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Mortgage Brokerby Paul Donohue A “mortgage broker” is essentially a middleman between the borrower and the bank or mortgage lender. They work directly with both the consumer and the bank to help borrowers get approved for a mortgage. While a loan officer typically works directly for the lender, a mortgage broker works as a liaison between the borrower and the lender, working to find the best possible solution for both. Most states in the U.S. require the mortgage broker to be licensed and have established the National Mortgage Licensing System and Registry (NMLS) in order to improve supervision of the mortgage industry, streamline and make the licensing process for mortgage companies and professionals consistent throughout the states, and to enhance protection of consumers borrowing money. States regulate their own lending practices and licensing requirements, but the rules vary. Most have a separate license with separate minimum requirements for those who wish to be a "Broker Associate," a "Brokerage Business," or a "Direct Lender." A mortgage broker is normally licensed with the state and, as of 2008 must be registered nationally with the NMLS, and is personally liable (punishable by license revocation or prison) for fraud for the life of a loan. A loan officer works under the umbrella license of their employing institution, typically a bank or direct lender. Both loan officer and mortgage broker occupations have legal, moral, and professional responsibilities to prevent fraud and fully disclose loan terms to both consumer and lender. Additionally, agents working for or on behalf of mortgage brokers may refer to themselves as "loan officers." Typically, a mortgage broker will have a higher income per loan than a loan officer, but a loan officer can utilize the referral network available from the lending institution to sell more loans. Mortgage brokers work with borrowers throughout the entire loan process until the deal is closed. Overall, they are probably a lot more available than loan officers at retail banks, since they work with fewer borrowers on a more personal level. Once a borrower contacts a mortgage broker and they agree to work together, the broker will gather important information. Things like income, asset, and employment information are necessary to ascertain the borrower’s ability to repay the loan. A retail bank would collect the same documentation. Once the mortgage broker has all the important details, they can determine what would work best for the borrower. This may include setting an appropriate loan amount, loan-to-value, and determining which type of loan would be ideal for the borrower. Of course, the borrower could decide on all these things themselves if they so choose. The broker is just there to help. Acquiring the license to perform these tasks on behalf of the borrower and lender requires preparation and education. For pre-licensing and continuing education courses that meet state and national requirements, preparing you for licensing and registration as a mortgage broker, you can find the tools you need at Abacus Mortgage Training and Education.
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