What exactly do mortgage brokers do? The word broker refers simply to someone who negotiations on someone else s behalf. A mortgage broker works directly with several different lenders to get you the best loan programs with the lowest rates, fees and lowest closing costs; however, the broker does not actually loan you the money. Instead, he acts as a link between the lenders and borrowers. This means that the broker’s job is to find the right deal for the customer and prepare application forms for submission to the lender.
Brokers are usually independent contractors and work for a mortgage lender, credit union or attorney firm. However, they sometimes work for one or more banks. As well, some brokers are paid by commissions from loan officers whose clients they represent.
There are a variety of mortgage loans available through a mortgage broker. Many of these loans are referred to as sub-prime mortgage loans. These are special loans that are designed to provide mortgage loans for people with bad credit. Usually, when people apply for a mortgage loan they will be turned down because of their credit history.
One of the reasons that people are turned down for a mortgage loan is that they do not have enough credit history to qualify. In this case, a mortgage broker can help the customer with a special loan application known as an ‘Omni-type’ loan. This loan allows the person to apply for the mortgage with just a few pieces of information – including employment and income history.
To be eligible for this type of loan, the mortgage broker must be a part of a lender’s sub-prime lending network. To qualify, the mortgage broker must be working directly with one or more sub-prime lenders. A mortgage broker is only able to work with multiple lenders if he or she also works directly with one or more of these lenders. In other words, a mortgage broker must have multiple relationships with multiple lenders in order to be able to submit multiple lender quotes to multiple lenders.
Mortgage brokers have to follow many laws, regulations and rules when they work with multiple lenders. For instance, mortgage brokers cannot lie on their loan applications. If a mortgage broker lies on a loan application, the mortgage broker could be prosecuted for loan fraud – a federal crime. Lenders are very conscientious about keeping their lending programs honest. Therefore, there are penalties for lying on a loan application or any type of application for financial services such as credit cards, mortgages or auto loans. Because mortgage brokers deal with so many lenders, they are subject to many regulations and many rules regarding their business.