Mortgage Broker

Mortgage Broker Definition:

A mortgage broker acts as intermediary between a financial institution and individual or borrower, who sells mortgage loans.

Most of the mortgage brokers are controlled to guarantee compliance with the banks and or financial laws in the jurisdiction of the customer; but the extent of control depends on the jurisdiction. There is one state within US which has no laws that govern mortgage lending.

Responsibilities of Mortgage Broker:

The roles of a mortgage broker are varied and depend on the jurisdictions. In UK the mortgage broker is responsible for ensuring the advice given to the borrower is appropriate for his conditions and also is financially held liable if the advice is later proven to be defective.

In other jurisdictions a mortgage broker’s job may be purely sales job.

The following are t he tasks undertaken by the mortgage broker:

  • Marketing to attract clients
  • Assessment of the borrower’s credit history and if he can afford to take a loan.
  • Assessing the market to find a product that fits the clients needs
  • Applying for a lenders agreement in principle
  • Gathering all needed documents
  • Explaining the legal disclosures
  • Submitting all material to the lender

Difference between a loan officer and a Mortgage Broker:

A mortgage broker works on a channel between a borrower and a lender. A loan officer works for the lender. In US most state require mortgage broker to be licensed. A mortgage broker is registered with the state and is punishable for fraud for the life of the loan. A loan officer works under the license of his current institution a bank or a direct lender. Both posts have official, ethical and professional responsibilities including liabilities to avoid scam of the loan.

Generally a mortgage broker earns more money for every loan he sanctions than a loan officer. A loan officer makes use of the referral group which exists from the lending institutions to sell more loans.