Mortgage Broker

As the market for mortgage has become more competitive, the mortgage financing industry has experienced a shift from “direct lending” to “brokerage” business. The role of the mortgage broker has hence become more popular these days.

A mortgage broker acts as a conduit between the mortgage lender and the borrower whereas “loan officers” are treated as representatives for the mortgage lending companies. In comparison, a mortgage broker doesn’t have the wide referral network as available with the loan officers, but they do make more money per loan than a loan officer does.

In many countries and especially in the USA, the various mortgage lenders such as the mortgage banks and credit unions have outsourced the task of finding and qualifying borrowers to the mortgage brokers. This has resulted in over 80% of home loans in the country being negotiated through mortgage brokers. During the process of loan origination, the broker is usually entrusted with the work of processing and documenting paperwork associated with mortgaging real estate.

Today, over half of the mortgage business is controlled by mortgage brokers and borrowers. In this context, a distinction can also be made between an upfront mortgage broker and a conventional mortgage broker. While conventional mortgage broker add a mark up to the wholesale prices and quote the resulting retail prices, an upfront mortgage broker discloses the wholesale prices (rates and points) and his individual fees in advance and in writing. The customers thus have to pay the wholesale prices and the brokers’ fees in the latter case. Upfront Mortgage Brokers also credit the customers with any credit they receive from third parties which may increase the fees beyond what was agreed upon previously.

In terms of national bodies regulating the mortgage brokerage industry the most important are the National Association of Mortgage Brokers (NAMB) in case of USA and the Canadian Institute of Mortgage Brokers and Lenders (CIMBL).These were mainly established to protect the consumers from unfair dealings by mortgage brokers and regulate the mortgage business. The requirement of a physical workplace for the brokers have now vanished as now most of the dealings are made online which is the most fast and convenient way. Mortgage brokers can obtain instant loan approvals from the largest secondary wholesale market lenders in any country. For example, a leading mortgage company may issue a loan approval to a client through its mortgage broker, which can then be assigned to any number of mortgage bankers. In a way, with so many mortgage brokers vying for the top spot in the brokerage industry, instances of predatory lending and mortgage servicing fraud are on the rise. Falsifying income or asset documentation, influencing a higher loan amount and inflated appraisals are now common.

Some of the leading mortgage brokers in the world are:mortgagechoice.com.au.
mortgages.charcolonline.co.uk
nationalmortgage.com
      
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