Mortgage Broker

Financial Dictionary -> Mortgages -> Mortgage Broker

In today's ever growing population, where banks offer hundreds of different services it is not always feasible for financial institutions to negotiate mortgages or offer in depth advice to borrowers. A Mortgage Broker is an individual or company that acts on behalf of lenders and borrowers, bringing them together and arranging the most suitable service for both sides. A mortgage broker does not actually lend any money themselves and is more of a middle man between lenders and borrowers.

Despite this mortgage brokers are essentially employed by financial institutions and outsourced the work involved with finding and qualifying borrowers for their specific mortgage services and packages. A lot of the mortgage broker work is commission based and they are not always paid if the client shows interest but doesn't purchase the mortgage.

The general tasks that a mortgage broker undertakes for a lender include the marketing of the specific mortgage services (whether that is sorting out TV, newspaper adverts or anything else), checking up on the credit rating and financial history of the potential borrower by liaising with Credit Bureaus and other organizations for credit reports. (If a mortgage broker blatantly ignores a borrower's bad credit and offers a loan that does not suit them, they can be held liable). They also complete all the lender's forms and submit all the required information to the lender.

The general tasks a mortgage broker undertakes for a borrower include offering in depth information and guidance in relation to mortgages in general, discussing the best mortgage options that would personally suit the borrower, explaining all the legal issues involved and setting out the terms for the loan. Again if false information is given to the borrower the mortgage broker can be held liable.

In the United States mortgage brokerage is strictly governed and regulated and the laws are focused on keeping the mortgage broker business above board and function to the best of its ability.