Mortgage Broker

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A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses.

Traditionally, banks and other lending institutions have sold their own products. However as markets for mortgages have become more competitive, the role of the mortgage broker has become more popular. Today in most developed mortgage markets (especially in Canada, the U.S., the UK, Australia, New Zealand and Spain) mortgage brokers are the largest sellers of mortgage products for lenders. Mortgage brokers exist to find a bank or a direct lender that an individual seeks with a specific loan the individual is seeking. Mortgage brokers in Canada are paid by the lender and do not charge fees for good credit applications.

The majority of mortgage brokers are regulated to ensure compliance with banking and or finance laws in the jurisdiction of the consumer; however, the extent of the regulation depends on the jurisdiction. Only one state within the U.S. has no laws that govern mortgage lending.

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Banking activities can be divided into the following:
Retail Banking, dealing directly with individuals and small businesses;
Business banking, providing services to mid-market business;
Corporate banking, directed at large business entities;
Private banking, providing wealth management services to High Net Worth Individuals and families; and
Investment banking, relating to activities on the financial markets.

Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits. Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as Lender of last resort in event of a crisis.
The nature and scope of a mortgage broker's activities varies with jurisdiction. For example in the UK anyone offering mortgage brokerage is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowers' circumstances and is held financially liable if the advice is later shown to be defective. In other jurisdictions the transaction undertaken by the broker may be limited to a sales job: pointing the borrower in the direction of an appropriate lender, no advice given, and a commission collected for the sale.
Therefore the work undertaken by the broker will depend on the depth of their service and liabilities. Typically the following tasks are undertaken:

• Marketing to attract clients
• Assessment of the borrowers circumstances (Mortgage fact find forms interview). This may include assessment of credit history (normally obtained via a credit report) and affordability (verified by income documentation).
• Assessing the market to find a mortgage product that fits the clients needs. (Mortgage presentation/recommendations)
• Applying for a lenders agreement in principle (pre-approval)
• Gathering all needed documents (paystubs/payslips, bank statements, etc.),
• Completing a lender application form.
• Explaining the legal disclosures.
• Submitting all material to the lender.
• Up holding their duty by saving their clients as much money as possible by offering best advice for the clients circumstances.

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