What is a Mortgage Broker ?
A Mortgage Broker is an Individual or a firm that brings borrowers and lenders together for loan origination. A Mortgage broker typically takes loan applications and may process loans. A Mortgage broker can sometimes close the loan, but they typically turn it over to the underwriting and closing. A Mortgage Broker does not work for a specific bank or a lender but work with several lending Institutions.
A Mortgage Broker is a middle-man in the lending situation. If a borrower chooses to work with a broker, that broker will take their application and then shop it around to different lenders that they have a relationship with to find the best lender for the borrower's specific needs and application. The lender then compensates the broker for providing application to them. The Mortgage broker does not fund loans, they only take the application and in some situations, they help to process and close the loan. The Lender is the one funding and underwriting the application. Even though a broker is a middle man, it does not mean that a lender has better rates than brokers. A brokerage has the ability to negotiate the rates with multiple lenders they use.
Related Topics: What is the Record retention? Retention of information after a solicitation • Mortgage Acts and Practices – Advertising, 12 CFR Part 1014 (Regulation N) What are Record retention time frames? What is SAFE Act and CSBS/ARRMR Model State Law ? What are the Limitations on broker fees? What is the Equal Credit Opportunity Act (ECOA), 12 CFR Part 1002 (Regulation B)? What is the Gramm-Leach Bailey Act? What are Prohibited Acts? Explain the consequences of Violations of Gramm-Leach Bliley Act What are the Facts about Suspicious Activity Reports (SARs) ? What are the Required ESIGN disclosures? What are General permissible acts under the Equal Credit Opportunity Act? Explain Information provided by the borrower regarding the right of refusal • Fair Credit Reporting Act (FCRA)/Fair and Accurate Credit Transactions Act (FACTA) 15 USC § 1681 et seq. Explain Permissible acts of MLOs regarding the appraisal of a client’s property, Scenarios surrounding situations with borrower’s undisclosed income, Permissible acts after discovering deposits inconsistent with borrower’s income included on application, Scenarios involving a gift received by the borrower, What is Real Estate Settlement Procedures Act (RESPA), 12 CFR Part 1024 (Regulation X) What Documents must be provided to a borrower at loan consummation • Dodd-Frank Act ? What are the Ways to verify a borrower’s identity • USA PATRIOT Act? What is the core concepts of the Truth-in-Lending Act? What is the Equal Credit Opportunity Act (ECOA), 12 CFR Part 1002 (Regulation B)? What is the Enforcement authority for “red flag” rules • Bank Secrecy Act/Anti-Money Laundering (BSA/AML) ? What are the Duties a loan processor may/may not perform? What acts are Allowable by underwriters ? Clerical/support duties, Loan processors ? Documents to be signed at closing The Loan Estimate (LE) The Closing Disclsoure (CD) Documents Required for a Home Loan Application
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