In competitive mortgage markets many lenders use an array of rate offers and other incentives to attract customers. To many consumers due to their infrequent purchases of mortgage products the mortgage market may appear confusing and somewhat daunting. A mortgage broker can guide them through the process of selecting a suitable mortgage and offer mortgage and property related financial advice.
For borrowers with poor credit records or other unusual circumstances finding a lender may be difficult and therefore it may be necessary for them to consult a mortgage broker as they will have the specialised knowledge required.
Over 80% of home loans issued in the US today are negotiated by brokers. The banks have used brokers to effectively outsource the job of finding and qualifying borrowers, and also to outsource some of the liabilities for fraud and foreclosure onto the originators through legal agreements.
During the process of loan origination, the broker gathers and processes paperwork associated with mortgaging real estate.
As of 2005, there are approximately 20,000 mortgage brokerage operations across the USA. Today, mortgage brokers originate 60% of American mortgages.
Difference between a mortgage broker and a loan officer
A loan officer acts as the conduit between buyer and lender. Most states require the mortgage broker to be licensed, while others do not. States regulate lending practise and licensing, but the rules vary. Most have a license for those who wish to be a "Broker Associate", a "Brokerage Business", and a "Direct Lender".
A mortgage broker is normally registered with the state, and personally liable (punishable by revocation or prison) for fraud for the life of a loan. A loan officer is typically not liable for their actions, and work under the umbrella license of the institution they are at. Typically, they have less experience in the field.
Also, loan officer usually connotes someone who works for a lender, and has involvement in the internal processes of a lender. A broker exclusively uses the money of others to fund their loans.
