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Mortgage Brokersby Paul Donohue Mortgage brokers are fundamentally the middlemen between the borrower/homeowner and the bank or mortgage lender. They work directly with both the consumer and the bank to help potential borrowers get approved for a mortgage, whether it’s for a purchase or a refinance. While the loan officer usually works directly for the lender, mortgage brokers work as liaisons between the borrower and the lender, working to find the best possible solution for both sides. Most states in the U.S. require mortgage brokers to be licensed and have established the National Mortgage Licensing System and Registry (NMLS) in order to enhance supervision of the mortgage industry, make the licensing process for mortgage companies and professionals streamlined and consistent throughout the states and to improve protection of borrowers. States regulate the lending practices and licensing requirements in their own state, 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." Mortgage brokers are normally licensed with the state and, as of 2008, must be registered nationally with the NMLS, and they are 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, which is typically a bank or direct lender. Both loan officers and mortgage brokers have legal, moral, and professional responsibilities to prevent fraud and must fully disclose terms of the loan to both the consumer and lender. Typically, mortgage brokers 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 loan is approved and the contract is signed. In general, a broker is probably a lot more available than a loan officer at a retail bank. A broker works with fewer borrowers on a more personal level. When a borrower contacts a mortgage broker and they agree to work together, the broker will gather important information. Specifics like employment information and asset and liability details are necessary to determine the borrower’s ability to repay the loan. When the mortgage broker has all of the important details, they can determine what would work best for the borrower and still meet the needs of the lender. This may include setting an appropriate loan amount, interest rate, and determining which type of loan would be ideal for the borrower. Of course, the broker is just there to help -- the borrower could make all these decisions themselves if they so choose. Gaining the license to perform these tasks on behalf of the borrower and lender requires preparation and education. For pre-licensing and CE courses that meet national and state requirements, preparing you for licensing and registration, joining the ranks of mortgage brokers, you can find the resources you need at Abacus Mortgage Training and Education.
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