mis-conduct. Normally Broker earn more than a Loan Officer, but Officer have a vast network of lending institution for Mortgage. Their Levels of experience and duties are separate.

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Brokers in Industry

In Beginning, Mortgage brokers did not have access to wholesale markets, unlike traditional bankers. Today, mortgage brokers are more competitive with their access to wholesale capital markets and pricing discounts. Potential clients can compare a lender’s loan terms to those of others through advertisements or internet quotes. Mortgage brokers can also obtain loan approvals from the largest secondary wholesale market lenders in the country.

The Variation between the “Broker” and “Banker” is the banker’s ability to use a short term credit line to fund the loan until they can sell the loan to the secondary market. Then they repay their warehouse lender, and obtain a profit on the sale of the loan. The Broker disclosure requirements, especially the Good Faith Estimate, can often create the illusion that they are charging more to obtain the exact same mortgage when compared to a Banker, when in fact they may cost the same or the Brokers offer may even be less costly, But A banker have no such requirements. The selling of mortgage loans in the wholesale or secondary market is more common. They provide permanent capital to the borrowers. A “direct lender” may lend directly to a borrower, but can have the loan pre-sold prior to the closing.

Mortgage Frauds

Fraud is when someone  defraud an institution by submitting false information willfully. This is normally to obtain a favorable outcome. Some mortgage brokers have been involved in mortgage fraud. When a dishonest financial institution willfully misleads or deceives the consumer, it is also Fraud. Some mortgage consultants, processors and executives of mortgage companies have been involved in predatory lending.

Common misstatements are :

  • Wrong Financial statements and other documents.
  • Not or Less disclosure of loan and premier information.
  • Make unfair advantages from ignorance of borrower in respective field.
  • Convincing borrowers to refinance a loan without any true benefit.

Mortgage Brokerage in Other Countries

In Canada, high ratio loans are insured by either the Canada Mortgage and Housing Corporation or AIG United Guaranty. The law permits mortgage brokerage to be performed by those in the finance industry, as well as those in the real estate industry.

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Mortgage Brokerage was in Australia since the early 1980′s. Currently there are few federal laws requiring any form of  licensing or training for mortgage brokers. Australian mortgage brokers do not usually charge a fee for their services as they are paid by the lenders.

In Singapore, The mortgage brokers are mostly regulated by the Singapore Law of Agency. but the fee structure in the mortgage brokerage industry in Singapore is not regulated. This resulted in different kinds of fee structure for different mortgage brokerage companies.

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One Response to “Mortgage Broker”

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