Mortgage Brokers

The proper function of mortgage brokers is to act as intermediaries between mortgage lenders and borrowers, by introducing the lender to the borrower and preparing and presenting the proposal for the borrower to receive a mortgage from the lender. Mortgage brokers perform this intermediary function in many ways, with some of the most common and important roles being as follows:

To assess the financial circumstances and mortgage requirements of the borrower;
To identify prospective lenders and formulate a mix of mortgage rates, points and fees;
To compile all the documentation required to support a borrower's mortgage application.

Mortgage Brokers vs Loan Officers

Mortgage brokers operate independently of lenders and borrowers, whereas loan officers tend to be employees of lenders. Consequently a mortgage broker may have no conflict of interest in advising
a borrower, but a loan officer who works for a lender will always be conflicted. Mortgage brokers are able to advise borrowers on a wide range of mortgage products from competing lenders, whereas lending officers of a lender deal only with mortgages offered by their employers.

Almost all states regulate mortgage lending, and they require mortgage brokers to be licensed.
Loan officers who work for mortgage banks are also required to be licensed, but not in all states,
and licensing is not mandated at all for loan officers who work for banks. Licensing has the advantage of conforming brokers to a specific set of standards, by way of sanctions for breaches, and by providing a framework for maintaining and extending one's knowledge of the mortgage industry.

Today mortgage brokers originate more than two-thirds of all mortgages underwritten in the market. This reflects the preference of consumers to deal with someone who is at least once removed from the lender, and who can help them to access the benefits of what is a very competitive market.