Well stated, I have come to refer to myself as a mortgage broker even though my "title" in my shop is Sr. Loan Officer.

One term I hate is Mortgage Planner, I think it is silly.

David, thank you for your comment. I call myself a Mortgage Consultant because I create clients for life, not one time customers. The typical Loan Officer closes the loan and loses contact with the borrower. I keep in contact 3-4 times a year with each of my clients to consult them on whether they are in the best situation they could possibly be in, or if they need to work on their credit a little to get them into a better loan.

Why hate the term mortgage planner? I often receive and enormous response from that title and have had clients kick down my door to talk to me because they think I'm different from the rest.

As far your post Justin great job. All good points and very accurate. Thanks for taking the time to write this.

I agree, mortgage planner is different; it will attract different prospects who would've passed with a glance if the title were any different. I also like Mortgage Specialist.

Jacob, thank you for your comment. I am starting to take a new approach toward blogging - I am going to aim my blogs toward the consumers and have them listed on my localism page as articles I've written. Who knows, maybe one of these days enough people will rate my blog and I will get featured!

Justin,

That's great explanation for newbies, good blog :) keep the good work!!!

Justin- You said: "A loan officer is a representative of a lending institution, such as a bank, who works to sell and process mortgages and other loans originated by their employer. They often have a wide variety of loans types to draw from, but all originate from that specific lender." That is EXTREMELY misleading! The laws in your state may be different, but in Florida a LO is a non-licenced person who works for a Correspondant Lender or a Full Lender. In neither case does a LO have to lend that particular Company's money. I worked for a Correspondant that didn't even have a warehouse line - we had 10+ lenders that we worked with. In particular, your statement: "but all originate from that specific lender" is just 100% wrong and very misleading.

Justin,  Not to jump on the band wagon but I really must write everything that Marc just wrote goes Ditto for me.  I know you meant well with the post but it is very misleading.

One thing you really did not get into was being licensed with the state usually requires so much education (Florida is 24 hour course and pass a FBI back ground Check) as well as some sort of background checks.  When working with a Loan Officer it is up to the lender to check the employees.

Guys, this blog was meant for the consumer. I lightly touched on the broad differences between brokers and loan officers.

I highly doubt this is going to mislead the average consumer. Thanks for ripping it apart though :)

Justin I did not want to rip it apart but the facts are what you wrote was some what misleading.  My suggestions if you are going to write about this do more details not just a fluff piece.  I know you tried but you really missed some key pieces.

Matthew, I appreciate your comments and critique. What doesn't kill me only makes me stronger. Keep it up, I will learn sooner or later! Thanks again.

Justin,  My pleasure anytime I can help

Justin - where do you get this?

He or she receives a commission from the borrower if the loan closes.

We do not receive COMMISSIONS from Borrowers

We receive COMMISSIONS from Lenders for loans...

If a borrower chooses to pay POINTS, then part of our commissions come from them but as a whole, most good and competent mortgage BROKERS get paid by Lenders 100%.  That is because we have enough volume to get rates down low enough that we can get paid enough on loans at low rates.  Brokers are wholesale loan originators.

The nicest thing for a borrower is that with a Mortgage Broker, all fees are disclosed UP FRONT in the Good Faith Estimate.   There are no sneaky changes and "hiding the backend" that happen with Loan Officers.  One of the major reasons for this is that Mortgage Brokers are state regulated and licensed individuals who undergo a vast amount of prelicensing education and continuing education.

Loan Officers are mostly unlicensed people working in a Retail Setting.  The Retail setting is the core of the issue that isn't brought up.  Usually Loan officers work off a standard rate that has its markup already on there.  The reason is OVERHEAD.

Overhead is worked into the rate to pay salaries, benefits, commissions and fixed costs.

Overhead is also hidden from consumers because Lenders are currently not required to disclose all fees and premiums.

So when a Mortgage Broker shows a matching rate it is still within their capability of dropping that rate either just to be competitive or to help the client.

The other thing to consider is that a Mortgage Broker has many more tools at his/her disposal because we are NOT limited to our bank's offerings... we have hundreds of lenders and thousands of programs which allow us to truly custom tailor a package to fit the needs of the individual.

What about a Mortgage Banker that has the option to broker deals as well that don't fit in-house?  

David, thank you for your comment. By receiving a commission from the borrower, I meant when an origination is charged. Origination can be a flat fee or a % of the loan amount. I would agree, the big hitters in this industry make their money on the back end and charge minimal up front. Keep in mind, I wrote this blog for the consumer.

Michael, good point. I am a mortgage banker and have the option to fund through my warehouse line or I can broker deals to wholesale lenders. This blog is meant more for the average consumer looking to pick up a little information so I didn't get too deep into the broker/banker difference. I don't want to confuse or bore my readers!

"Overhead is worked into the rate to pay salaries, benefits, commissions and fixed costs.

Overhead is also hidden from consumers because Lenders are currently not required to disclose all fees and premiums."

So Brokers disclose overhead such as rent, etc.? I really don't think a consumer really cares how much or how little someone "makes" on a transaction, but rather prefers to get quality service and terms.  This goes for a banker or broker.  Neither is better, just different.  Slightly.

Michael, I agree. The borrower isn't looking to see how much their broker is making off of them, they're more interested in the product or service they're getting.