In the process of buying a realty property, mortgage brokering and banking is one of the services that real estate agents shall need to work with their clients. They need to look for mortgage brokers that would work as the intermediary person between the bank and the individual clients who are applying for a mortgage loan.
Though in most cases where mortgage brokers are separate entity with real estate agents, in this process, it is important that the client is able to monitor and watch closely the progress of their application. Agents are allowed to act as an intermediary between banks and clients as long as they have the necessary knowledge and experience on mortgage brokering. In California for example, agents who are taking their CA pre-license credits are required to take a course about mortgage brokering in California. This is to educate the agents about the legal laws and processes as well as transactions involved in mortgage brokering and the like. But still, it is better to hire someone who is really a licensed mortgage broker in your state.
Mortgage Brokers vs. Loan Officers
Apparently, they are two different entities with regards to mortgage application and banking.
Mortgage brokers are usually independent individuals who work with either real estate agents or directly with clients and look the best options and rates for their clients to get a mortgage loan. They act as a conduit between the home buyer and the lender.
Loan officers are those who work directly with the lender.
Mortgage brokers have their own license – which could be revoked if they commit fraud and if proven by the state. They are regulated directly by the state and are liable to any action they commit as mortgage brokers.
Loan officers, on the other hand – are regulated under a company that should be licensed as well by the state. They are closely monitored by the company management, and whatever actions they commit is a liability of the company where the officer works at.
Both though, have their own duties and responsibilities as either a broker or a loan officer. It is stated on their licenses as they acquire it or as they are hired by the bank or lender.
The Legal Duties of a Mortgage Broker
A qualified mortgage broker is expected to do the following as part of their legal duties as licensed professionals. This includes:
• Fair Assessment and Research. Brokers should ensure fair assessment of the financial background and situation of the client. They are tasked to find out credit information and history of the client to verify the authenticity of the client and their financial capacity for a mortgage loan. They are also tasked to conduct a research to determine the loan rate that they could afford to apply for.
• Consultation. After doing an assessment and research on the financial background, situation and capacity of the individual for a loan, the broker is next tasked to consult with the client the list of options that fits their financial status. After which the client has decided the loan rate he or she will apply for, the broker shall apply for loan pre-approval from the lenders on behalf of the client.
• Application Assistance and Feedback Gathering. Brokers shall assist clients in completing all the processes and requirements of the mortgage application, compiling and reviewing every necessary documents required by the lender. The broker is also tasked to monitor closely the loan application and update the client on the progress of the application. They should also provide a list of itemized fees and costs that were spent during the application process to the client.
• Confidentiality of information between the broker and the client. Brokers shall ensure confidentiality of the information involved in the process. It includes the financial background of the client that served as the determining factor in the loan application of the client. All documents and agreements shall also be confidential only to both and the lenders involved in the transaction as well.
These legal duties are embodied in the license of these mortgage brokers and shall serve as their guide in servicing clients applying for a mortgage. Real estate license agents are also taught about mortgage brokering – allowing them to understand the process and also aid their clients when applying for mortgage.